UPS and FedEx Restore Money-Back Guarantee for Select Services

In the wake of the Covid-19 outbreak, both UPS and FedEx suspended their money-back guarantee in March 2020 due to challenging market conditions. However, fast forward to 2023, the carriers are still refusing to honor their money-back guarantee for most service levels.

Guaranteed Service Levels: Next-day air services and international priority/express services are among the service levels now guaranteed by UPS and FedEx. UPS has also altered its guarantee policy, stating that next-day air services are considered timely as long as they are delivered by 11:59 pm (local time) the following day. Previously, next-day air deliveries had definite delivery times (8 am, 10:30 am, and 5 pm).

More recently, UPS and FedEx began honoring the money-back guarantee for 2 Day services as well.

Other Service Levels: There is no word yet on when UPS and FedEx will reinstate the money-back guarantee for the rest of their service mix, which includes 3rd day air, home delivery, and ground services.

Impact on Your Business: Although this is a positive development, the majority of the volume handled by UPS and FedEx remains without a guarantee. This change offers some relief to overnight shippers but fails to address the issue of service failures for all other service levels.

Eligibility for Money-Back Guarantee: As the money-back guarantee returns, it is crucial to determine if your business is eligible for refunds. Recently, both carriers have included a waiver for Guaranteed Service Refunds in their carrier agreements by default.

The Challenges Associated With Auditing Your Own Parcel Invoices

Auditing your parcel invoices is a proven way to immediately reduce your parcel spend by 2-5%. By auditing your invoices, you can request refunds for several different types of refundable charges - Service Failures, Manifest Errors, and Erroneous Billing Charges. 

If your company spends $1m/year with UPS or FedEx, and does not have a process in place for auditing parcel invoices, you are likely over-spending by $20-50k each year.

 With the opportunity to reduce your parcel invoices by 2-6%, you’re probably asking: “How do I capture these refunds?”.

 Here are your two options - 

 Option 1: Audit your own parcel invoices in-house

OR 

Option 2: Use a third-party to audit your parcel invoices

While it’s absolutely possible to audit your own invoices in-house, there is a considerable amount of labor, time, and experience required to capture all eligible refunds.

Consider the following before choosing to audit your carrier invoices in-house  –

1.      Carriers will not notify you when a shipment delivers late – This means that someone will need to manually cross reference the tracking info on each shipment with a guaranteed delivery date matrix doc to determine which shipments are eligible for a service failure refund.

PRO TIP – Service Failures (late deliveries) make up 90% of eligible refunds.

2.      You must file a claim for each individual refund – Whenever a service failure, manifest error, or erroneous billing charge is identified, a claim must be submitted, tracked, and followed up on to ensure that a refund is credited back to your shipper account.

 PRO TIP – Service Failure claims must be filed for within 14 days of being invoiced for the shipment.

3.      Labor expenses could potentially outweigh the savings incurred from auditing your own invoices – Most parcel audit providers offer their services via gain-share based pricing. Meaning, they will only bill you for a portion of the refunds that they are able to capture. If an audit provider is not able to generate savings, you won’t own them anything.

 PRO TIP – Erroneous billing charges are nearly impossible to identify without auditing software. There are simply too many different ways that erroneous billing charges can be applied to your invoices. However, these charges typically only account for 5-10% of eligible refunds. 

 If you’re interested to learn more about utilizing a third-party to audit your parcel invoices – feel free to check out Empact’s Parcel Audit service page at https://www.empactparcel.com/audit-recovery-service

Empact Parcel is a third-party logistics provider that specializes in cost-saving solutions for UPS, FedEx, and DHL shippers.