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How Companies Can Reduce Parcel Shipping Costs in 2022

by Sifted Team

Nov 18, 2022

7 min read

Different Factors to Consider

One of the top priorities for eCommerce businesses and shippers alike is finding ways to manage and reduce parcel shipping costs. There are different factors that affect your business’s bottom line lead to higher profits overall.

Finding a balance between affordable and reliable shipping can be difficult for eCommerce businesses and retailers. This process becomes easier when you clearly understand your business needs and know what features to look for in a carrier

Here are the most important things you should consider when choosing the cheapest shipping solution for shipping packages:

  • Shipment speed: eCommerce sellers looking to compete with Amazon’s 2-day shipping need affordable overnight and 2-day delivery options. Parcel carriers offer multiple time-sensitive shipping options to match your preferred time and date.
  • Weight and dimensions: The size and weight of a package affect its shipping cost. Large, heavy packages are the most expensive to ship. Similarly, some carriers use DIM weight pricing to charge higher rates for large, lightweight packages.
  • Distance: Distance is one of the most important factors for the shipping cost of a package. For domestic shipments, the more shipping zones a package travels through, the higher the shipping cost will be. However, if you use flat rate shipping, you pay the same price regardless of the package’s destination.
  • Insurance: Shipping insurance is an add-on option offered by courier services to help mitigate the risk of damage, theft, and loss. When looking for the cheapest way to ship packages, consider carriers that offer the best insurance coverage for your shipments.
  • Money-back guarantee: Major carrier services offer a money-back guarantee if a package arrives a day or more later than the promised date. Guaranteed delivery services are especially important for shippers who need to ship time-critical products like mechanical parts and medical supplies.
  • Surcharges and handling fees: Delivery surcharges, also referred to as accessorial fees, are additional fees applied on top of already existing shipping costs. When choosing the cheapest way to ship packages, double-check their surcharges to protect your business from unexpected shipping fees.

 

The Cheapest Way to Ship Based on Delivery Speed

In this section, we’ll compare the three major domestic carriers based on their delivery speeds. Let’s start with a sample shipment from Miami, FL, to New York, NY.

USPS Is Best for Overnight Shipping Services

Compare the rates for overnight shipping of a 7 x 7 x 6 in. package weighing 4 lbs from Miami, FL 33130 to New York, NY 10012 with UPS Next Day Air, FedEx Priority Overnight, and USPS Priority Mail Express.

Delivery ServiceDelivery Time and DateCost of Shipping
UPS Next Day AirNext business day by 10:30 a.m.$114.40
FedEx Priority OvernightNext day delivery to business addresses by 10:30 a.m. and residences by noon$122.55
USPS Priority Mail ExpressNext day to two-day by 6:00 p.m.$65.00

All three shipping companies offer a money-back guarantee for their overnight shipping services. In terms of affordable, 1-day delivery, USPS is clearly the most economical option.

USPS Priority Mail Is Best for 2-3 Day Shipping

Compare the rates for 2-3 day shipping of a 7 x 7 x 6 in. package weighing 4 lbs from Miami, FL 33130 to New York, NY 10012 with UPS 3 Day Select, FedEx Express Saver, and USPS Priority Mail.

Delivery ServiceDelivery Time and DateCost of Shipping
UPS 3 Day SelectThree days or less by end of day, Monday to Friday$36.58
FedEx Express SaverThree days or less by 4:30 p.m., Monday to Friday$40.95
USPS Priority MailThree days or less$18.30

Each carrier offers reliable 2-3 day shipping. However, USPS Priority Mail is the cheapest option for shipping packages within three days around the U.S.

 

The Cheapest Way to Ship Based on Weight

In this section, we’ll compare the shipping rates offered by UPS, FedEx, and USPS for various package weights.

Under 1 Pound

Compare the rates for shipping a 0.9 lbs package from Los Angeles, CA 90001 to Boston, MA 02108 with UPS, FedEx, and USPS.

Delivery ServiceCost of Shipping
UPS Ground$13.18
FedEx Ground$13.88
USPS Retail Ground$10.25
UPS small flat rate box
(6 x 6 x 6 in.)
$12.40
FedEx Small Box
(10-⅞ x 1-½ x 12-⅜ in.)
$12.05
USPS Priority Mail Small Flat Rate Box
(8-⅝ x 5-⅜ x 1-⅝ in.)
$9.45

Small package shipping tends to be the backbone of eCommerce businesses, so if you want to ship a parcel under one pound, USPS Retail Ground offers the cheapest shipping option.

Alternatively, you should consider USPS flat rate shipping if your package meets its size requirements.

