Residential Surcharge

A residential surcharge is a carrier fee applied to deliveries to a home rather than a business address.

Why it matters for ecommerce brands

The residential surcharge hits nearly every DTC parcel shipped by UPS or FedEx, so a discount on it is often worth more than a bigger base rate discount. It is a flat fee per package, and the fuel surcharge applies on top of it. For example, at about $6 per package, 80,000 residential parcels a year add $480,000 before fuel, and a 30% discount on the surcharge saves $144,000. USPS does not charge a residential surcharge, which is one reason many light DTC parcels ship with USPS.

Common questions

Does USPS charge a residential surcharge?
No. USPS does not add a residential surcharge to its parcel services, while UPS and FedEx do for deliveries to homes. This is one reason USPS is often cheaper for light DTC parcels.
How do carriers know if an address is residential?
UPS and FedEx classify addresses using their own address data and driver feedback, and bill a residential adjustment if you shipped as commercial and they find it is a home. Home-based businesses are usually treated as residential.
Can you avoid the residential surcharge?
Not on true home deliveries with UPS or FedEx, but you can negotiate a discount or move light parcels to USPS, which has no residential fee. Also make sure real business addresses are marked commercial so you are not charged by mistake.