February 27, 2015

Study: Best Shipping Company - UPS vs FedEx vs USPS

Read more about Business

What is the best shipping company for small business? Read this comparison of FedEx, UPS and USPS before you ship your next package.

© Theis Kofoed Hjorth (CC BY-SA 2.0) via Flickr

Sending mail through the post office may have gone out of vogue, but online shopping has upped our need for shipments — and fast. We want our packages in good shape when they arrive, and we often want them overnight. We also want to ship them with confidence, ease and at the lowest cost possible, whether we’re a small business owner with many packages going out the door every night or a hobbyist making a go of making extra money through eBay, Etsy, and similar websites.

Sometimes the price paid at the register isn't the only thing that matters. Do you need your package to arrive by a certain time, or can you be flexible? Do you have your own packing supplies or would you prefer help? Does one location offer any one-stop shopping opportunities that another does not? To help make your choice easier the next time you need to ship something, CreditDonkey reviewed the services of the U.S. Postal Service, UPS, and FedEx to see how they compare.

Study Methodology

  1. Convenience
  2. Service
  3. Price

When your shipping needs go beyond just printing out an address on a shipping label off your home computer and putting the box outside your door, your go-to place will be the one that’s most convenient – the one that can give you the services you need all in one trip. You may need guidance on what box to use, or you may need copies, a notary, money orders, office supplies, and so on. You may need those things plus some new boxes. Some shipping services will even give you a few free ones.

Next we considered the array of shipping services each company offers and its reputation for delivering unharmed packages on time. All three have easy-to-navigate websites where prices can be easily estimated (as long as you know the weight and dimensions of your package), so we had to dig deeper to figure out the differences. How many options do they offer between “slow and cheap” and “quick and costly”? Do you have to drop off packages that you prepared online, or will they pick them up? Do they guarantee the delivery date, or do they merely offer a multi-day window of time that keeps you guessing? Lastly, what do customers think about the service?

To compare pricing among the service providers, we looked at the cost of sending a 5-pound, 8" x 10" x 4" rectangular package from California to New York. Given the recent shift towards dimensional weight pricing at UPS and FedEx, we figured this moderately heavy, medium-size box would provide the most comparable pricing.

BEST PRICES: USPS

© David Guo (CC BY 2.0) via Flickr

  • Convenience: More than 30,000 locations in the U.S. plus online print and ship options, limited retail hours at most locations, free Priority Mail and Express Mail boxes, ample space for preparing packages, digital kiosks available during off-hours at many locations, 5

  • Service: Delivers 6 days per week, offers 3 speeds of shipping (regular, Priority, and Express), free pickup for select packages, and either Scheduled or Expected Delivery Dates, tracking included with Priority and Express mail packages, delivers to PO Boxes and APO (military addresses), 4

  • Prices: Range from $11.30 for a medium flat rate box to $57.95 for overnight delivery, $100 insurance free with Priority Express, $50-$100 insurance free with Priority Mail, 5

  • CreditDonkey Score: 4.7

The U.S. Postal Service is the oldest shipping company around. Contrary to popular belief, it’s not funded by tax dollars but instead operates much like its competitors, earning the bulk of its income from transporting simple letters. Despite a difficult management structure (which Phil Rosenthal described in detail for the Chicago Tribune), the USPS has been able to continuously offer the lowest shipping prices. It’s also the only provider that serves every U.S. address — both UPS and FedEx pay the USPS to deliver some of their parcels for them.

Although Forbes feels that USPS is strategically poised to take back a chunk of its market share in the upcoming years, Reuters is concerned the company might not be ready to handle a rapid change due to the age and size of the vehicles in its fleet. Meanwhile, as The Washington Post reported, the USPS continues to raise its rates, including a hike that could take place this spring. Nonetheless, if the direct cost is the most important factor to you, it's likely you'll agree with the majority of reviewers who, like Fit Small Business, deem the USPS the best overall option.

