1. Overview of FedEx and UPS Carriers for eCommerce Shipping
Which one should you select: FedEx or UPS? As a relative newbie to the eCommerce industry, UPS and FedEx are most likely to look the same to you. But although both are reliable shipping solutions that offer a wide range of services, each has its own pros and shortcomings. Both offer the best tracking services and make deliveries faster than all government postal services, however, these two companies are competitors. So what exactly is the difference between them and which one is likely to be a better fit for your needs?
That’s exactly why we’re here! In this post, we’ve compared FedEx and UPS on a few parameters we thought were important to consider when it comes to eCommerce shipping. Below is a review of both providers to help you understand what exactly your business requires.
2. About UPS (United Parcel Service) Shipping
Established in 1907 in Seattle, Washington, United Parcel Services is currently one of the largest courier and delivery service providers in the United States. UPS was founded by James E Casey and Claude Ryan, and it’s presently headquartered in Atlanta, GA. The company operates as a logistics and package delivery services provider along with supply chain management services.
The logistic services offered by UPS include transportation, contract logistics, ground freight, air freight, ocean freight, distribution, insurance, customs brokerage and financing. The company operates via the following segments: U.S International Package, Domestic Package, Freight and Supply Chain. They offer the complete package of U.S domestic guaranteed air and ground transportation services. Their international package includes operations in Asia-Pacific, Latin America, Canada, the Middle East, the Indian subcontinent and Africa. Likewise, the freight and supply chain segment offers transportation, international trade, distribution and brokerage services.
Presently UPS has got 543,000 employees and sales of over $84.4 billion.
3. About FedEx Shipping
Founded in 1971 by Frederick Wallace Smith, FedEx is headquartered in Memphis TN. FedEx is the second-largest courier carrier in the U.S, right behind UPS, and has got a revenue of $69. billion. The company has employed over 475,000 people and has active operations in 220 countries.
FedEx operates via the following segments: FedEx Ground, FedEx Express, FedEx Freight, Corporate, Eliminations and other FedEx services. The main focus of the company’s ground branch is small package delivery services. FedEx Express includes domestic and international shipping services for the delivery of freight and other packages. The freight service provides less than truckload freight services across the country.
Lastly, the FedEx services include support sales, sales, marketing, communications, technical support, IT, billing and collection services.
4. UPS vs FedEx: The Key Differences Between 2 Popular Shipping Carriers
To begin with, let’s compare the different approaches FedEx and UPS use.
* While UPS specializes in domestic ground delivery and has a much larger fleet of vehicles, FedEx specializes in express air freight and has almost double the flights in comparison to UPS. This indicates that FedEx has got cheaper rates on international shipping and UPS on domestic.
* Both FedEx and UPS offer a wide range of shipping services at different prices and speeds, as well as flat-rate services and deliveries ranging from ground to overnight. Although FedEx has more stores in more locations, both companies have physical stores across the U.S.
* UPS provides freight and supply chain services like customs brokerage, freight distribution, and supply chain management. If you’re planning to scale up and become global, UPS will be an ideal partner. On the other hand, FedEx has partnered with USPS (United States Postal Services) for several eCommerce orders and handles the majority of them via air, after which they hand off to USPS for the final delivery. This helps the company increase the delivery time for domestic deliveries and reduce costs.
* UPS uses a different formula for weight for their shipment. For international shipment, the volumetric weight is 13” X 12” X 2”, 3lbs and for domestic it’s the same volumetric weight with 2lbs. Contrarily, for FedEx, the volumetric weight is 13” X 12” X 2”, 3lbs regardless of domestic or international. If you’re planning to ship a 2lbs package domestically then UPS is likely to give you a better rate than FedEx.
5. FedEx vs. UPS: Ground Services Compared
As mentioned above, UPS and FedEx are close competitors, which means that both companies tend to offer services that are quite similar in terms of features, delivery times, and price. To get a clearer picture, we’ve broken this comparison in terms of the ground services provided.
5.1) Ground Service Details: FedEx
* Monday - Friday Delivery (No weekend deliveries)
* Provides guaranteed delivery
* Package tracking available
* Insurance up to $100 for packages
* 1-5 business days for delivery with contiguous US and 3-7 business days for Alaska and Hawaii
* Length limit, 274 cms (108 inches) and girth 330 cms ( 130 inches); Weight limit of 150 pounds.
5.2) Ground Service Details: UPS
* Monday - Friday Delivery ( No weekend deliveries)
* Provides guaranteed delivery
* Package tracking available
* Insurance up to $100 for packages
* Weight limit of 150lbs (68kgs)
* In terms of ground services, both FedEx and UPS deliver to every state within a week. The delivery times are comparable and both offer package tracking and guarantee.
Disclaimer: Both companies have currently halted their guarantees due to the pandemic restrictions.
