What Every Mailer Needs to Know About the Differences between UPS, FedEx, USPS and EquaShip

These are the truisms of parcel shipping:

• Most organizations have an ingrained mythology around which carrier(s) are the best for shipping parcels. But because there are many differences between carriers, none is “the best” or even the lowest-priced in every scenario.
• Most organizations believe that they have a great discount with UPS or FedEx—usually because their account rep told them so.
• Savvy organizations compare shipping rates with their industry peers, and often learn that their UPS or FedEx discounts are not as good as they can be. Negotiation is king.
• In most organizations there is a complete disconnect between what Operations thinks they are paying for UPS and FedEx shipping, what Accounting actually pays every week, and what Marketing thinks they’re earning or losing on shipping charges to their customers.

Only very large organizations have IT platforms and/or costly shipping consultants to analyze their true costs of shipping. Smaller shippers tend to rely on base rate comparisons, never noticing or even seeing the 20% to 35% in adjustments and accessorial fees on actual billing statements.

If your company ships to residential addresses, UPS/FedEx will add another $2.45 to $2.75 Residential Area Surcharge (RAS). If any of your customers are located in an area that UPS/FedEx consider “rural”—which includes 25% of the US population—expect another $1.85 to $3.00 Delivery Area Surcharge (DAS). In areas that you’d probably consider rural, expect another ding for Extended DAS (and these get super-sized for Alaska, Hawaii and other US territories). Make a tiny mistake on the recipient’s address, or accidentally use UPS/FedEx to send something to a PO Box or APO/FPO address and it’ll cost you another $11 per incident, plus the cost of return shipping if they can’t deliver it.

Everyone knows that UPS/FedEx now add a Fuel Surcharge (FS) to every parcel. But the accessorial fee most likely to go unnoticed—and it can be a massive one—is the so called “dim weight” fee (dimensional surcharge) for bulky but low-density parcels containing things like pillows or lampshades are charged based on dimension, not actual weight. For example, a 12 pound set of bicycle wheels shipped via ground in a 28” x 26” x 13” box is rated as a 58 pound parcel by UPS/FedEx.

UPS and FedEx can apply dozens of accessorial surcharges to your packages. USPS and EquaShip structure their pricing to avoid confounding accessorial fees. For example, neither charges RAS, DAS, Extended DAS, Fuel Surcharge or Address Correction fees. EquaShip doesn’t have any dim weight charges at all (USPS does on Priority Mail).

If you haven’t compared carriers in a while, you might want to do so in January when UPS, FedEx and USPS will all post significant increases (EquaShip is not planning an increase). You’ll generally find that USPS has lower prices than UPS and FedEx for items less than 6 lbs. If you spent less than $150,000 per year with UPS or FedEx, you may find EquaShip has lower prices across all weight classes and parcel dimensions.

The bottom line is when you use USPS or EquaShip you will see all your costs up front. If you use UPS or FedEx, ask your accounting department for invoices and compare your true costs with what you think you’re paying today. Then work with your marketing team to see if you’re charging your customers correctly for shipping, or switch carriers to lower your costs.

Ron Wiener is the CEO of EquaShip™, a new kind of parcel delivery service designed specifically for small and medium-sized business shippers. With transparent “all-in” pricing, EquaShip gives shippers access to great service at prices typically 26% – 77% below FedEx, UPS and DHL Residential Ground retail rates. EquaShip provides fully-integrated track-and-trace, $100 of EquaSurance™ coverage included with every package, and superior customer care, all with no hidden assessorial fees, special software or contracted volume commitments. The Seattle entrepreneur previously founded Earth Class Mail and has been founder/CEO of five other investor-backed technology companies.

Leave a Reply