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GAIN CONSULTING

New UPS ICOD Fee for U.S. Deliveries

  • Kelsea Ansfield
  • Jun 6
  • 6 min read

At Gain Consulting, we help U.S. shippers stay ahead of logistics challenges with strategic insights and practical solutions. On June 2, 2025, UPS introduced a new International Collect on Delivery (ICOD) fee of $12 USD, charged to U.S. consignees at delivery for international shipments with unpaid duties, taxes, or other fees. This change, detailed in UPS’s recent announcement, impacts small package clients, particularly those using Collect on Delivery (COD) terms for cross-border shipments. This blog post analyzes the ICOD fee, its implications for shippers, and actionable strategies to avoid the fee while maintaining a seamless customer experience.


Understanding the UPS ICOD Fee

The ICOD fee is a new charge aimed at streamlining UPS’s international delivery process but adds complexity and cost for shippers and consignees. Here’s a breakdown of the key details:

  • What It Is: Starting June 2, 2025, UPS will charge U.S. consignees a $12 USD ICOD fee at delivery for international shipments where duties, taxes, or other fees remain unpaid. This fee is in addition to those charges.

  • Who It Affects: The fee primarily impacts small package clients shipping internationally to the U.S. under COD terms, where consignees pay customs charges upon receipt. E-commerce businesses and small-to-medium enterprises (SMEs) relying on cross-border sales are particularly affected.

  • Exemptions:

    • The fee does not apply if duties and taxes are billed to a UPS account number prior to delivery.

    • Consignees can avoid the fee by paying customs charges electronically before delivery via the UPS International Pre Payment Application (IPPA).

  • IPPA Access:

    • Shipment Payment Notification: Requires shippers to provide consignee contact details (name, email, phone) and consignee opt-in to UPS notifications.

    • UPS.com Tracking Page: Consignees can access a payment link through the tracking page to settle charges before delivery.

Key Takeaway: The $12 ICOD fee adds a new cost for U.S. consignees unless duties and taxes are prepaid via a UPS account or IPPA, impacting shippers’ cost structures and customer relationships.

Implications for U.S. Shippers

The ICOD fee introduces several challenges and considerations for shippers, particularly those in e-commerce and international trade:

  1. Increased Delivery Costs: The $12 fee raises the total cost for consignees, potentially leading to delivery refusals or dissatisfaction. This could strain customer relationships, especially for SMEs with price-sensitive buyers.

  2. Administrative Complexity: Small businesses may struggle to manage pre-payments or ensure consignee opt-in for IPPA notifications, increasing administrative burdens. Incomplete contact information or lack of opt-in could trigger the fee.

  3. Customer Experience Risks: Unexpected fees at delivery frustrate consignees, with 68% of shoppers demanding transparency in shipping costs (per FedEx 2025 E-Commerce Trends Report). Negative delivery experiences may reduce repeat business.

  4. Operational Adjustments: Shippers must update processes to collect accurate consignee details, integrate IPPA, and educate customers about pre-payment options, requiring time and resources.

  5. Competitive Pressure: Competitors offering fee-free delivery options (e.g., by absorbing duties or using alternative carriers) may gain an edge, pushing shippers to rethink pricing strategies.

Key Takeaway: The ICOD fee increases costs, administrative burdens, and customer experience risks, requiring shippers to adapt processes and communication to maintain competitiveness.


Contextual Factors Shaping the ICOD Fee

Several industry trends and operational realities provide context for UPS’s introduction of the ICOD fee:

  1. Rising Cross-Border E-Commerce: The U.S. Census Bureau reports that cross-border e-commerce grew by 15% in 2024, increasing demand for international small package delivery. COD terms are common in markets like Canada and Mexico, where consignees pay duties at delivery, complicating UPS’s collection process.

  2. Carrier Cost Pressures: UPS faces rising labor and fuel costs, with diesel prices at $3.50 per gallon in May 2025 (per BTS). The ICOD fee offsets administrative expenses for collecting payments at delivery, aligning with industry trends toward fee-based services.

  3. Consumer Expectations: The FedEx 2025 E-Commerce Trends Report highlights that 76% of shoppers expect free or low-cost shipping. Unexpected fees like ICOD could drive consumers to competitors with more transparent pricing.

  4. Technology Adoption: The IPPA platform reflects UPS’s push for digital solutions, but adoption requires shipper and consignee cooperation. SMEs may lack the technical resources to integrate IPPA seamlessly, as noted in Supply Chain Dive.

  5. Customs Compliance: Stricter U.S. Customs Service regulations increase scrutiny on international shipments, pushing carriers to streamline payment processes to avoid delays. The ICOD fee incentivizes pre-payments to reduce delivery bottlenecks.

