Find the best business loan rates (2021)

By Kris DiRenzo Updated on December 17, 2021

UPS vs. FedEx vs. USPS: Comparing Costs and Services

Affordable, reliable delivery service is key with the dramatic rise of ecommerce. While online shopping was surging in popularity before the COVID-19 pandemic hit the U.S., it saw dramatic growth in 2020—nearing $800 billion in total sales. If you’re looking for competitive shipping rates, look no further than the big 3: the U.S. Postal Service (USPS), UPS and FedEx. You need to select the organization that offers the best pricing, service and efficiency that your business needs and your customers demand.

We’ll go through the different shipping types and rate calculations. Then we’ll look at shipping options such as:

  • Pickup, drop-off and packaging
  •  Tracking your parcels and insurance
  • Shipping labels and how to use them

Let’s go through your options to help you choose the best service to deliver on time and under budget.

A person gets a package ready for shipping.

Shipping Rates: Best Shipping Options for Small Business

Comparison shopping for rates is critical for small businesses that ship products regularly.

It’s important to note packages and letters follow different pricing structures. Postage for a letter may be the same depending on where you’re sending it and when you want it to arrive. With packages, the following factors determine what you pay at most couriers:

  • Distance from mailing ZIP Code
  • Weight of the parcel in pounds and ounces
  • Volume of packages mailed
  • Dimensional weight (DIM weight): Based on the length, width and depth of your package.

While FedEx has an online DIM weight calculator, USPS and UPS expect you to break out the measuring tape and calculator to do some math.

    • Note: FedEx announced it will implement various fee changes and surcharge increases in January and February 2021. Consult the FedEx website for the latest shipping rates.
    • USPS has also announced mailing service rate changes, starting Jan. 24, 2021. First Class prices will increase by about 1.8%, and by 1.5% for other postage categories.

A woman scans packages in a warehouse as they prepare for shipping.

FedEx vs. UPS vs. USPS Rates: Ground Shipping

Ground shipping is a low-cost, basic shipping service. While FedEx Ground and UPS Ground are pretty straightforward, USPS is a little more complicated.

USPS offers its Priority Mail service, which features various options within it, including Flat Rate mailing in envelopes and boxes. Ecommerce or other small businesses that meet specific requirements for Priority Mail or Priority Mail Express may qualify for Commercial Plus Pricing.

Let’s take a look at a couple of situations and which shipper is best for each:

  • Heavy packages in small boxes: If you’re shipping auto parts or other raw materials made of metal, then consider USPS Priority Mail Flat Rate. You must use USPS packaging, but “if it fits, it ships” for one price, regardless of weight. International delivery also is available.
  • Featherweight items with normal dimensions: As long as the item is less than 2 pounds and has a normal dimensional weight, FedEx or UPS is your best bet.
  • Light items (less than 2 pounds) with large dimensional weights: USPS factors dimensional weight into its pricing, so rates for FedEx, USPS or UPS aren’t largely different.
  • Packages exceeding 2 pounds: If your customer can wait 5 days for a package, FedEx or UPS Ground guarantee their delivery dates. Unlike USPS, which uses FedEx to fly Priority Mail and Priority Mail Express worldwide, both UPS and FedEx use a combination of their own planes and chartered flights to ensure accurate tracking. Be sure the dimensional weight is correct or you will be unpleasantly surprised.
  • International shipping: All 3 operations offer international shipping services. Priority Mail International Flat Rate makes it easy to calculate shipping costs anywhere in the world, but it isn’t cheap. Many small businesses prefer UPS because of its superior tracking services.

Shipping potentially hazardous or restricted items: Some items are off-limits or have strict regulations on how and where they can ship.

A man reviews shipping updates on his laptop as he works in a shipping warehouse.

USPS vs. UPS vs. FedEx Costs: Express Shipping

This is where it gets complicated.

Because both UPS and FedEx guarantee delivery dates and times, rates may not be as important as reliability in this area. Even though USPS Priority Mail may have better rates, delivery times aren’t guaranteed. The same goes for overnight services.

Here are expedited services that don’t have an overnight component:

UPS vs. FedEx vs. USPS Price Comparison: Overnight Shipping

Even though Priority Mail Express rates are often attractive, critical deliveries may be better-handled by UPS or FedEx.

Here’s the rundown:

Additional Shipping Service Options for Small Businesses

FedEx, UPS and USPS offer a variety of options and add-on services.

Pickup, Drop-Off and Packaging Options

The 3 shippers each pick up and drop off from your home or business, as well as offer free packaging supplies. One catch with USPS pickup: You’ve got to have a mailbox to get the free service. Post office boxes don’t apply. Otherwise, you’re stuck waiting in line at the post office to drop off your packages.

A note about packaging: Although it’s provided to you free of charge, all 3 shipping operations are sticklers about package supplies. Make sure you’re using the right box and label before you send it.

Tracking and Insurance

Free tracking is available from all carriers. USPS Priority Mail provides free insurance for items valued $50 or less.

Commercial Shipping Discounts for Volume

The more you ship, the less you pay per unit. You don’t have to be a big business to get deep discounts, but to qualify for commercial rates, you’ll need to ship many packages. USPS Commercial Plus Pricing is a smart deal — and you only need to ship 50,000 units of Priority Mail annually to qualify.

Shipping Labels

All 3 carriers allow you to print or write address information on labels, which they provide for free.

Consider Shipping-Management Software

If you’re an online commerce company looking to ship every package as economically as possible, consider using shipping-management software such as Easyship or ShippingEasy. This way, you can get the best rate for every package, no matter which carrier you use.

Kris DiRenzo is a Business Advisor and team leader at Fast Capital 360 who enjoys guiding and educating small business owners about their funding options to ensure a return on their investment and measurable growth.
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