FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You

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1 Avoid Hidden Fees: FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You Knowing how to avoid hidden fees when it comes to shipping can make a big difference to a company s bottom line. The team at shipping software provider Endicia created this guide to give you a close look at the three main players in the shipping world FedEx, UPS and the USPS and provide a detailed breakdown of the types of fees and surcharges associated with each carrier. It s exactly the information you need to ship smart and save money every time.

2 When running an online business, your time and attention should be dedicated to growing your business and maximizing efficiency. Instead, many business owners find themselves spending a great deal of time trying to manage shipping costs, and discovering that these costs are sometimes much higher than expected. If you ve ever taken the time to study a UPS or FedEx invoice closely, you ve probably noticed several extra charges beyond the price that was quoted when you printed the shipping label. These surcharges, or hidden fees, can be added for residential delivery, Saturday delivery, fuel, address correction and delivery to hard-to-reach rural destinations and they can be a real budget-buster. Whether you re a small to medium-sized online seller or a large omni-channel retailer, it s in your best interest to keep shipping costs as low as possible for your business and for your customers. After all, most consumers say they would not make an online purchase if the shipping costs outweigh the cost of going into a local store to pick it up. In fact, 58 percent of consumers have added items to their shopping carts to qualify for free shipping and 83 percent are willing to wait an additional two days for delivery if shipping is free. 1 Clearly, the cost of shipping is one of the major factors online shoppers consider before clicking through to finalize a purchase. So, now you re caught in a sticky situation: do you increase the amount you charge customers to cover these hidden fees and risk negatively impacting sales? Or do you let your customers off the hook and cover the cost of these surcharges for them taking a direct hit to your company s bottom line? Neither scenario sounds very appealing. Lucky for you, there s a third option: avoid these hidden fees altogether. The Breakdown: USPS vs. FedEx and UPS Everyone knows the three big dogs of the shipping world: FedEx, UPS and the U.S. Postal Service (USPS). There are advantages and disadvantages associated with each carrier depending on your business needs. But when it comes to avoiding hidden fees, there is a clear winner overall. 1 comscore Pulse of the Online Shopper Study results, Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April

3 The U.S. Postal Service Fees and Surcharges Price The USPS has no hidden fees or surcharges. Any USPS service that costs extra, such as Signature Confirmation, Collect on Delivery (COD) or Restricted Delivery, is charged upfront, so you won t have any surprises at the end of the month. And, the USPS never charges for services like address correction, rural delivery or Saturday delivery. The USPS has always been a cost-effective option for lightweight packages. The January 2016 rate changes represent the first price increase for commercial USPS Priority Mail in over three years. So, although the average price increase for Priority Mail looks high at 9.8 percent for 2016, that averages out to less than 3.3 percent per year since the last rate increase. Priority Mail continues to be an affordable option for lighter-weight packages that need to be delivered crosscountry in only 2-3 days (versus 5-6 days with FedEx/UPS Ground ). The USPS also offers two discounted pricing tiers to their customers who use a PC Postage provider, such as Endicia: Commercial Base Price (CBP): CBP is a discounted postage price available for certain mail classes for businesses using a PC Postage provider. The vast majority of Endicia customers automatically enjoy this price for applicable competitive mail classes. Commercial Plus Price (CPP): CPP refers to slightly deeper discounted postage prices that are available to qualified high-volume shippers who use a PC Postage provider. The thresholds to qualify for Commercial Plus rates are:» Priority Mail: 50,000 packages in the prior calendar year» Priority Mail Cubic: 50,000 packages in the prior calendar year» Priority Mail Express : 5,000 packages in the prior four quarters» International Mail: at least $100,000 in qualified international postage value (First-Class Package International Service, Priority Mail International, Priority Mail Express International, Global Express Guaranteed ) per year Accessibility With more than 35,000 retail locations and 180,000 drop boxes, the USPS is practically everywhere. And, what s more accessible than having a mail carrier come to your home or office every day? The USPS will even pick up your domestic (Priority Mail and Priority Mail Express) or international packages right from your home or office for free during your regular mail delivery. Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April

