Online shoppers simply don't have much tolerance for added shipping expenses. Research
indicates that there is a direct relationship between shipping costs and conversions: Sales conversions drop when the cost of shipping increases
. If merchants raise their shipping rates, they're likely to see more shoppers abandon their carts at checkout when shipping is calculated. Of course, merchants can raise the price of goods to cover the cost of fuel surcharges, but they run the risk of items never even making it into carts. Absorbing the fuel surcharge increases simply isn't an option for many shippers — particularly because fuel surcharges get amplified when added to other accessorial charges.
Carriers have hundreds of accessorial charges they apply on top of the base cost of delivery. One of the most common accessorial charges shippers must contend with is a residential surcharge. Every customer order that a merchant ships to a residence incurs a residential surcharge. The fuel surcharge is an additional charge that is tacked onto the residential surcharge.
Doing the math to calculate the total dollar amount of accessorials and fuel surcharges is overwhelming and frustrating for shippers. Fuel surcharges can be added to each accessorial. For example, a package delivered to a residential address will be charged a residential delivery fee plus a fuel surcharge. If the package is oversized, another fee will be assessed for that. The kicker? A fuel surcharge will be added to the oversize charge. Now imagine the parcel requires a signature. Another accessorial is charged for signature verification, and a fuel surcharge can be added for that line item as well. The cost quickly multiplies. Not only does this rapidly drive up the cost of shipping, but it is also makes it extremely difficult for shippers to estimate what they will be charged to set their shipping rates accordingly.