Key Takeaway: The ICOD fee is driven by e-commerce growth, carrier cost pressures, consumer expectations, technology adoption, and customs compliance, shaping its impact on shippers.


Strategic Recommendations for U.S. Shippers

To avoid the ICOD fee, streamline international shipping, and enhance customer experience, Gain Consulting recommends the following strategies for U.S. shippers in 2025:

  1. Educate Customers on the ICOD Fee:

    • Communicate the June 2, 2025, fee implementation via emails, website FAQs, or order confirmations. Explain that the $12 fee applies unless duties and taxes are prepaid.

    • Highlight exemptions (UPS account billing or IPPA) to set clear expectations and encourage pre-payment.

  2. Encourage Pre-Payment Options:

    • UPS Account Billing: Set up a UPS account to bill duties and taxes directly, or use Gain Consulting’s 3PL services to manage billing through our UPS account. This eliminates the ICOD fee and simplifies delivery.

    • IPPA Integration: Update e-commerce checkouts to collect consignee contact details (name, email, phone) and include UPS notification opt-in. Test IPPA compatibility with platforms like Shopify or WooCommerce to ensure smooth pre-payment.

  3. Optimize Shipper Processes:

    • Ensure accurate consignee contact information at checkout to enable IPPA notifications. Use validation tools to minimize errors.

    • Provide accurate customs documentation (e.g., commercial invoices, HS codes) to avoid delays. Leverage Gain Consulting’s customs clearance services for compliance.

    • Inform consignees about duties and taxes upfront via order confirmations or shipping policies to reduce delivery refusals.

  4. Enhance Customer Experience:

    • Add disclaimers to shipping policies (e.g., “Avoid a $12 ICOD fee by paying duties via UPS IPPA”) to promote transparency.

    • Offer branded UPS tracking pages through Gain Consulting’s services, making IPPA payment links easily accessible.

    • Develop a reverse logistics plan for refused deliveries, minimizing losses from ICOD fee disputes.

  5. Manage Costs Strategically:

    • Consider absorbing the $12 fee for high-value customers to maintain loyalty, or share costs with consignees through adjusted pricing.

    • Compare UPS rates with competitors like FedEx or DHL to ensure cost-effective international shipping, using platforms like Freightos.

  6. Leverage Technology:

    • Integrate IPPA with your TMS or e-commerce platform for automated payment notifications, reducing manual work.

    • Use analytics tools like DAT One to monitor shipping costs and identify opportunities to offset the ICOD fee’s impact.

  7. Prepare for Peak Seasons:

    • Anticipate higher international shipment volumes in Q4 2025 and educate consignees early about pre-payment options to avoid delays.

    • Secure carrier capacity with UPS or alternatives to ensure timely deliveries, negotiating volume discounts where possible.

Key Takeaway: Shippers can mitigate the ICOD fee by educating customers, encouraging pre-payments, optimizing processes, enhancing transparency, managing costs, leveraging technology, and preparing for peak seasons.


How Gain Consulting Can Support Your Success

Gain Consulting is your trusted partner in navigating the complexities of international shipping and the new UPS ICOD fee. Our tailored solutions empower U.S. shippers to maintain efficiency and customer satisfaction:

  • Fee Avoidance Strategies: Guide clients on UPS account billing and IPPA integration to eliminate the ICOD fee.

  • Customs Compliance: Provide accurate documentation and clearance services to streamline international shipments.

  • Technology Integration: Implement TMS and e-commerce solutions for automated payment notifications and cost tracking.

  • Customer Experience Enhancement: Develop transparent communication and branded tracking solutions to reduce delivery friction.

  • Cost Management: Negotiate carrier contracts and compare rates to optimize international shipping budgets.

  • Peak Season Planning: Secure capacity and streamline processes for high-volume periods.

The UPS ICOD fee, effective June 2, 2025, introduces new challenges for U.S. shippers, but with the right strategies, it’s an opportunity to streamline operations and enhance customer trust. Partner with Gain Consulting to turn this change into a competitive advantage.


Contact Gain Consulting today to build a resilient, cost-effective international shipping strategy for 2025.


Sources: UPS, International Collect on Delivery (ICOD) Fee Announcement, June 2025; DC Velocity, UPS ICOD Fee Analysis, June 2025; FedEx 2025 E-Commerce Trends Report, February 18, 2025; U.S. Census Bureau, E-Commerce Statistics, 2024; Bureau of Transportation Statistics, Motor Fuel Prices, June 3, 2025; Supply Chain Dive, International Shipping Trends, 2025.

 
 
 

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