4 Shipping Options The USPS offers plenty of options for both short and long-haul delivery. These range from: DELIVERY TIMEFRAME OPTION DETAILS Next Day Priority Mail Express Overnight delivery to most U.S. locations or your money back. Prices from $20.66 when paid online. 1-3 Days Priority Mail 1, 2 or 3 day delivery from $5.75 when paid online. 1-3 Days First-Class Mail 1-3 day delivery for evelopes and small packages from $0.47 at a Post Office location. 2-8 Days Retail Ground or Parcel Select Ground 2-8 day delivery for non-urgent and oversized packages starting at $6.75 for Retail Ground (available at a Post Office location). Parcel Select Ground offers the same service starting at $5.95 and is exclusively available through PC Postage providers. In addition to business and residential delivery, the USPS is the ONLY carrier that can deliver to P.O. boxes and military or diplomatic (APO/FPO/DPO) addresses. Tracking and Insurance The USPS offers end-to-end tracking with up to 13 scan events per package. That s on par with the tracking offered by carriers such as FedEx and UPS. The USPS includes up to $50 of insurance with Priority Mail, up to $100 of insurance with Priority Mail Express and up to $200 of insurance with Priority Mail Express International packages paid at Retail or Commercial Base postage rates. Additional USPS insurance can be purchased for higher value shipments or can be added to packages being sent with other mail classes. FedEx Fees and Surcharges Be sure you understand the fees and surcharges FedEx can tack on to your invoice. Additional charges can be added for a variety of reasons. These include Delivery Area Surcharges, which are added to shipments destined for select ZIP codes and can range from $2.30 to $22.50 per package, or Saturday Pickup charge that costs $30 per shipment. Again, these surcharges are tacked on after the package has been shipped, so you won t know how much additional cost your business has incurred until the invoice arrives. Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April

5 Price Effective January 4, 2016, FedEx Ground and Home Delivery, as well as FedEx Express rates for U.S. domestic, U.S. export and U.S. import services, increased an average of 4.9 percent over 2015 rates. And in 2015 FedEx adopted dimensional weight pricing for all its Ground shipments, making it a more expensive option for shipping large, yet lightweight, packages (more on that on page 7). Despite these changes, FedEx remains a good option for day and time-definite deliveries, as well as heavier B2B shipments. FedEx offers delivery options such as A.M. Delivery, Close of Business Delivery or Custom Delivery. For a fee, FedEx will deliver on a scheduled date by 4:30 p.m., 10:30 a.m. or other time options. Accessibility FedEx has 1,900 locations within the United States and abroad, along with 43,000 FedEx Express Drop Boxes where you can drop off your packages. Regular scheduled pickups are free. However, you will have to pay an additional fee for a one-time pickup. Shipping Options FedEx offers both time-definite and regular ground services. This includes: DELIVERY TIMEFRAME OPTION DETAILS Same Day FedEx Same Day Delivery time based on flight availability Next Business Day FedEx First Overnight FedEx Priority Overnight FedEx Standard Overnight Delivery by 8:00 or 8:30 a.m. Delivery by 10:30 a.m. Delivery by 3:00 p.m. 2 Business Days FedEx 2-Day Delivery by 4:30 p.m. 3 Business Days FedEx Express Saver Delivery by 4:30 p.m. 1-5 Business Days FedEx Ground Delivery based on distance to destination FedEx cannot deliver to P.O. Box or APO/FPO/DPO addresses. Tracking and Insurance FedEx provides detailed tracking for each FedEx label as well as proof of delivery. Unless a higher value is declared and paid for, the maximum liability for each package is limited to $100. Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April

6 UPS Fees and Surcharges As with FedEx, UPS requires that you pay extra for services like address correction, rural delivery and Saturday delivery. UPS has surcharges for additional handling, collect on delivery, large packages, hazardous materials and international dangerous goods, scheduled pickups, etc. You can check out the full list here. Price On December 28, 2015, UPS increased its rates an average of 4.9 percent for its Ground, and 5.2 percent for Air and International services, as well as for air freight services within and between the U.S., Canada and Puerto Rico. Like FedEx, UPS also introduced dimensional weight pricing to all its Ground shipments. Additional details are available on page 7. In general, UPS is best known for its economical Ground shipping for large, heavy packages (up to 150 pounds). UPS also offers a shipping calculator to help you estimate the time and cost of delivery, based on destination and service. Accessibility UPS has more than 4,800 store locations worldwide, and 38,000 UPS Drop Boxes. If you can t make it to a UPS location, UPS will come to you (though there is an extra charge for a pickup). Shipping Options UPS offers a variety of options, including: DELIVERY TIMEFRAME OPTION DETAILS Same Day UPS Express Critical Delivery time based on flight availability Next Business Day UPS Next Day Air Early UPS Next Day Air UPS Next Day Air Saver Delivery as early as 8:00 a.m. Delivery typically by 10:30 a.m. Delivery typically by 3:00 p.m. 2 Business Days UPS 2nd Day Air A.M. UPS 2nd Day Air Delivery typically by 10:30 a.m. Delivery typically by end of day 3 Business Days UPS 3 Day Select Delivery by end of day 1-5 Business Days UPS Ground Delivery based on distance to destination Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April

