April 26, 2022 •Chase Flashman
Parcel Invoice Audit
Long-lasting supply chain issues caused by the global COVID-19 pandemic, rising oil prices, and increasing volumes of e-commerce purchases continue to drive up the cost of shipping for businesses. It seems like everywhere you turn, there’s something else eroding your bottom line. To avoid a situation where you need to raise your prices to cover costs, you can get the most savings out of your carrier contract with a parcel invoice audit. There are also steps you can take to proactively reduce your shipping costs, like ensuring that you’re not making any costly errors during packaging. In this post, we’ll cover the UPS surcharges you may encounter due to incorrect packaging and how to avoid them. Yes. All UPS base rates were increased beginning on December 27, 2022, causing an average hike of 6.9% in service costs. Surcharge fees have increased two additional times since, with no appearance of slowing down. Both package dimensions and weight matter when determining your shipping rate with UPS. In fact, having the wrong measurements can cause errors even if you have the right weight! Those mistakes lead to delayed shipments, unhappy customers, and extra fees from UPS. Dimensional weight can apply to all UPS domestic and international shipments, and it measures the package's density. To calculate the dimensional weight of your package, measure the length, width, and height in inches (rounding up to the nearest inch). Then multiply the length by the width and height to get its size in cubic inches. Next, divide the cubic size by the divisor (139 for UPS ground and express services) to get its dimensional weight in pounds. Dimensional weight = (Length X Width X Height) / Divisor For example, if your package measures 12 inches by 24 inches by 36 inches and weighs 50 lbs, the equation would look like this: Dimensional weight = (12 X 24 X 36) / 139 So, its dimensional weight would equal 74.6 lbs. You end up paying for the greater of your package’s actual or dimensional weight. In this example, you’d pay the rate for a 74.6 lb package. If your package dimensions don’t match your labels, then the mislabeled packages will be subject to a shipping correction fee. Then, if the average correction during an invoice week exceeds $5.00 per package, you will also have to pay a shipping charge correction audit fee. If you get charged with a shipping charge correction audit fee, you’ll have to pay the greater of the following: Keeping track of fees on top of fees can get confusing. Here’s an example. Let’s say you sent out a shipment of 30 packages. Due to an oversight during packaging, each of those packages was mislabeled. UPS would need to correct that shipment to the right dimensions so that their vehicles can be loaded efficiently. It costs $5.00 to correct each package, so you immediately owe an additional $150.00 for that shipment. Because the correction costs were at least $5.00 a package, in this example you must also pay the correction audit fee. Paying $1.00 per package would add up to $30.00, and paying 6% of the total shipping charge corrections (6% of $150.00) would be $9. UPS charges the greater of the two audit fee calculations, so you would pay an additional $30.00, bringing your total surcharges to $180.00. At first glance, a labeling issue may seem trivial. But when you consider that even a typo could make your packages oversized or overweight for your labeling, these costs can quickly add up. Keep an eye out for the following mistakes before sending out your next shipment: When measuring and weighing your packages, it can help to round up. That way, you don’t get surprised with additional fees if your measurements don’t match your carrier’s. Sometimes, you make mistakes that cost you extra when it comes to shipping. Other times, it’s your carrier whose errors end up costing you more. You’ve done your best to negotiate a contract with terms that benefit your business, so how can you get your carrier to keep additional expenses down? That’s where we come in. At ShipSigma, our parcel invoice audit helps you discover where carrier mistakes–such as a UPS package that is damaged in transit or delivered to the wrong address–are costing you more. When you know which mistakes are happening, you can get a refund and ensure they don’t happen again—saving you time, money, and your reputation in the long run. Regular parcel audits can even work to your advantage the next time you need to negotiate a contract. In fact, when combining our auditing and contract negotiation services, we’ve been able to save our clients an average of 25.2% on their shipping costs. Contact us to learn how you can get ahead of rising shipping rates. 
Are UPS Rates Going Up?
Do Package Dimensions Matter?
Does UPS Charge by Dimensional Weight?
What Happens If Package Dimensions Are Wrong?
Avoid Shipping Cost Corrections with ShipSigma
Share This:
