Who Has the Best Shipping Rates? - FedEx vs. UPS vs. USPS
Digital commerce wouldn’t be possible without reliable delivery carriers. Each of the big three carriers – UPS, USPS, and FedEx – move millions of packages daily. Though relatively new, e- commerce is growing at unfathomable speeds as customers rely more-and-more on online shopping. With increase in demand for shipping comes increasing demands on shipping. As the Wall Street Journal reports:
In its latest survey of over 1,000 U.S. consumers, supply chain consulting firm AlixPartners LLP found that consumers expect to wait an average of 4.8 days for delivery, down from 5.5 days in 2012. And the share of those who are willing to wait more than five days has declined to 60% from
74% in four years.
Customers increasingly want more for less from online vendors. Free shipping is a major selling point for consumers, driving up your operating expenses. Combine this with increasing rates charged by carriers, it can get a little taxing for vendors. It’s also clear that annual price hikes are part of the norm, with all three carriers raising their rates in 2018.
Making sense of carrier rates requires an understanding of each company and their offerings. So who are the three big competitors vying for your traffic?
FedEx is the newest, and smallest, of the three major carriers. Founded in the 1970s by Fred Smith, the company was created with the express intent of being a technologically advanced carrier service. Despite their size, their leading edge truly is innovation. In 1979, for example, they introduced the tracking number to delivery. In terms of raw numbers, however, their performance is still behind the other two carriers with an average daily volume of 6 million, and a fleet size of 90,000 – smaller than UPS’s fleet of 119,000 vehicles. As an air carrier, however, they’re larger than UPS with 664 aircraft compared to 244 owned, and 320 leased by UPS.
The second oldest of the three carriers, UPS was founded in 1907 in Atlanta. UPS delivers to over 220 countries and territories – essentially everywhere in the world, give or take a few locations. Daily global deliveries are over 20 million packages. In 2015 UPS was the leading carrier of online deliveries. Despite their smaller fleet and revenue compared to USPS, UPS is very much a competitive figure on the market.
The United States Postal Service, USPS, is an old dog in the carrier kennel. Founded in 1775, there’s a lot of ink spilled on a daily basis about how it’s an antiquated relic, hemorrhaging money, and doomed to fail. Beyond the doom and gloom, though, it’s pretty clear that USPS is doing just fine as a competitor. A 10-year perspective reveals that, despite the 2008 economic crash, the agency has maintained a relatively constant revenue stream, with 2017 bringing in $69.6 billion – more than UPS at $66 billion.
So now to the important part: prices. Obviously, pricing depends on what you’re shipping, where it’s going, and when it needs to arrive. That said, what does the price look like if you wanted to ship a 6 x 6 x 4 inch, 12 oz package from Tennessee to Texas? Let's compare shipping rates:
- FedEx Home Delivery– $13.85
- UPS Ground - $10.72
- USPS First-Class Package Service - $3.82
That’s pretty shocking, to say the least. When we compare shipping prices, USPS comes out to be $3.82, one third the price of the next-best price from UPS.
Numbers vary, however, and USPS has its own restrictions on weight that aren’t quite as flexible as the other two carriers. USPS, for example, has a weight restriction of 70 lbs. for most deliveries.
Let’s look at another scenario and compare shipping costs. You have a 65-pound package, 12 x 12 x 10 inches, and you want to ship from Atlanta to Salt Lake City. What do the prices look like on that order?
- FedEx Home Delivery - $94.29
- UPS Ground - $96.10
- USPS Priority Mail – $99.54
Not a lot of variation, but FedEx comes out as the winner here.
The takeaway is not that one company is always better than the others. For any specific package that needs shipping, there are many factors that affect your price. For lightweight packages, USPS tends to be the cheapest way to ship a package. For heavier packages, however, they’re not always your best option. FedEx and UPS tend to have higher average prices, but their services focus on specific types of packages and delivery. Picking your carrier requires knowledge and research; don’t take it lightly.