7 Tracking and Insurance UPS provides you with detailed tracking information for up to 25 packages at a time. And, your customers will have the ability to follow their package s entire journey from pickup to delivery via updates. Up to $100 of insurance is included. The Dimensional Weight Impact Both FedEx and UPS use dimensional weight pricing for all Ground shipments. For e-commerce businesses, this means a substantial hike in shipping costs for larger, lighter-weight packages. But first, what is dimensional weight? Dimensional weight is calculated when the size of a package is used to determine the weight at which the shipping costs will be charged. The length, width and height of the box are multiplied together and divided by a dimensional factor (UPS and FedEx use 166 for domestic shipments) to determine the dimensional weight. The calculated dimensional weight is then compared to the actual weight of the package, and the higher of the two is used to determine the base rate of the shipment. The new scope of this dimensional pricing is directly targeted at bulky, but light packages containing things like purses, sweaters and shoes. Here s a visual to help you understand how dimensional weight pricing works: Woman s Shoulder Bag Video Game Controller Small to Medium Size Pet Bed Dimensions: 19x15x5 Actual Weight: 2 lbs DIM Weight: 9 lbs Dimensions: Actual Weight: DIM Weight: 12x8x8 1 lb 5 lbs Dimensions: 23x18x3 Actual Weight: 1 lb DIM Weight: 8 lbs Avg. Rate Impact: +27.6% Avg. Monthly Impact 50 Packages/Day: +$2,490 Avg. Rate Impact: +29.6% Avg. Monthly Impact 50 Packages/Day: +$2,370 Avg. Rate Impact: +39.5% Avg. Monthly Impact 50 Packages/Day: +$3,160 Calculations based on 2016 FedEx and UPS Standard List rates for Ground service across all Zones. Surcharges not included. This is a big game-changer for those who use the U.S. Postal Service. Since the USPS does NOT apply dimensional weight pricing to all of its shipments, it s a more viable option for many businesses and also allows shippers to keep costs low and competitive for their consumers. Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April

8 The Bottom Line Looking at the data above, it s clear that each carrier has its strengths, but it s also clear that every business should include the USPS as part of its shipping mix in order to save money on lighter-weight packages and to expand its universe by having the ability to send packages to P.O. boxes and to military personnel stationed overseas. Most importantly, the USPS says no to hidden fees. You won t have to pay a cent over the price of the shipping label for services like address correction, rural or Saturday delivery. Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April

9 Choosing the Right Shipping Software Solution Once you ve decided that adding USPS to your shipping mix or increasing the use of its services is right for your business, it s time to make sure you choose the right shipping software. With the USPS, your e-commerce business has several options when it comes to electronic postage providers. It s important to select a reliable shipping software vendor that offers convenience, efficiency, plenty of advanced features, is geared for international shipping and can keep up with and help you brand your growing business. Convenience - The ideal electronic postage software offers easy access to all USPS rates and services and makes it easy to get started quickly. Scalability - The right provider can scale with you as your business grows and offers multiple product and service plans, as well as APIs that can easily integrate into an existing application. You also need a postage technology that is flexible and seamlessly fits into applications that provide services like e-commerce storefront solutions, order management and logistics systems, shopping cart applications and online marketplaces. Efficiency - Choosing a shipping technology platform that provides a collection of clients, services, technologies and integrations allows you to optimize shipping operations without sacrificing efficiency. Make sure you have access to USPS partners like DHL ecommerce and UPS Mail Innovations. These partners take care of a business shipping from pickup and sorting, to transportation. Advanced Features - Your postage technology vendor should also offer advanced features that help make the shipping process a breeze, such as the following: Integrated address verification tool Carrier rate comparison tool Access to a choice of parcel insurance providers Personalized notifications Label customization (brand your business!) Advanced reporting tools and online postage logs An automated refund service for unused USPS shipping labels Return shipping labels that are only paid for if they are actually used International shipping solutions» Up-to-date information on restrictions and prohibitions by country» Automated, integrated international shipping forms» Pre-filled customs forms Marketplace Solutions - If your business sells on Amazon and/or ebay, you need a postage provider that allows you to connect directly to your Amazon or ebay store, enabling you to seamlessly import order information and automatically post-back tracking data. Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April

10 About Endicia Endicia, a wholly owned subsidiary of Stamps.com, is the leading provider of innovative and intuitive shipping technologies and services for e-commerce businesses. We deliver value by creating breakthrough shipping solutions that help global businesses, small and big, reach their customers. Our customers have printed over $14 billion in postage via seamless access to the U.S. Postal Service and integrations with more than 250 e-commerce partner solutions. For more information on Endicia products and services, visit You can also contact an Endicia representative at sales@endicia.com. We re happy to help! For e-commerce and online shipping tips, visit Endicia. All rights reserved. All other trademarks are the property of their respective owners. Avoid Hidden Fees FedEx, UPS and the USPS: Finding the Shipping Mix that Works for You April