The residential surcharge is among the most common and substantial surcharge fees for 98% of all FedEx and UPS shippers. Therefore, a shipper must consider the impact and compare FedEx and UPS applications during contract negotiation. This consideration includes much more than just the discount offered. Therefore, consider a few key areas with a residential surcharge contract negotiation strategy.
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Residential Surcharge Contract Negotiation Quick Guide
Different Prices for Residential Surcharges
So, the first residential surcharge contract negotiation consideration to look at is the price. In 2023, UPS will be ten cents more expensive for ground residential and five cents more expensive for international and domestic express. Historically, UPS has always charged more for residential than FedEx. But, there is a catch for FedEx residential fees for ground and home delivery services.
| 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|
| FedEx Home Delivery | $4.00 | $4.35 | $4.75 | $5.15 |
| UPS Ground | $4.10 | $4.45 | $4.85 | $5.25 |
| FedEx Ground | $4.65 | $4.80 | $5.20 | $5.50 |
| FedEx Express Domestic & International | $4.65 | $4.95 | $5.30 | $5.80 |
| UPS Express Domestic & International | $4.70 | $5.00 | $5.35 | $5.85 |
Carrier Residential Surcharge Information
FedEx Ground to Residence Penalty
The next residential surcharge contract negotiation to consider is the penalty applied when a FedEx shipper uses FedEx Ground to a residential address. Home Delivery is the service to a residence. FedEx Ground is a service to a commercial location. When a FedEx Ground is delivered to a residential area, the charge is $5.50. Therefore, the published rate is $0.45 more expensive if you mistakenly use FedEx Ground rather than FedEx Home Delivery to ship to a residential location.
Furthermore, most discounts for residential charges on a FedEx agreement only apply to FedEx Home Delivery. The discount does not apply to a residential charge on a FedEx ground package.
| Discount | Net Charge | Total Loss | |
| FedEx Home Delivery Published Rate Residential Surcharge: $5.15 | 50% | $2.58 | $0 |
| FedEx Ground Published Rate Residential Surcharge: $5.50 | 0% | $5.50 | -$2.92 |
With a FedEx Home Delivery residential fees 50% discount, a shipper that mistakenly uses FedEx Ground will be charged 213% more for the residential surcharge.
Discount as a percentage
As you strategize, consider the discount type you will pursue in a residential surcharge contract negotiation. Would you rather take a discount as a percentage of the published rate or a discount as a set dollar amount? Each year, the price of residential surcharges will go up. They have gone up consistently since their inception. Shippers can negotiate a discount percentage of 25%, 50%, 75%, or even a 90% discount off published rates. To learn more about what you should ask, use our contact form, and we can run a contract analysis at no cost.
Discounts as a flat fee
We have seen some UPS agreements that provide a discount as a flat dollar amount. In our opinion, this is not the best option. As the residential fees rise each year, your discount stays constant. In conclusion, a flat fee discount produces a lower net discount year after year.
Residential Surcharge Contract Negotiation
Each part of your FedEx or UPS agreement is negotiable. Therefore, a consistent strategy backed up by data from your shipping spend is vital. Know what services you are using. Know what surcharges you are using. If access to this data is missing, contact Refund Retriever for help. Transportation impacts your bottom line. Sign up with Refund Retriever to lower your shipping costs today.