Under 5 Pounds

Compare the rates for shipping a 4.5 lbs package from Los Angeles, CA 90001 to Boston, MA 02108 with UPS, FedEx, and USPS

Delivery ServiceCost of Shipping
UPS Ground$21.87
FedEx Ground$20.08
USPS Retail Ground$22.80
UPS medium flat rate box
(8 x 8 x 8 in.)
$14.95
FedEx Medium Box
(11-½ x 2-⅜ x 13-¼ in.)
$15.70
USPS Priority Mail Medium Flat Rate Box
(13-⅝ x 11-⅞ x 3-⅜ in.)
$16.10

FedEx Ground offers the lowest shipping prices for packages weighing between 1 to 5 lbs, but you can pay even cheaper flat rates if your package size meets the UPS flat rate requirements.

10 Pounds

Compare the rates for shipping a 10 lbs package from Los Angeles, CA 90001 to Boston, MA 02108 with UPS, FedEx, and USPS.

Delivery ServiceCost of Shipping
UPS Ground$31.08
FedEx Ground$24.43
USPS Retail Ground$38.95
UPS large flat rate box
(10 x 10 x 10 in.)
$19.60
FedEx Large Box
(12-⅜ x 3 x 17-½ in.)
$24.20
USPS Priority Mail Large Flat Rate Box
(23-11/16 x 11-¾ x 3 in.)
$21.50

FedEx Ground offers the most economical option for shipping packages between 5 and 10 lbs. You’ll get even cheaper rates if you use the UPS large flat rate box or USPS flat rate shipping method, provided your parcel meets the maximum weight and size requirements.

50 Pounds or More

Compare the rates for shipping a large, heavy package (51 lbs) from Los Angeles, CA 90001 to Boston, MA 02108 with UPS, FedEx, and USPS

Delivery ServiceCost of Shipping
UPS Ground$118.69
FedEx Ground$115.75
*FedEx Ground (for 50 lbs package weight)$68.87
USPS Retail Ground$120.60

If you need to ship heavy items such as wooden furniture, FedEx Ground offers the best shipping rates between the three carrier services.

 

Shipping Services FAQs

Let’s go over some commonly asked questions about parcel shipping services.

How Much Does It Cost To Ship Internationally?

The cost of an international shipment depends on several factors, including its origin, destination, service, package weight, and dimensions, duties, and surcharges.

Here’s an example of international shipping costs for a 4 x 6 x 5 in. package weighing 2 lbs from Miami, FL 33130 to Alberta, Canada, with UPS 3 Day Select, FedEx Express Saver, and USPS Priority Mail.

Delivery ServiceCost of Shipping
UPS Standard$43.86
USPS First-Class Package International Service$22.10
FedEx International Ground$44.31

When Is It Best To Use a Flat Rate Package?

Flat rate shipping is a great option for small businesses and eCommerce retailers looking to avoid DIM weight pricing, peak season spikes, and residential delivery surcharges. Secondly, some carrier services offer flat-rate packaging, allowing shippers to save on packaging costs.

Similarly, shippers don’t need to worry about strict weight and dimension limits with flat-rate shipping. They can simply pack the items in carrier-provided flat-rate envelopes or boxes and send them out for shipping.

When Is Dimensional Weight Used?

Dimensional weight, also known as DIM weight or volumetric weight, is a pricing method used to calculate a package’s shipping costs. Since there is a limited amount of space on delivery trucks, this technique allows carriers to charge based on the space occupied by a package.

However, the dimensional weight pricing technique only applies to packages larger than 1 cubic foot. You should calculate DIM weight on every package over 1 cubic foot and compare that to its actual weight. The greater of the two values will determine your shipping cost.

You can use this DIM weight calculator to compare the billable weight between FedEx, UPS, and USPS.

Is It Best To Get Insurance for Parcel Shipping?

Your decision to get shipping insurance depends on the value of your goods and your shipping volume. If you frequently ship high-value items or luxury goods, parcel insurance could potentially pay for itself. However, if you ship low-value items, the chance of your packages getting stolen are relatively low, and a reimbursement for a damaged item might not outweigh the cost of the insurance.

Sifted Insurance helps shippers minimize costs and get a better payout than what carriers offer.

 

Stay on Top of Your Logistics Costs With Sifted

UPS, FedEx, and USPS are the most widely used parcel shipping companies. When choosing the cheapest courier service for your business, you should consider multiple essential criteria, including shipment speed, distance, size and dimensions, surcharges, and insurance coverage.

Sifted Logistics Intelligence offers tools for shippers to gain complete visibility into their shipping data in one place. It helps you keep track of their important metrics and optimize costs using AI-powered demand forecasting.

Reduce stress and accurately calculate shipping costs. Get a free demo from Sifted today!

Topics: Shipping Costs
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