Quarterly Live Group Demo Watch Now

Sifted logo

UPS vs FedEx Rates: The Difference Is You

by | Aug 10, 2020

4 min read

A lot of people come to our blog after searching for “UPS vs FedEx rates” or “carrier invoice audits,” looking for answers about how to get shipping costs under control. Everybody wants to find ways to save, of course. 

But here’s the kicker: There’s no one-size-fits-all magic wand for getting the best rates or biggest discounts from UPS or FedEx. Carrier pricing is dynamic and different for everyone.

The deal you get with your carrier is almost entirely dependent on your shipping profile: what you ship, where you ship it, the services you use, and many other factors that make your business unique to a carrier.

Yes, the carriers publish rate guides annually, but the amount you actually pay depends on that crucial shipping profile your carrier has built about you — and your ability to understand it yourself.

To see the difference that package weights, earned discounts, contract optimization and more make in your shipping spend, let’s take a look at three fictional packages. We’ll see how different shippers are affected by their profiles.

 

Package A: DIM Weight and Additional Handling add up

Package A

First, this shipper has optimized a competitive UPS discount, but optimization is only half the battle. Your discount is your base (optimized) discount plus your earned discount, which is based on your volume and can disappear without warning if your volume drops off. The shipper doesn’t have a discount with FedEx, meaning they’ll not only pay more, but they could be short on options and flexibility if their UPS relationship isn’t working out.

(Remember: Don’t stress too much over the discount tier you optimize. There are many other factors that affect your spend.)

This shipper could be in for a surprise if they’re not watching their dimensions and staying aware of the impact on their costs. This package was charged a base cost for the dimensional weight (35 lbs) instead of its actual weight (25 lbs). The carrier will always charge you the higher of the two. 

Your dimensional weight is calculated by multiplying the length, height and width of the package and dividing that number by the DIM divisor. The standard DIM divisor for both carriers is 139, but did you know you can optimize it? The shipper of Package C does — read on to find out why that matters.

 

Package B: Surcharges upon surcharges

Package B

This shipper has a lower discount with their preferred carrier than the shipper for Package A. It could be that they didn’t optimize a competitive base discount or that they don’t have a strong earned discount because they are a lower-volume shipper. And they don’t have any discount with UPS, again making it hard to switch carriers if necessary.

This package is over the 50-lb threshold for the Additional Handling surcharge, so that adds $24 to the invoice. It was headed to a residential development in a rural area, so it got hit with both the Residential Delivery surcharge and the Delivery Area surcharge. (These often occur on the same package.)

You can’t avoid these surcharges if your customers want their packages shipped to these areas, but you can optimize to lower them. It’s important to understand which surcharges will affect your shipping profile and spend the most and focus on optimizing those.

For instance, this shipper optimized a higher DIM divisor, but, at least for this package it’s not benefitting them because it was charged for its actual weight, not its DIM weight. For this package, it would be better if they had a discount on the residential surcharge. This shipper should examine their shipping data, determine which surcharges affect them most often, and work on optimizing those.

 

Package C: Oversize means overwhelming costs

Package C

Where this shipper really nailed it was their DIM divisor. Remember, the higher your DIM divisor, the lower your DIM weight. They’re clearly experienced at shipping large packages. They probably even expected what many shippers don’t: the 90-lb minimum billable weight that’s automatically triggered when you incur the Oversize (FedEx) or Large Package (UPS) surcharge.

The surcharge itself is hefty ($100 for commercial deliveries and $120 for residential) and comes when a package is longer than 96” or 130” in length plus girth. (Girth is two times the width plus two times the height of the package.) I hope this shipper took this shipping cost into account when they set their free shipping minimum.

What they might not have considered was how their volume was weathering the pandemic. Their FedEx discount is less than it could be — maybe they lost their earned discount when their volume went down. 

 

Know your own data to get the best shipping deals

All these shippers have positive and negative ways that their shipping profiles and their carrier contracts have affected these particular packages.

While you’ll never find a perfect combination of surcharges to optimize to guarantee the lowest rate on every single package, it’s absolutely essential to understand your own profile and data so you can make the best choices for your business and your most common shipment characteristics. That’s how you’ll protect your bottom line in these bumpy times.

 

Mystified by shipping surcharges? Get the scoop on the five biggest in our eBook, 5 Budget-Busting Surcharges & How to Lower Them

Topics: Dimensional (DIM) Weight, Dimensional Weight Contract Negotiation
Topics

Check out related resources at Sifted.