6. UPS vs FedEx: Which Is Cheaper?
Moving on, let’s find out which of these companies is cheaper.
For a clear understanding, let’s assume you’re planning to ship a package domestically on Monday to New York from San Francisco CA. The rates for a 3lbs package (13” X 12” X 2”) to NY from SF is as follows:
* UPS: Next Day Air Early delivers on Tuesday at 8 am at $121.22
* FedEx: First overnight delivers on Tuesday 8 am at $120.27
Both FedEx and UPS provide similar time-sensitive deliveries at almost the same rate. However, the prices of FedEx are cheaper in comparison to UPS for in-state shipping. A ground service quote is not provided by FedEx, so it’s assumed that UPS provides a cheaper rate for ground service.
Similarly, the rates offered by both companies for short distances are very close, the difference is often less than a dollar. It’s best to opt for a delivery speed that your customer prefers.
Overall, FedEx has cheaper shipping and offers more services as compared to UPS.
7. UPS vs FedEx: Shipping Internationally
Again, let’s assume you are shipping a package internationally on Monday to London from San Francisco. The rates for a 3lbs package to London, UK from SF, CA is as follows:
* UPS: Worldwide Express delivers on Wednesday at 9 am at $180.72
* FedEx: International First delivers on Wednesday at 9 am at $181.80
FedEx once again offers a cheaper rate as compared to UPS. This brings us to the conclusion that FedEx is cheaper while paying retail prices.
8. UPS vs FedEx: Which is best?
Now that we’ve compared both companies, you can see how similar their delivery speed, service options, reliability, and prices are. However, if we look back at the prices, FedEx is for the win. Although there’s not much of a difference between the rates, FedEx is cheaper.
Despite the above being said, if you’re shipping packages less than 2lbs domestically then ups is likely to give you a better price.
It is a tough choice to pick between these two companies. In the end, it all comes down to the services offered on your preferred route or the timing of the package.
9. 5 Ways to Reduce the Shipping Carrier (FedEx and UPS) Costs
* Third-Party Services
This is the best way to reduce shipping costs because along with providing shipping options and buying insurance, third-party services make time for you to focus on other critical elements of your business.
Aggregators team up with courier companies and facilitate a cheaper rate of shipments. You’re just required to sign up on their platform, where your marketplace is integrated and shipping your products gets easier. This reduces costs tracks shipments and chooses your courier priorities.
* Postal Shipping
If you’re trying to reduce costs, then postal shipping can reduce costs significantly. However, you will not be able to track your packages; thus, it’s best to use postal services locally and for short distances.
* Prepaid shipping
Prepaid shipping means buying labels in advance instead of doing it over and over again on each item. Several carriers provide discounts on prepaid shipping. This works best if you’re sending the same weight packages daily and the shipping costs are predetermined.
* Buy Insurance from the third party
Most third-party providers offer a 50% discount on insurance as compared to regular carrier providers. In the long run, this can significantly increase your savings.
10. Sales and Market Share
In 2020, the total market revenue of FedEx was $84 billion, whereas the revenue of UPS was $84.6 billion. FedEx has a global CEP market size of 343.6 billion euros and a 30% market share in same-day deliveries. UPS has a global CEP market size of 375.5 billion euros.
11. Competition and Controversies
Through a campaign worth millions of dollars, FedEx accused UPS of trying to get a government bailout that’s designed to limit the competition for same-day deliveries. This disagreement over the provision in the FAA (Federal Aviation Administration) bill classifies the non-airline employees of FedEx under the NLRA (National Labor Relations Act) instead of the RLA (Railway Labor Act), which makes it easier for employees to form unions. Whereas, the ground employees of UPS are already covered under the NLRA and so most of their employees are members of the International Brotherhood of Teamsters.
UPS alleged the ground employees of FedEx to be covered by NLRA so that employees of both companies can have the same rights. However, FedEx claimed that UPS was trying to force the company to expose the local work stoppages which could affect the time-sensitive deliveries and lower competition.
12. FedEx vs UPS FAQ
FedEx or UPS, which one is more reliable?
Generally, reliability is a feature that you have to pay for, however, both these companies offer insurance, package tracking and delivery guarantee for most of their services. UPS is a specialist in domestic shipping and has proven to be more reliable within the U.S. Likewise, FedEx specializes in international shipping and is a better choice for overseas.
FedEx or UPS, which one is better for shipping a large package internationally?
As mentioned above, FedEx specializes in international shipping and UPS focuses on domestic shipping. Nevertheless, both companies have a maximum weight limit of 150lbs for international deliveries. Any extra weight could cost you an additional amount. For easier comparison, use a rate calculator to see the price differences for each specific shipment size.
13. Final Conclusive Words
Since FedEx and UPS are so similar to each other it’s easy to assume that they are the same. However, where the main focus for FedEx is international shipments and for UPS it is domestic shipping. You need to understand what exactly you need and then decide.