Why We Like USPS
The USPS offers an excellent variety of delivery speed options — from overnight to one week — at consistently low prices. At the slow end of the spectrum, the difference isn't quite as large, but for expedited delivery, the savings can be as great as 50%. It doesn't offer quite as many speedy delivery options or guaranteed arrival times as the competition, and its reputation for meeting customer expectations on expedited deliveries is sub-par, but its Priority Mail service usually gets your package to its destination in 2 to 3 days. In many cases, that speed feels plenty fast once you weigh the difference in cost ($12.65 for a Medium Priority Mail Flat Rate Box vs approximately $50 for FedEx or UPS 2-day guaranteed services).

USPS offers free pick up for Priority Mail Express packages, but that costs $44.95 as opposed to the 2- to 3-day Priority Mail price previously quoted. If you do choose the cheaper price and drop your package off at your local post office, you can pick up a greeting card, buy packing tape, apply for your passport, or pick up a money order while you're there, if need be.

The Downsides
The only help the USPS offers for preparing your shipments is the free boxes it provides for Priority Mail Flat Rate and Priority Mail Express shipments. You will need to provide your own tape and padding to protect the contents from damage. If you forget, the post office will gladly sell you a roll of tape, but you'll likely feel like you're buying a small bottle of water at the movie theater.

Furthermore, if your items don't fit in a flat rate box, you won't be able to get the least expensive price. The USPS cost for 2-day shipping using your own packaging is not much cheaper than that charged by UPS or FedEx. And while USPS’ competitors offer straightforward shipping speed estimates that correspond to each price, at shorter distances, both Priority Mail and Priority Mail Express will sometimes get to their destination in 2 days. (The website indicates estimated arrival dates for each. Pay close attention to avoid unnecessary costs.)

Who USPS Works Best For
Those who are accustomed to preparing their own packages — or have the patience to figure it out — and those who can utilize the flat rate boxes. Those who find price to be the most important factor when choosing a shipping method will love the USPS.

MOST CONVENIENT: UPS

© Ken Teegardin (CC BY-SA 2.0) via Flickr

  • Convenience: Boasts the most locations worldwide (over 65,000 retail access points in 220 countries, including drop boxes), retail access points are open for normal or extended business hours, you must provide or purchase all packing materials (most of the time), UPS Stores offer a wide range of services, easy-to-prepare packages online, no charge for regular pickup (varying fee for sporadic customers), 5

  • Service: Offers a diverse array of delivery speed options with both guaranteed and flexible arrival times, allows packages up to 150 pounds without extra charge, does not deliver to PO Boxes or APO (military addresses), limited Saturday delivery options, 4

  • Prices: Range from $20.74 for ground to $130.54 for next day early a.m. delivery, insurance free for packages valued at $100 or less, 4

  • CreditDonkey Score: 4.3

Way back in 1919, UPS introduced the world to the idea of a common carrier service — one that would include daily pickup calls, additional delivery attempts, automatic return of undeliverables, and streamlined monthly billing. The USPS used to hire them to deliver packages when the U.S. Postal Service had its hands full carrying around letters (and made enough money doing it). So, while the USPS may have the most experience delivering mail in general, one could argue that UPS has been shaping the package shipping industry far longer.

Forbes recently reported on the switch both UPS and FedEx made to dimensional weight pricing — a measurement that aims to discourage wasteful packaging that utilizes an excessive amount of space on shipping trucks. The coinciding news about the release of its mobile app indicates UPS is making a concerted effort to continue to be a trendsetter and defend its market share.

Why We Like UPS
Although, in general, UPS may not appear to be the most cost-effective way to ship, its retail stores are perfect for consumers who feel their time is worth far more than a few dollars. Not only can you pay a little extra to have someone securely wrap your package for you in the most cost-effective size, you can get copies made, documents notarized, or even pick up your mail (if you rent a PO box at that location).

According to CNN, UPS even offers 3-D printing services at 100 locations. When you consider that its ground service is 3 days (or more) faster than the least expensive option via USPS, the few dollars extra might seem worthwhile. If you're an overworked entrepreneur wishing you were prosperous enough to hire an assistant, or a mother who has her hands full with multiple young children, the UPS Store may be exactly what you need to keep your sanity throughout an already overwhelming day.

