Whether your store is entirely online or a blend of traditional retail with a modern online marketplace, your business likely ships packages (and lots of them!). But shipping can get expensive quickly, especially with the demand to get products out to customers faster than ever before!
There are three main options that business owners often think of when it comes to shipping: the United Parcel Service (commonly called UPS), U.S. Postal Service (USPS), and Federal Express (FedEx).
Which is cheaper, UPS or USPS? Could it be FedEx? When it comes to USPS vs. UPS, what are the pros and cons? The options are enough to make you dizzy!
There is no one-size-fits-all solution when you’re considering a shipping carrier for your business needs. To help, today, we’ll help you to understand and compare shipping rates (and suggest some ways to find cheaper shipping along the way!).
An Overview of UPS, USPS, and FedEx
The three largest shipping carriers in the country for domestic and international shipping are UPS, USPS, and FedEx; they all ship for individuals and businesses. But which is best for your small business shipping needs?
Though they appear to be stiff competitors, especially UPS vs. FedEx, each has a different specialty.
Founded in 1775, USPS has a nationwide network that includes all mailboxes in the country — literally! However, only the USPS carrier is legally allowed to access mailboxes.
USPS specializes in small packages, generally under 20 pounds (ones that will fit in a mailbox, unsurprisingly!). USPS is an affordable way to ship items like books, apparel, and cosmetics. Insurance is also available for individually shipped packages.
Despite the maxim that “neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds,” USPS had a reputation for being somewhat unreliable; however, the reliability and on-time delivery has improved steadily over the years (COVID-pandemic notwithstanding). So, for this reason, many small businesses rely on USPS to ship small packages.
A significant advantage of shipping with USPS is using Priority Mail Cubic, which defines shipping rates based on the package’s dimensions, not its weight.
Businesses can also get volume discounts by using shipping software or through a third-party logistics (3PL) company.
With Priority Mail, if you can get the item(s) into a USPS flat rate box, you can ship packages of any weight to any domestic location for one price. So if your items are small, you can usually save money through Priority Mail. USPS also offers free insurance up to $50 on packages.
USPS offers cheap shipping rates on very light packages (under 13 ounces). And since the USPS has exclusive access to every mailbox in the country, it is a good choice for shipping to residences or PO boxes.
Other advantages include Saturday delivery and free pick-up. USPS also tends to have cheaper shipping for international packages as a federal entity.
There are some disadvantages to using USPS shipping. For example, the weight limit for a USPS package is 70 pounds. USPS only offers limited tracking, too.
Sometimes, packages are late, and the company has a bit of a reputation for poor customer service support.
Founded in 1980 as a private company, UPS shipping specializes in larger, heavier packages and ground delivery. It is also a good option for packages over two pounds.
The UPS network includes air, domestic, international, residential, and commercial services; this single network allows UPS to maximize its assets and network efficiency.
The maximum weight for a UPS package is 150 pounds, over twice that of the USPS limit. Even so, UPS delivers a large number of small packages, too.
UPS stores are located in urban areas; there are over 5,000 stores throughout the United States, Puerto Rico, and Canada alone.
UPS also has drop boxes for domestic and international shipping, although there is a size limit to dropbox packages. UPS has partnered with retail stores, including Staples and CVS, to offer small package drop-offs if you use prepaid labels through its Access Point program.
The UPS tracking system is comprehensive and reliable; it has guaranteed same-day or next-day service delivery. As a result, the company’s heavy and ground shipping rates are often affordable, and UPS also offers volume shipping discounts.
Furthermore, UPS insures packages. Anything under $100 is insured for free. UPS also offers fragile packaging services (FedEx and USPS do not).
Through its Next Day services, UPS can deliver packages quickly. The company is also known for delivering international packages sooner than expected.
The shipping carrier, UPS, can be expensive for some types of packages. UPS often includes fees and surcharges that drive up the shipping costs, especially for international shipping.
UPS doesn’t deliver to PO boxes, Army Post Office (APO) addresses, or Fleet Post Office (FPO) addresses.
In addition, you have to schedule pick-ups. There is no free pick-up unless you pay a flat rate for pick-up service. If you want Saturday delivery, it will cost extra; Sunday delivery is unavailable.
Whereas UPS Stores are often small and independently owned, FedEx Stores are larger and corporate-owned. FedEx specializes in express, long-distance deliveries. Unlike UPS, which operates a single network for all services.
FedEx also has drop boxes and has partnered with some businesses such as Walgreens and Office Depot/OfficeMax to serve as locations for small package drop-off (pre-paid label required).
Services offered by FedEx are suitable for retail and corporate clients who are willing to pay for express services.
FedEx offers shipping volume discounts and excellent tracking. The company ships and delivers packages seven days a week and offers express delivery services.
Shipping via FedEx can be expensive; if you want packages to reach their destinations express, you’ll pay for it. Additionally, FedEx doesn’t offer free package pick-up. When it comes to FedEx vs. UPS for numbers of stores, FedEx is at a disadvantage with only 2,000 stores throughout the United States.
Overall Shipping Carrier Costs in 2022
Being able to ship packages is crucial for eCommerce businesses. Because shipping costs can eat into your overhead, you likely want to find cheap shipping solutions. To do that, you’ll need to compare shipping rates to find out which is more affordable, UPS or USPS, or FedEx.