Parcel Carrier Diversification 101

Parcel Carrier Diversification 101

Last mile delivery has never been more important to businesses. In 2023, the global last mile delivery market was ...
Read More
RILA LINK 2024 Recap: The Cutting-Edge of Retail Supply Chains

RILA LINK 2024 Recap: The Cutting-Edge of Retail Supply Chains

At the end of February, supply chain leaders from the nation’s largest retailers converged in Dallas for the ...
Read More
Sifted’s Caleb Nelson Named 2024 “Pros to Know” Award Recipient

Sifted’s Caleb Nelson Named 2024 “Pros to Know” Award Recipient

KANSAS CITY, Missouri - Sifted, the trailblazer in Logistics Intelligence™ is proud to announce that Caleb Nelson, ...
Read More
Meet Sifted at LINK 2024

Meet Sifted at LINK 2024

At the end of February, the top supply chain leaders from some of the nation’s largest retailers will converge in ...
Read More
Parcel Carrier Comparison Guide

Parcel Carrier Comparison Guide

In the intricate landscape of parcel shipping today, shippers navigate a complex web of carriers, each with its ...
Read More
Amazon Shipping, Seller Fulfilled Prime, and More: Matt Snyder’s Insights and Advice to Sellers in 2024

Amazon Shipping, Seller Fulfilled Prime, and More: Matt Snyder’s Insights and Advice to Sellers in 2024

Amazon took the supply chain world by storm in 2023. They announced Amazon Shipping, a FedEx and UPS competitor ...
Read More
2024 Shipping Industry Outlook: Top Trends Driving Down Costs + How to Capitalize

2024 Shipping Industry Outlook: Top Trends Driving Down Costs + How to Capitalize

Over the last few years, soaring shipping costs, unpredictable rate hikes, and a challenging logistical landscape ...
Read More
Sifted Celebrates Achievement as 2023 Top Tech Startup by Food Logistics, Supply & Demand Chain Executive

Sifted Celebrates Achievement as 2023 Top Tech Startup by Food Logistics, Supply & Demand Chain Executive

Kansas City, Mo – Sifted, a leader in Logistics Intelligence, has been recognized as a 2023 Top Tech Startup by ...
Read More
11/27/23 Parcel News Update

11/27/23 Parcel News Update

1. Amazon’s Volumes Surpass FedEx and UPS Amazon delivered more parcels in 2022 than UPS, according to internal ...
Read More
11/20/23 Parcel News Update

11/20/23 Parcel News Update

1. USPS Announces Tentative Rate Increases for 2024 The United States Postal Service has announced rate increases ...
Read More
11/13/23 Parcel News Update

11/13/23 Parcel News Update

1. Experts Share Attention-Grabbing Items from 2024 GRIs Supply Chain Dive interviewed industry experts, including ...
Read More
2023 Holiday Shipping Deadlines

2023 Holiday Shipping Deadlines

It’s the most wonderful time of the year? It will be if your customers receive their orders on time. The major ...
Read More

How Sifted Works

Connect to
your account

Sync
your data

Power your
dashboards

Get Your Logistics
Intelligence Demo

Strategic ways to prevent loss down the line

Services you could be utilizing right now for savings

Ways to cut material costs without cutting quality

Are you an FBM (fulfillment by merchant) Amazon seller?

Check out our Marketplace Intelligence solutions to protect your bottom line.

Shipping Insights & Alerts
Get updates and track the things impacting your business most

Decision Support
See how supply chain adjustments pay off before you pay out

Carrier Management
Streamline how you manage your carrier operations and contracts

Business Automation
Let software do what it does better than people can

Seller Insights
Measure and monitor with confidence.

Sales Visualization
Shed new light on your sales data.

Fee Analyzer
Understand the impact of ever-changing FBA fees.

FBA Audit & Recovery
Secure money you’re owed from Amazon.

Blog
Discover news, tips, and industry best practices

DIM Weight Calculator
See how DIM is impacting you

Podcast
Hear from industry experts on LeaderShipping

Case Studies
Learn how other brands use
Logistics Intelligence

Carbon Calculator
Calculate your CO2 Emissions

Thought Leaders
Meet the people behind the technology

Guides
Download free reports and expert how-tos

Demo
Get a personalized tour of our software

About Sifted
Get to know Logistics Intelligence

Logistics Intelligence
For parcel shippers

Marketplace Intelligence
For Amazon FBA sellers

Let's get you to the right place!

SIFTED DASHBOARDS
For parcel shippers

AMAZON Marketplace Intelligence

Not sure if you have an account? Email [email protected].