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.