Most eCommerce business is done through small package shipments. USPS delivers in 1 to 5 business days for packages under a pound and offers the cheapest shipping by far.
|Approximate FedEx Cost
|Approximate UPS Cost
|Approximate USPS Cost
|Ship Austin, TX to Nashville, TN: 4” x 6” x 6”, 12 ounces
The main competition for shipping heavy packages is FedEx vs. UPS; USPS will only ship up to 70 pounds.
Large, Heavy Packages: FedEx vs. UPS vs. USPS
|Approximate FedEx Cost
|Approximate UPS Cost
|Approximate USPS Cost
|Ship Salt Lake City, UT to Atlanta, GA: 12” x 12” x 10”, 65 lbs
UPS does not offer a flat-rate service, but FedEx and USPS do. USPS supplies the box for free. USPS will ship a flat rate box anywhere within the United States from 1 to 3 business days.
Flat Rate Option: FedEx vs. USPS
|Approximate FedEx Express Saver One Rate (Small: 10⅞ x 1½ x 12⅜ in.)
|Approximate USPS Priority Mail Flat Rate (Small: 5⅜ x 8⅝, 1⅝ in.)
|Ship Los Angeles, CA to New York, NY: 8” x 5” x 1”, 10 lbs
The specific rates you pay for packages will vary based on several factors; however, these examples give you a general idea of what to expect. Going through a 3PL company can also help you save even more money on shipping.
5 Ways to Cut Shipping Carrier Costs
Shipping is especially crucial to an eCommerce business. So how can you reduce shipping costs? There are several ways:
- Ship from closer shipping zone
- Optimize package sizes
- Use third-party logistics (3PL)
- Insure your packages through a third party
- Prepay shipping
Let’s take a look at each of these in detail.
Ship from Closer Shipping Zones All shipping carriers use the shipping zone system, rather than actual mileage, to measure distances and set charges. Distances are calculated from the point of origin zone to the destination zone, which is why shipping from California to Florida is so expensive.
For example, shipping a distance of under 50 miles means you are still shipping within zone 1; however, if you ship over 1801 miles, you are shipping from zone 1 to zone 8 (and charged accordingly).
As your business grows, you may want to consider dividing your inventory. So instead of shipping from California to Florida, you can ship from a closer zone and pay less in shipping costs. A 3PL company can help you to manage split inventory.
- Optimize Your Packaging Size
Make sure your packaging is as small as you can make it and still effectively ship your item(s). If you use packaging that is too large for what you ship, you may be charged for the dimensional weight of the package instead of the actual weight of your package. Dimensional weight is the amount of space a package takes up on the truck.
This means if you have a very light item in a large container, you will end up paying more for the dimensional weight than for the actual weight. All shipping carriers charge whichever is more, dimensional weight or actual weight; it is extra income for them.
- Use Third-Party Logistics Fulfillment
Third-party logistics (3PL) fulfillment refers to outsourcing the logistics of order fulfillment to a company specializing in retail fulfillment, including warehousing, inventory management, receiving and processing orders, customer data management, picking and packing, and shipping.
- Insure Your Packages with a Third Party
Though it is good to have, shipping insurance can be expensive. So if you are looking for cheaper shipping options, consider purchasing your shipping insurance through a third party rather than from the shipping carrier. This will save you more on high-value items.
Third-party insurers usually charge a fee for a declared value over $100. The declared value increases the carrier’s maximum liability if the goods are damaged or lost; however, you may not be able to cover the total loss.
- Prepay Shipping
Prepaid shipping can save you up to 20% from UPS or FedEx by purchasing a certain number of shipping labels at once. This works when you consistently ship orders of the same weight and dimensions.
Which Courier is Best for Your eCommerce Business?
Given all of this information, which shipping carrier is best for your eCommerce business? To a certain extent, it depends on what you are shipping, the size and weight of packages, the distances shipped, and the timeframe in which you’d like the packages delivered. It also may be a combination that works best for you (UPS or FedEx for some kinds of packages, USPS for others).
USPS and UPS are good options if you ship a lot of small, lighter-weight packages. USPS comes under the costs of FedEx and UPS across the board; however, the commercial carriers have more accurate tracking and are better with on-time delivery.
If you’d like packages delivered directly to customer mailboxes or PO boxes, USPS would be the way to go.
FedEx and UPS are better options for larger, heavier packages. FedEx specializes in speed over long distances, so if it is urgent, FedEx might be the better option. UPS is the best middle-of-the-road option across the board.
There is another option for your shipping needs, however: consider a 3PL service. Because of the huge volumes of packages 3PLs ship, they have access to volume discount shipping rates.
A 3PL makes it possible to split your inventory, which can save significant money in shipping costs. In addition, a 3PL service can provide an array of services to support your business.
Ready to Ship?
Shipping is mission-critical to eCommerce businesses. However, if you use one of the shipping carriers, you still have to manage shipments yourself, which can be time-consuming. If you use a 3PL, the whole of order fulfillment can be outsourced to logistical experts, which will free you up to concentrate on managing and growing your business.
Ready to find out what a 3PL can do for you? Contact Print Bind Ship today for a free shipping quote.