The Downsides
Not everyone can afford to pay the premium for UPS Store packaging assistance, and the only time UPS is likely to offer the best price is when you're shipping items that weigh between 101 and 150 pounds. (Both USPS and FedEx charge extra for packages over 100 pounds, but UPS refrains from doing so until the scale tops 150.) Also, if you want your package delivered on a Saturday, you will have to mark it with one of its special Saturday Delivery stickers and pay an extra charge.

Who UPS Works Best For
Customers who are shipping really heavy or fragile items that require packaging assistance, entrepreneurs who can take advantage of multiple UPS Store services, or anyone too busy to wrap their packages at home will love the UPS Store.

BEST SERVICE: FedEx

© Dan McKay (CC BY 2.0) via Flickr

  • Convenience: Ample number of locations throughout the U.S. (51,000 shipping locations worldwide), some 24-hour retail locations and drop boxes, easy-to-prepare packages online or by phone, free boxes and envelopes available, free pickup for regular customers ($4 for sporadic customers), 3

  • Service: Delivers 6 days per week, offers 10 shipping speeds (including same day), does not deliver to PO boxes or APO (military addresses), highest consumer satisfaction ratings, 5

  • Prices: Range from $15.79 for FedEx Ground to $124.93 for FedEx First Overnight, insurance free for packages valued at $99 or less, 4

  • CreditDonkey Score: 4

Although Federal Express Corp. was not founded until 1971, the company has roots in the shipping industry that date back to 1919. However, it truly made its mark on the world with the introduction of the Overnight Letter in 1981. The company has been setting the standard for premium quality shipping ever since, regularly receiving the highest ratings on the annual American Consumer Survey Index.

According to Forbes, FedEx delivered more than 98% of its packages on time during Christmas week 2014. The Wall Street Journal reported it even delivered some packages on Christmas Day! Most people would say that if you truly need something to get somewhere quickly and on time, choose FedEx.

Why We Like FedEx
FedEx offers the most options for expedited shipping with guaranteed arrival times — Same Day, First Overnight, Priority Overnight, Standard Overnight, 2Day A.M., 2Day Standard, Express Saver, and Ground. If you're using your own packaging, you can ship a 5-pound box (8" x 10" x 4") from California to New York in 2 days for a few dollars less than the USPS charges for Priority Express. The USPS doesn't offer an overnight option for such a package, and FedEx will get it there the next day for about $5 less than UPS. If you compare the cheapest, slowest options, FedEx again ranks first. Like UPS, its Ground deliveries are guaranteed to arrive on the fourth business day, 3 days quicker than USPS, but it charges about $5 less.

The Downsides
Shipping via FedEx is not inexpensive and it is often slightly less convenient. Although the retail access points are usually located in places a businessperson could multi-task (i.e., you have access to copy machines when you’re there, such as Office Max), it still has far fewer locations than USPS and UPS. For many people, the most convenient FedEx option will include preparing your own packing slips online and dropping off your package at the nearest drop box.

Who FedEx Works Best For
FedEx works well for those who live near a FedEx retail access point and are able to easily obtain boxes and packing slips in person, as well as for those who ship frequently enough to warrant setting up an account and pre-ordering packing supplies. If you like the comfort of knowing exactly when your package will arrive, FedEx may be the best option for you.

Other Ways to Save on Shipping

If you have ever wished you had an assistant to keep track of every package you send and ensure you get the service you pay for, check out Package Fox. All you have to do is link up your FedEx and/or UPS accounts and it will automatically request a refund for any shipments that arrive later than expected. The first $100 in refunds is yours to keep, but after that, the company takes 50%.

The most basic ways to save on shipping is to recycle all packing materials you receive and plan ahead to avoid rush fees. Keeping a stash of cardboard boxes, bubble wrap, packing peanuts, and newspapers can save you several dollars per shipment in addition to easing the burden on the environment. Not needing every package to arrive in 2 days or less could also save a small fortune.

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