Why is There a Residential Surcharge?

This guide explains the rationale for residential surcharge and how you can avoid it.
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Last update:

June 22, 2023

Many shippers will hear the option of a "residential surcharge" when shipping packages, which is a fee charged in addition to the carrier's base rate. The residential surcharge occurs because the carrier believes delivery to a residential address is more complicated than delivery to a commercial address.

However, many people still have questions about this, so in this guide, ShipSaving will provide details on what causes the residential surcharge and how to reduce it effectively.


Business address VS Residential address 

As the name suggests, business addresses are places used for business operations. In a broad sense, business addresses include office buildings, factories, shopping malls, hospitals, churches, etc.

Commercial addresses are usually located in commercial areas or at least areas surrounded by many other businesses, which means that carriers can deliver more packages in less time. Packages are also more likely to be received at commercial locations because they usually maintain regular business hours and have personnel present.


Residential addresses refer to non-profit places for a living but are not limited to homes or apartments. Carriers can deem things as varied as farms and mixed-use buildings as residential.

Suppose a carrier needs to deliver your package to a residential location. In that case, there is a chance that you are the only residential location in the area that needs to make the delivery. Therefore, this is an uneconomical shipping method for the carrier. It also increases the risk that the package will not be received and must be redelivered. Residential surcharges exist to compensate carriers for the losses they may incur.


Residential Surcharge Policy for UPS and FedEx

UPS and FedEx have different rates for residential and commercial addresses shipping within the United States. Shipping to a residential address is usually more expensive, including a residential surcharge. Because one residential address typically corresponds to only one recipient, the cost is higher for the carrier. On the other hand, a business address may have multiple recipients, which is more labor-saving.


How much is the residential surcharge

UPS and FedEx charge a residential surcharge with higher rates for residential addresses, and the price is based on the type of service the shipper chooses.

FedEx's residential surcharges range from $5 to $20, while UPS's range from $4 to $30. The difference in cost is that although it is a residential address, it is also classified as a remote area by the carrier.

It is important to note that remote areas are not only Hawaii, Puerto Rico, or Alaska, but even California and New York have areas that are classified as remote.


Does the USPS have a residential surcharge?

The USPS does not charge different fees based on whether the address is residential or not. Because the Postal Service is committed to the daily delivery to all U.S. addresses, there are no residential surcharges for attribution. However, USPS's heavier packages tend to be more expensive than other carriers. 


ShipSaving User Guide

When creating a shipment on ShipSaving, please check the box Residential Address if the recipient or sender's address is a residential address.  If you need more clarification about the address type, you can click Verify Address, and our system will automatically identify it for you.

If you are using ShipSaving for Business, you should be able to check [Residential Address] when you purchase a label 👇


If you are using ShipSaving for Starter, you should be able to check [Residential Address] when you purchase a label 👇


Once you need to check the box and ship the package to a commercial address, the carrier may charge you another adjustment fee. The adjustment fees incurred are more expensive than directly checking the box of residential addresses. We recommend that you ensure that the address is the correct type when purchasing a shipment.


ShipSaving makes your package orders easy to manage with no sign-up and monthly fees. On ShipSaving, you can prepay for residential address surcharges, reducing unplanned costs after you create your shipments.


Written on:

October 28, 2022
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