2 Biggest Reasons Shippers Don’t File Parcel Service Failure Refunds

Let’s face it – when virtually anyone thinks of shipping parcels, they think of UPS and FedEx. By most accounts, the two companies account for over 95% of the parcel shipping market in the U.S – and do an admirable job, considering the sheer volume of packages they ship. According to shipping research firm PackageFox, UPS ships more than double the number of packages per day than FedEx. UPS does meet customers’ needs with its ability to deliver 91% of express packages on time, compared to a still-impressive 88% for FedEx.

In addition, both companies also offer guarantees or refunds if your package doesn’t arrive to its intended destination on time. Very few shippers, however, take them up on their offer. Why? Here are the two biggest reasons:

First Reason: Shippers Unaware

One big reason clients of FedEx and UPS don’t file for refunds is because they were unaware that either company offers refunds for service failure. It could be that they ship so many packages that their first concern is if the package simply got there. If a customer is not complaining, it may not be worth worrying about or it wasn’t brought to their attention. The refund / claims process is also not something that the companies in this duopoly advertise. Given their dominant market share, they really don’t have to. Most parcel customers do not feel like they have a choice here.

Second Reason: Resources To File

If a shipper is actively sending multiple parcels daily or weekly, tracking them is one thing. The claims / refund process, however, is very complicated. Both UPS and FedEx tend to make it this way on purpose – or at least it appears that way. It involves multiple steps that are cumbersome to undertake, require a lot of documentation and proof, and are not easily understood. Furthermore, the refund amount oftentimes is less than the cost to file for the refund due to the cost of personnel time it takes in preparation.

Rest assured, however, shippers have recourse. FedEx and UPS are concerned about customer retention and efficiency. They do have a claims refund policy and procedure and they will make good on packages delivered late. As a shipper, you need to perform a strategic analysis and decide whether it would be worth it invest time into this process.

You may be surprised – there may be significant dollars available that would be delivered…straight to your bottom line.