A residential surcharge (sometimes called a residential delivery fee, or RDF) is a per-shipment fee carriers charge when a parcel is delivered to a residential address rather than a commercial one. UPS and FedEx both apply residential surcharges; they currently run $4 to $7+ per parcel depending on the service.
The fee exists because residential delivery is materially more expensive per parcel than commercial delivery. A commercial address typically has a dedicated receiving area, business hours, no signature complications, and a higher density of deliverable parcels per stop. Residential addresses are scattered, often require multiple delivery attempts, more frequently need signature handling, and are subject to porch-piracy claims.
For e-commerce shippers, almost every shipment is residential. The residential surcharge is often the single largest non-postage cost on every parcel. A 4 lb apparel shipment with a $4 retail-ground postage rate might carry $4-5 in residential surcharge on top — effectively doubling the per-shipment cost.
USPS does not charge a residential surcharge — every USPS service is priced for residential delivery by default. This is one of the structural reasons USPS work-share is cheaper than UPS or FedEx Ground for residential-heavy ecommerce shippers, especially on lower weight bands. L5's rate engine accounts for residential surcharges automatically when rate-shopping, so you see the all-in cost — not just the headline postage rate.