UPS and FedEx Service Guarantees and Your Shipping Audit

Author: Jared Fisher
March 04, 2011

I was dumbfounded last week to learn a prospective client, spending millions of dollars each year on shipping, was unaware that UPS and FedEx ground services are guaranteed…just like air and international shipments.  “Yeah, we perform our own internal shipping audit but are you sure ground packages are guaranteed?” he asked.  Really?!!

This particular shipper is the exception, as most anyone who uses UPS and FedEx typically knows that all standard small parcel shipments come with a money back service guarantee.  Every shipment delivered late (yes, even 1 minute late) is eligible for a full carrier refund (less the fuel surcharge).  What better way to reduce shipping costs, right?  There’s a catch.  Both UPS and FedEx require you the shipper to first, identify the refund eligible shipment and second, request a credit.  You have a fifteen-day window to do this.  It may not sound like such a hassle if you only ship a few small parcel packages each day.  After all, with the on-time performance of both carriers in the high 90%’s, you can expect only one or two out of a hundred packages to be delivered late.  But what if you ship thousands of small parcel packages per day?  Perhaps you’re attempting an internal shipping audit and are manually tracking each package.  If so, chances are you’re not catching everything.

UPS and FedEx have invested billions of dollars into technology and their ability to scan and track packages throughout their networks.  Considering they handle millions and millions of packages on a daily basis, it’s pretty impressive that you can type in a tracking number online and see all shipping information, including approximate location, of your parcel shipment.  With a keen focus toward ‘on-time performance’, both carriers know exactly which packages are late.  Yet despite this knowledge, UPS and FedEx will invoice you and gladly collect your money for every guaranteed shipment that is delivered late unless YOU identify the carrier service failure and request a refund.  It’s like booking a flight from LA to Miami, but getting dropped off in Dallas and still having to pay for the original itinerary.

So why aren’t late shipments automatically credited back to the customer?  From the carrier’s perspective, what you don’t know won’t hurt you.  Doing so would cost UPS and FedEx billions of dollars annually.  It’s a simple math equation and right now the cost of doing so does not outweigh the benefit.  The reality is that most refund eligible shipments are still paid for by the customer.

So, what can you do to help reduce shipping costs?  If you’re like many, your shipping audit may consist of requesting a shipment credit after getting an angry call from your customer wondering where their package is.  You may even be using UPS Quantum View or FedEx InSight to keep a watchful eye on your parcel shipments.  Either way, you are responsible for initiating a credit…and eligible credits are more than likely falling through the cracks.  Many larger shippers outsource this responsibility to an established freight auditor who uses proprietary software to identify UPS and FedEx late shipments (among other billing inaccuracies) and requests the refunds on the shippers behalf.  Freight audit companies are not all the same and finding the right one can often require some research; however, it is a great option for those looking to increase visibility, reduce shipping costs, and minimize their own time involved.

So, ship ground with confidence…after all, it’s guaranteed!

Jared Fisher is a Senior Pricing Analyst at Lojistic and can be contacted at 949-398-6454.

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