It generally costs less to ship to a commercial address – but why? and does it matter?

Residential vs Commercial Delivery: The Obvious Basics

  • Residential delivery: final delivery to a home or private residence, including a home based business.
  • Commercial delivery: final delivery to a business.

Why does it generally cost less to ship to a commercial address?

Logistically speaking, it’s simply less expensive to deliver to densely clustered commercial addresses. Conversely, areas zoned as residential are often scattered throughout sprawling neighborhoods.

Why is residential delivery more than commercial delivery?

If you monitor your shipping destination addresses, you may have noticed that residential shipping fees are higher than commercial rates. Because residential addresses are spread out, they have more overhead costs such as time, fuel costs, and wear and tear on vehicles.

Last-mile delivery” is the most expensive part of any small parcel or package cost. Commercial addresses, being mostly situated in high-density areas, allow carriers to bundle or group many deliveries in a small geographic area.

Hence, commercial delivery is less expensive than residential delivery.

What about residential freight costs?

In terms of LTL shipping, business to business (B2B) shipments are the norm. Carriers usually ship dock to dock, or dock to tailgate and vice versa.

For reasons explained above, carriers will consider anything shipping to or from a location not located in commercial area as an extra service. This will require additional equipment or have certain restrictions.

Common questions about commercial and residential deliveries

As someone who needs their products shipped, you may have certain circumstantial details. Here are some common questions most frequently asked:

Why am I being charged a residential fee if I have a business with a dock?

Some carriers will justify additional residential fees based on the fact that residential streets are narrower and more difficult to maneuver. 

With decreased maneuverability, access issues arise such as the need to send a smaller truck, or a truck with tailgates. There are greater time requirements plus drivers have to pay more attention to road restrictions and increased pedestrian traffic.

It’s also common for cities to impose restrictions on the vehicle weight allowed to pass through some areas.

The rules can vary from carrier to carrier, some may be a bit more lenient than others. For instance, some carriers may not charge for residential services if they’re picking up from a business with a dock in a residential area.

Others however will only charge if there are additional services required such as sending a smaller vehicle or a truck with a tailgate. Furthermore, most carriers will tend to charge based on zoning designations set by the city.

Ultimately, the carrier has the final word on the shipping details and these charges are rarely disputed.

Timing and communication are ket to keeping delivery costs under control. If through miscommunication, the carrier sends a truck that is too large for your area, they will charge a re-delivery fee for a failed delivery attempt. These costs need to cover the driver’s time and fuel surcharges.

My street can accommodate a 53’ truck and has no heavy traffic or restrictions. Can we do something about these charges?

It’s a good question with no straightforward answer.

As mentioned above, the carrier has the final say on how it handles a residential location. Sometimes with borderline cases it’s best to check with your preferred carrier about specific details.

What’s the worst that could happen if I forget to include residential service for a quote?

It comes down to timing. If you’ve booked a shipment without requesting a residential service, and the shipment has not yet been picked up, you can try to contact the carrier to see if the paperwork and pricing can be revised. As long as the new paperwork is used at delivery or pickup, the carrier should have all relevant information to avoid overlapping issues.

Equally important, if the carrier thinks they’re delivering to a business with a dock instead of a residence, this could lead to issues such as missed delivery or pickup. In such instances, the carrier may dispatch a truck that’s too large for the delivery location. The end result is delays, extra charges, and needless headaches.

For the most part, carriers realize residential charges are an inconvenience to you, the shippers. Therefor most carriers will schedule an appointment for delivery to make sure the process flows with as fem delays or hiccups as possible.

Partner With Someone Who Knows Your Destination Locations

Due to access restrictions and higher time constraints, it’s normal for carriers to apply additional charges to shipments involving residences, or businesses in residential areas. In order to make the delivery go as smoothly as possible, better carriers will schedule an appointment with the consignee to ensure location accuracy.