All shipping carriers will inevitably miss delivery guarantees. Whether it’s a late overnight package, a shipment that never arrived, damaged box, or something else, these are service level agreement (SLA) failures defined by your contract.
You’re entitled to a refund when this happens.
But most businesses are leaving money on the table because they either didn’t realize they were eligible for a credit or they never asked for one. Even fewer businesses have systems in place to identify when carrier services fall short.
For those of you who haven’t been doing this or doing it properly, there’s a good chance you’re leaving thousands (if not tens of thousands) of dollars on the table.
Key Takeaways
- Carriers don’t automatically issue refunds for SLA failures.
- It’s on you to identify issues and file claims yourself.
- Most carriers have strict claims-filing deadlines, and missing them means forfeiting the refund entirely.
- Filed claims don’t equate to paid claims, so need to follow through and confirm the credit actually appears on your invoice.
- Manually tracking service failures and filing claims without a systematic auditing process is not realistic if you have any meaningful shipping volume.
Carriers Offer Service Guarantees, But Claiming Refunds is Your Responsibility
Most major shipping carriers advertise service guarantees as part of their value proposition. For example:
- FedEx promises overnight packages will arrive by 10:30 am.
- UPS commits to ground delivery within a specific timeframe.
- USPS offers guaranteed delivery on Priority Mail Express.
These are contractual commitments that come with financial consequences if the carrier doesn’t deliver what they’re promising. But there’s a catch.
Refunds only apply if you actually file a claim. Carriers don’t actively monitor their own performance of your shipments and issue credits when they miss the mark.
The burden is entirely on you to:
- Identify the failure
- Document it
- Submit a claim (within the allowed window)
- Verify the credit actually gets applied to your invoice
This complex setup is by design, and the tables are titled in the carrier’s favor (the SLA is in their contract). They’re hoping that fewer claims get filed, so more money stays with them.
What Actually Qualifies for a Refund
Exact terms depend on the agreement you signed with a carrier. But generally speaking, service failures fall into a few categories.
- Late Deliveries: These are the most common and easiest to prove. If you paid for next-day air and it took three days, you’re owed a refund on the shipping cost.
- Lost Packages: Assuming you can prove the shipment never reached its destination and the carrier can’t locate it in their system, either.
- Damaged Shipments: These claims require more documentation as proof that the damage occurred in transit, and wasn’t caused by poor packaging on your end.
- Billing Errors: This is a common refund opportunity that most businesses miss entirely. Incorrect surcharges, charges for services not rendered, or misclassified package dimensions/weights aren’t service failures in the traditional sense, but they’re overages that you’re entitled to recover.
As you can see, there’s a high probability that you could be entitled to carrier refunds every month or as frequently as every week.
At minimum, I’m willing to bet that some of your packages arrive late. It happens, and it’s just a law of averages. Beyond that, billing errors like residential delivery fees on commercial addresses or duplicate charges are far more common than most businesses realize.
Why Carriers Don’t Proactively Refund You
There’s a reason why the system works the way it does.
Shipping carriers process millions of shipments every day. And a percentage of those will inevitably fail to meet the guaranteed service level.
It would cost them a fortune and borderline put them out of business if they automatically issued credits for every late delivery. So instead, they structure the refund process to shift the administrative burden on the shipper.
The process creates friction at every step. And the more friction, the fewer claims they process.
Most businesses simply don’t have the time or resources to track every service against its commitment. Even if you do notice a problem, the effort required to file a claim for a $15 refund often doesn’t feel worth it.
Carriers are counting on this. They know the majority of service failures will go unclaimed, which means they keep the money by default.
The Filing Window is Short
Carriers enforce strict filing deadlines for service refunds. These tight windows are measured in days, not weeks or months.
And if you miss the window, the refund opportunity is gone. Carriers keep the money, and there’s no appeals process for late claims.
- UPS requires claims for refunds to be submitted within 15 days of the scheduled delivery date.
- USPS refund claims must be submitted between no later than 60 days for most packages, but no earlier than 7-15 days (depending on the shipment type).
- FedEx has a money-back guarantee, which is only available to select contract services, and typically has a 15-day filing window.
- DHL claims must be filed within 14 days of the shipment date.
These tight deadlines create a significant challenge for any business shipping packages at volume.
You need to track every single shipment against its service commitment, identify failures as they happen, and file claims immediately.
A two-week window doesn’t leave room for any delays in your internal process. It’s not like you can just wait to audit these every month or every quarter. Delayed, missing, or damaged shipments need to be identified in real time for you to have any chance of filing within the window.
Your Custom SLA May Be Slightly Different
To clarify, the information above is based on standard terms and public information.
The exact terms you negotiated in your agreement may be slightly different. Sometimes in your favor (meaning longer time windows to file or additional services that qualify for refunds).
But in other instances, custom SLAs can work against you when it comes to getting refunded for service failures.
For example, here’s a proposal that FedEx sent to one of our clients on a custom contract:
FedEx is saying that for this merchant to qualify for custom pricing, they waive their rights to refunds specified in FedEx’s money-back guarantee.
This type of contract clause essentially releases FedEx of any accountability for delivering packages within your agreed upon time window. And it’s so easy to overlook something like this, as it’s a single sentence buried in dozens of pages of custom pricing materials.
What You Need Before You File
Once you’ve identified a service failure, you need to prove it.
Carriers aren’t just going to take your word that a package arrived late or damaged. So you’ll need to gather the appropriate documentation and full records before you start the claims process, as filing with incomplete information will likely lead to a denial.
Again, exact provisions vary by carrier and your unique SLA. But you’ll generally need:
- Tracking numbers
- Proof of value for lost or damaged items
- Photos of items/boxes that arrived damaged
- Original shipping receipts
- Service-specific requirements
- Insurance documentation (if applicable)
The good news is that most of what you need should be readily available as part of your normal shipping process. But gathering it after the fact, especially at scale, can be time-consuming. So it’s in your best interest to establish strong data capturing upfront on all shipments or use automated systems to track this stuff by default. So it’s already collected when you’re ready to file.
How to File a Claim
Online filing is the default and most efficient method to request a refund for failed services. Each carrier has a dedicated claims portal that you can access through their website.
For businesses, you typically need to login to your account, enter the tracking number, select the claim type, and then upload supporting documentation.
The only systems will all guide you through the process step-by-step. But they can be rigid. If you skip a required field or upload the wrong type of document, you may get an immediate rejection or flag for manual review.
Business customers can sometimes bulk submit requests. For example, USPS allows business customers to upload files with up to 1,000 tracking numbers.
You Still Need to Verify Refunds Have Been Properly Credited to Your Account
Don’t make the mistake of thinking that your job is done once the claim has been submitted.
Unfortunately, filing a claim and receiving a refund for carrier service failures are two completely different things. And this is another gap in the process where a ton of money can get lost in the process.
- Claims get denied (sometimes incorrectly).
- Some claims are approved but never actually refunded to the next statement.
- Other times merchants only receive partial refunds when they’re entitled to more money.
You need to have a system in place that checks approved claims against credits on your next invoice.
Billing errors happen. Credits can be applied to the wrong account. And sometimes, refunds just never process. (Though I find it funny how these errors rarely, if ever, seem to benefit the merchant).
If you’re expecting a credit that isn’t there, contact the carrier immediately with your claim number and approval confirmation. Don’t wait for the next billing cycle. The longer you wait, the harder it becomes to track down a missing refund.
What if Your Claim Gets Denied?
Claim denials are frustrating, especially when you know the claim was legitimate and you’re entitled to a refund.
The reason for each denial is unique. It could be due to a missed deadline, insufficient documentation, services not covered by guarantee, or the delay was caused by an excluded event (like weather).
Certain rejection reasons can’t be fought (like filing after the claims window ended or weather-related delays).
But most carriers allow you to appeal a denial, typically within 30 days if receiving the notice.
The appeal process varies based on the carrier, but you generally need to resubmit the claim with additional documents or a written explanation that addresses the reason why it was rejected.
If the denial cited missing documentation, make sure you include exactly what’s missing during the appeal.
Final Thoughts
How much money are you leaving on the table due to service failures from your carrier?
If you’re shipping thousands or tens of thousands of packages weekly, I’m assuming that not all of those packages arrive on-time or in one piece. And if you’re not requesting refunds for missed service failures, your carrier is keeping money that they’re contractually obligated to return.
Finding service failures and requesting refunds manually at scale is nearly impossible. So it’s in your best interest to work with a cost reduction consultant who can help identify savings opportunities on your behalf.
Contact us today for a free audit to find out how much money you can save on shipping without changing carriers.