If you just think that your business shipping costs are getting out of control, then you’re probably right.
Carriers industry-wide have gotten incredibly good at padding invoices with extra fees that most businesses just don’t understand.
And the problem is that overcharges don’t just announce themselves. They’re carefully hidden with vague line items and contract clauses that are designed to confuse you.
To help you gain control over your shipping costs, I’ve identified the top 15 red flags that you’re overpaying. The more of these red flags that apply to you, the greater the chance that you’re paying too much for commercial shipping.
1). You Haven’t Audited Your Shipping Invoices in Over 6 Months
Your shipping statements shouldn’t just be glanced at or thrown into a drawer every month.
Someone in your company needs to be auditing them line-by-line.
Not only does this help protect you against billing errors (that are never in your favor), but you can compare how your costs change from month to month to identify rate increases before things get too out of hand.
Going six months between audits means you’ve likely paid for service failures, duplicate charges, and surcharges that you may never get back. And if it’s been a year or longer since your last audit, I can practically guarantee it.
2). Your Fuel Surcharges Keep Increasing Without Explanation
In theory, fuel surcharges are supposed to reflect actual fuel costs. It makes sense that since oil prices can fluctuate, your carriers need to account for this when billing you.
But we tend to find that most carriers treat fuel surcharges as profit centers.
Think about it. When oil or diesel prices drop, do your fuel surcharges follow suit? Or maybe they decline slightly, but not nearly at the rate they rose when prices spiked.
Request a full breakdown of how your fuel charges are being calculated and compare it to the actual market rates to determine if you’re being charged fairly.
3). You’re Paying Publicly Published Rates Instead of Negotiating Discounts
If you’re paying the rates listed on your carrier’s website, then you’re definitely overpaying.
Probably by a lot.
Published rates are just a starting point for negotiations. Even smaller businesses with moderate shipping discounts can negotiate discounts off the base rates online.
Carriers expect you to negotiate and have already built margin into their published pricing. So if you haven’t asked for a discount or renegotiated in years, you’re paying too much.
4). Your Statements Are Full of Miscellaneous Line Items You Don’t Understand
Take a look at your most recent shipping invoice. Look through each item and either underline, circle, highlight, or put a star next to every line item you don’t understand.
Things like additional handling, extended delivery, or delivery area surcharges that seem arbitrary or inconsistent. What exactly are you being charged for here?
If you can’t confidently explain what each surcharge means and why it’s applying to your shipments, you’re almost certainly being overcharged.
5). You’re Constantly Paying Extra for Residential or Delivery Area Surcharges
Residential delivery fees and delivery area surcharges can add several dollars per package.
Do the math here.
If you’re paying an extra $5 per residential delivery fee and you ship 2,500 residential packages per month, you’re paying $12,500 in surcharges — just for that single line item.
The worst part here is that carriers have been quietly changing what qualifies as a “residential” or “extended” delivery, and reclassifying zones that previously didn’t have these charges applied.
So if these types of surcharges are a significant portion of your total bill, you definitely need to investigate, as it’s a red flag that you’re paying too much.
6). Your Dimensional Weight Charges Seem Inconsistent
As you may already know, dimensional weight pricing means that your carrier is charging based on package size. Not just weight.
But if your packages are largely the same size and dimensional weight charges are only being applied to a portion of them, then something is wrong here.
It could be that your packaging is inefficient or your carrier isn’t measuring things properly. It’s common with automated systems that misread dimensions.
This could be costing you thousands of dollars in overages if you’re not optimizing your packages for dimensional weight.
7). Your Statements Are Full of “Accidental” Billing Errors
One or two billing errors per year when you’re shipping tens of thousands of packages can be understandable. Everyone makes mistakes.
But if you’re regularly finding billing errors on every statement, it’s a problem.
These types of patterns no longer feel accidental, especially when they always result in you paying more money.
Most businesses don’t catch these errors, and carriers know it. So they don’t go out of their way to refund you unless you’re asking for a specific mistake that you’ve caught.
8). You Don’t Have a System to Consolidate Shipments
If you’re shipping multiple packages to the same customer or location separately instead of consolidating items into a single shipment, then you’re paying for multiple base rates, fuel surcharges, and accessorial fees instead of just one.
