5 Hidden Leaks in Your Shipping Budget | PigeonAI

You negotiated a discount. You picked the right box. Yet, at the end of the month, your shipping bill is still 20% higher than you budgeted. Why?

The answer lies in surcharges. In the logistics world, the "base rate" is just the tip of the iceberg. The real profit for carriers—and the real cost for you—lies in the hidden fees. Here are the five biggest leaks in your shipping budget and how to plug them.

1. Residential Delivery Fees

Carriers charge extra to deliver to a home versus a business. If you are a B2C e-commerce brand, almost all your shipments trigger this fee.

The Fix: Compare carriers. USPS does not charge residential surcharges, making them a strong competitor for lightweight B2C parcels.

2. Address Correction Fees

If your customer makes a typo on their zip code, or forgets an apartment number, the carrier will fix it—and charge you $18 to $20 for the privilege.

The Fix: Implement address verification software at your checkout cart to stop bad addresses before they become labels.

3. Fuel Surcharges

This is a percentage added to every shipment, fluctuating weekly based on the price of oil. It is often the single largest surcharge on your invoice.

The Fix: You cannot eliminate this, but you can negotiate the discount on the surcharge if your volume is high enough.

4. "Shipping Air" (DIM Weight)

We mentioned this in our previous post, but it bears repeating. If your packaging is inefficient, you are paying to ship air.

The Fix: Conduct a packaging audit. Are you using peanuts to fill void space? Switch to a smaller box size.

5. Service Level Overkill

Are you shipping "Next Day Air" to a customer who lives 50 miles away? Ground shipping would get it there in one day anyway, but costs a fraction of the price.

The Fix: Check the "Time in Transit" maps for your carriers and downgrade service levels that overlap.

Stop the Leaks

You can’t improve what you don’t measure. PigeonAI’s dashboard highlights exactly which surcharges are inflating your shipping rates so you can fix them.

Don't let hidden fees eat your margin. See exactly where your money is going with PigeonAI.