Audit Fee: One More Reason UPS Is Bad for Online Retailers

The Audit Fee imposed by UPS in June is another example of the differences in how FedEx and UPS manage their business — specifically billing. UPS bills based on the cost at the time a shipment is manifested. FedEx, at the time of delivery.

So, the UPS shippers impacted by this fee are the ones failing to include surcharges like those spelled out in the announcement (whether by accident or not), the invoice sent to the customer does not include them. This means a second, revised invoice needs to be issued to correct the invoiced amount. This is what these fees are intended to cover.

FedEx does not invoice until the delivery is made, any additional costs are included and there is no need for the invoice to be adjusted.

Online sellers shippers already struggle with being able to pass on their actual shipping costs. For many, the cost of shipping is a loss leader. Some may also provide a shipping cost at checkout and bill the customer based on those costs. Because these fees are imposed after the fact, it is difficult or impossible for the retailer to recover the additional expense after the fact. The intent of the announcement is primarily to punish shippers who intentionally don’t manifest the additional fees. The net cost of the fees is not necessarily significant to every company, but may be for ecommerce shippers.

From the UPS website:

Effective June 4, 2018:

  • The Over Maximum Limits and the Oversize Pallet Handling Surcharge increased by $150.
  • The Audit Fee is assessed if the average shipping charge correction in an invoice is over $5000. The Audit Fee is the greater of $1.00 per package subject to a shipping charge correction or 6% of the total amount of shipping charge corrections during the applicable invoicing period.  

 

Effective June 11, 2018:

  • The Ground Fuel Surcharge increased by 0.50% for all thresholds. It will continue to be based on the National U.S. Average Highway Diesel Fuel Price, adjusted weekly. 

 

View the full UPS announcement here: https://www.ups.com/us/en/shipping/rates-update.page

For a free analysis of what this means to your business, contact us on our website – here.

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