Many businesses think FedEx and UPS are essentially identical twins. But even identical twins have differences. And it’s the smart businessperson who can spot and understand those variances who will be able to ensure he/she is utilizing the best company to improve their bottom line.
What You Don’t Know Can Hurt You
Your first order of business when deciding between FedEx and UPS is having a firm handle on your own shipping data.
This is no easy task as the amount of data and understanding it can be overwhelming.
But starting out, you should focus on four main data points: shipping zones, parcel weight, mandatory minimums and assorted surcharges.
- Where shipping zones are concerned, analyze where you are shipping to and from. If you ship to and from the U.S. mainland, things should be fairly simple when figuring your costs. But if you ship to other North American countries, Alaska and Hawaii or ship internationally overseas, costs can be very complex to nail down.
- The weight of your shipments is fairly basic. But because of dimensional weight charges, many lightweight but bulky packages incur higher costs. One thing to remember, both FedEx and UPS charge whichever is higher: actual or dimensional weight.
- When it comes to mandatory minimums, depending on your own shipping profile, they might negate any discounts that appear attractive. If minimums are too high, you might wind up paying more than expected for your low-weight shipments.
- Surcharges are the most difficult aspect to get a handle on. FedEx and UPS each have a long list of possible surcharges. They are easy to miss since you might not learn which ones were applied until you receive your monthly invoice.
Look Under Your Nose
In order to determine if you should switch carriers, you need to evaluate what you already have.
Do they deliver your packages on time? Nobody is perfect and late deliveries are unavoidable in a vast array of circumstances. But if your carrier is making late deliveries more than 5% of the time, then it’s time to take a closer look. Begin by auditing your invoices to see exactly how many late deliveries you have.
Most carriers offer reimbursements for late deliveries for even as little as 15 minutes. It’s up to you to hold them accountable by submitting reimbursement claims. It will help your bottom line and hopefully improve their delivery performance.
As long as you have your invoices in hand, check for billing errors. With a wide variety of surcharges, billing mistakes happen more than you realize and can have a detrimental impact on your bottom line if not checked carefully.
The downside is that this is a time-consuming process, and the size of your business may not allow you time to review all invoices for accuracy. But delegating that work to trusted partners can ensure your billing statements are accurate. An expert team can take care of recovering the money your company is owed, which can be an arduous process.
Other areas to consider include ensuring your deliveries are being made without damages, your carriers’ customer service responsiveness and tracking how many packages your company ships to each shipping zone. This will help determine if your current carrier is meeting your needs, or if it’s time to consider a different national or regional carrier.
Compare Competitors
Remember when you were deciding which college to attend and you wrote down the pluses and minuses of each finalist on a legal pad? This is no different.
Let’s start with rates. FedEx’s published rates are lower than UPS’s in domestic express and ground services. Their ground minimum charge of $7.25 is lower than UPS’s $7.32.
FedEx also ships residential packages from Tuesday to Saturday, which means customers can be home to collect their purchases. UPS delivers Monday to Friday with its Saturday delivery only standard in urban areas. This covers about half of their customers.
As for surcharges, FedEx’s air and ground fuel surcharges both undercut UPS.
But FedEx does not hold all the advantages.
UPS’ 3-Day Air can be more than 25% cheaper than FedEx’s service equivalent, Express Saver.
Their accessorial charges are also typically more attractive after delivery area surcharge fees are added. UPS’ ground residential packages can be significantly cheaper than FedEx’s.
UPS also treats Puerto Rico as a domestic destination and depending on what percentage of your business ships to Puerto Rico, that can be critical to your bottom line.
If the bulk of your company’s shipping is straightforward domestic ground and you see few demands for express service, signing with FedEx for their lower published rates may be advantageous.
However, if your company ships high volumes and could be well served by revenue tier discounts, you should consider running calculations to see if UPS’s pricing model is better suited to you.
As long as you are armed with your shipping data and understand your shipping profile, making the right choice for successful shipping just got a whole lot easier. The profitability of your business depends ultimately on getting your product to your customer as safely and efficiently as possible, so assess these factors to determine which company would best serve your shipping goals.