A few one-off instances of this happening isn’t the end of the world. But if it’s part of your regular operations, it’s a huge problem. This often happens when different departments or warehouses operate independently without consolidation.
Having a basic system in place to hold orders (even for a few hours) to batch shipments can significantly reduce your costs.
9). You’re Surprised With “Peak Season” or “Demand” Fees Year-Round
Years ago, peak season surcharges used to only apply during the holidays. Now they seem to show up constantly, on nearly every statement.
Carriers are inventing new reasons to charge for “high demand” or “market condition adjustments” that are vague with no real explanation.
These are just rebranded versions of peak season charges.
So if you’re seeing them outside of traditional peak periods (November through December), push back. Check your contract against protections for unauthorized surcharges and demand documentation for why these are being applied to you in March or August.
10). You’re Only Using One Carrier
Loyalty doesn’t make sense in shipping.
If 100% of your volume is going through a single carrier then you have zero leverage and no basis for comparison. You don’t know if you’re getting competitive rates because you’re not checking.
It’s also worth noting that different carriers are better for different things.
USPS commercial rates are good if you’re shipping small, lightweight items to residential addresses. Whereas UPS is typically good for larger packages, and FedEx is better for overnight shipping. And you may want to use DHL for packages shipped internationally.
11). You’re Paying For Signature Requirements on Every Package
Having your customers sign for packages costs extra. And the vast majority of shipments don’t need them.
Signature confirmations should only be considered on high-value or sensitive shipments.
But if you’re paying an extra $6 or $7 by default on every package shipped, you’re wasting a ton of money.
12). Your Accessory Charges Exceed 20% of Your Total Shipping Costs
Accessorial charges include everything other than your base shipping rates.
Residential fees, address corrections, additional handling, delivery area surcharges, and so so on. These are meant to be rare exceptions on your bill. Not something that applies to every package.
So if you add up those costs and they account for at least 20% of your total invoice, it’s a big problem that’s worth investigating.
It either means you’re using the wrong carrier, you’re not optimizing something correctly in-house, or your carrier is flat-out overcharging you for things you don’t need.
13). Your Contract Doesn’t Protect You From Rate Adjustments
Most commercial shipping contracts that we audit include general rate increase clauses that allow annual price hikes.
But the best contracts either cap those increases or require advance notice and negotiation.
If your contract gives your carrier unlimited ability to raise your rates without any predictability or protections, expect them to take full advantage of that clause. Your rates will definitely be going up (and you agreed to this).
14). Your Paying for Insurance That You Don’t Actually Need
Carriers like to push declared value coverage and third-party shipping insurance on packages because it’s profitable for them.
But if your products are low in value or durable, the base limited coverage that’s included is going to be sufficient.
Even if the items you’re shipping are on the expensive side, you should analyze your actual loss history and claims paid to see if you’re over-insured. In many cases, you’re better off self-insuring and accepting the fact that the occasional loss is part of your business operations. It’s likely more cost-effective than getting extra insurance on every shipment.
15). Your Shipping Costs Just Keep Rising
Inflation. The economy. Gas prices. Labor costs.
We’ve heard every excuse in the book. And while it’s common for the price of services to rise over time, there’s a limit here.
If you see that your shipping costs are rising 10% year-over-year it’s way too high and a major red flag. 1-2% is somewhat reasonable but still not ideal.
But these massive rate hikes are likely just your carrier’s way of trying to charge you as much as possible, knowing there’s a slim chance you push back against it. Prove them wrong and do something about it.
Final Thoughts
Shipping costs are an inevitable expense for many businesses, especially online retailers and ecommerce sites.
You need items delivered to your customers. And you have to pay for it.
But that doesn’t mean you should just blindly accept your shipping fees at face value and assume your carrier is giving you a good deal.
Lots of your fees are completely negotiable, and you can save thousands of dollars every month.
If any of the red flags above apply to your business, then contact our team here at The Cost Guards for a free audit and assessment. We’ll analyze your shipping costs to show you where you’re overpaying, and resolve those issues directly with your carrier.