Many businesses default to one carrier out of habit, but a “set it and forget it” approach to your shipping strategy can be incredibly costly. The rivalry between FedEx and UPS creates a competitive environment that savvy shippers can use to their advantage. However, you can’t leverage that competition without first understanding where each carrier excels. UPS has built an incredibly dense and efficient domestic ground network, often giving them an edge on standard home deliveries. FedEx, with its massive air fleet, frequently leads in speed and international express services. This guide provides the critical data and insights you need to evaluate your current carrier mix, identify opportunities for savings, and ensure you’re using the right service for every single package you send.
It’s that time of year again! Seasonal retailers are in full-court press to prepare for the fast-approaching busy holiday season. But those of us that rely on FedEx and UPS to get our products to the doorsteps of our customers need to be aware of several new changes that will impact both shipping costs as well as guaranteed transit times.
FedEx vs. UPS: Understanding the Core Business Models
When you look at FedEx and UPS, it’s easy to see them as two sides of the same coin. They both move millions of packages daily in familiar brown or purple-and-orange trucks. However, their core business strategies are quite different, and understanding these differences is the first step to figuring out which carrier is a better fit for your company’s needs. One is built on a unified, all-in-one network, while the other operates with distinct, specialized divisions. This fundamental contrast in their DNA influences everything from their service strengths to their pricing structures, which can have a major impact on your bottom line.
UPS: The Domestic Ground Powerhouse
At its heart, UPS is a master of domestic ground delivery. The company has built its reputation on an incredibly efficient and dense ground network within the United States. If your business primarily ships to customers within the country, UPS’s model is designed for exactly that. Their focus on ground logistics allows them to optimize routes and consolidate packages with remarkable precision. This operational focus often translates into competitive pricing and reliable service for standard domestic shipments, making them a go-to choice for businesses that need to move a high volume of packages across the country without breaking the bank.
A Single, Integrated Network for Efficiency
The secret to UPS’s ground dominance lies in its single, integrated network. Every package, whether it’s traveling by air, ground, locally, or internationally, flows through this one cohesive system. This approach creates immense efficiency, particularly for small package delivery, as it allows for seamless transitions between different modes of transport. For shippers, this means a streamlined process, but it also means the carrier contract covers a wide, interconnected web of services. Getting the best rates requires a deep understanding of how your shipping profile interacts with this complex, unified network, which is where expert carrier contract optimization becomes invaluable.
FedEx: The International Air Express Specialist
While UPS dominates the ground, FedEx built its empire in the sky. The company is best known for its fast, time-definite air shipping, especially on an international scale. FedEx pioneered the overnight express delivery model and continues to be a leader in getting packages across the world quickly and reliably. For businesses that deal with time-sensitive documents, high-value goods, or international e-commerce, FedEx’s extensive air fleet and global reach provide a distinct advantage. Their expertise in customs clearance and international logistics makes them a strong partner for companies expanding their global footprint or serving an international customer base.
Separate Networks for Specialized Services
Unlike UPS’s unified approach, FedEx operates through separate, specialized networks for its different services, including Express, Ground, and Freight. Each division functions almost like its own company, with its own fleet and operations tailored to its specific purpose. This structure gives FedEx flexibility and allows them to excel in each service category independently. Many customers find themselves using multiple FedEx services to meet their diverse shipping needs. This multi-network model can also create complexity in billing and contracts, making regular invoice audits essential to catch errors and ensure you’re paying the correct, negotiated rates for each service.
A Head-to-Head Comparison of Services and Costs
Beyond their core business models, the practical differences between FedEx and UPS become clear when you compare their services and pricing. There’s no single “cheaper” or “better” carrier; the right choice depends entirely on what you’re shipping, where it’s going, and how fast it needs to get there. A package that’s cost-effective to send with UPS might be prohibitively expensive with FedEx, and vice versa. For high-volume shippers, even small differences in rates, surcharges, and service levels can add up to millions of dollars over the course of a year, making a detailed comparison critical for managing logistics spend.
General Cost Comparison: Domestic vs. International
As a rule of thumb, UPS often has a cost advantage for shipping packages via ground within the United States, thanks to its larger and more integrated ground fleet. If your business sends a lot of standard, non-urgent packages to domestic addresses, UPS will likely offer more competitive rates. On the other hand, FedEx generally shines when it comes to air services, particularly for international express deliveries. Their massive air cargo fleet and specialized international network often make them the more efficient and sometimes more affordable choice for getting packages across borders quickly. However, these are just generalizations, and the only way to know for sure is to analyze your own shipping data.
Which Carrier is Best for Your Products?
The nature of your products plays a huge role in determining the ideal carrier. Factors like weight, size, value, and urgency all need to be considered. A business shipping heavy industrial parts will have very different needs—and will find different value propositions from the carriers—than a company shipping lightweight apparel or time-sensitive medical supplies. Choosing the right carrier on a per-product or per-shipment basis is a key strategy in optimizing your distribution and fulfillment costs. Let’s break down a few common scenarios to see how FedEx and UPS stack up for different types of goods.
Shipping Large, Heavy, or High-Value Items
When it comes to shipping large and heavy packages, UPS is often the preferred carrier. They have a standard weight limit of 150 pounds and a well-established system for handling bulkier items. In many direct comparisons, FedEx tends to be the more expensive option for these types of shipments. However, published rates are just the starting point. For businesses that frequently ship heavy goods, negotiating specific incentives and discounts in your carrier contract is crucial. A strategic approach can help reduce high-volume shipping costs, even for items that would otherwise be very expensive to transport.
Shipping Time-Sensitive or Specialty Items
For shipments where speed is the top priority, FedEx often has the edge. The company is frequently chosen for its faster express delivery options and more flexible pickup times, which can be a lifesaver for last-minute or urgent orders. Their specialization in air freight means they have a robust infrastructure for getting packages delivered overnight or within a specific, narrow window. This makes FedEx a strong choice for industries like healthcare, electronics, and high-fashion, where delivery speed and reliability are paramount to the customer experience and business operations.
Considering USPS for Small and Lightweight Packages
While the debate often centers on FedEx versus UPS, it’s a mistake to overlook the United States Postal Service (USPS). For small, lightweight packages—typically those under 20 pounds—USPS is almost always the most affordable option. Services like First-Class Mail and Priority Mail offer excellent value for e-commerce businesses shipping small items. Integrating USPS into your shipping strategy is a perfect example of carrier diversification. By not relying on a single carrier, you can select the most cost-effective service for every single package you send, significantly lowering your overall shipping spend.
Understanding Common Surcharges
The base rate you see on a carrier’s website is rarely the final price you’ll pay. Both FedEx and UPS have a long list of surcharges and accessorial fees that can be added to your bill, sometimes increasing the cost of a shipment by 40% or more. These fees can be for anything from fuel costs and peak season demand to delivering to a residential address or handling a package that requires special attention. Understanding and managing these surcharges is one of the most important aspects of controlling your shipping budget and avoiding unexpected costs on your invoices.
Residential Delivery and Additional Handling Fees
Two of the most common surcharges are for residential deliveries and additional handling. Both FedEx and UPS add a fee for delivering to a home address, which can quickly add up for e-commerce businesses. Additional Handling is applied to packages that are oversized, overweight, or have non-standard packaging that prevents them from moving smoothly through the automated sorting systems. These fees are not only costly but are also frequently misapplied. Using an automated spend management portal can help you identify these errors and recover funds you’ve been overcharged.
Standard Inclusions: Package Tracking and Insurance
On a positive note, some valuable services are included as standard. All three major carriers—FedEx, UPS, and USPS—offer free package tracking on most of their services, giving you and your customers visibility into the shipping journey. They also typically include free insurance coverage up to a declared value of $100. While this is a great perk, it’s important to remember that if you’re shipping items worth more than $100, you’ll need to purchase additional insurance. This extra cost should be factored into your overall price comparison when deciding between carriers for high-value goods.
Retail Network and Accessibility
The physical presence of a carrier can be just as important as its digital tools and delivery network. Having convenient locations for dropping off packages, picking up supplies, or handling returns can make a huge difference in your daily operations and your customers’ experience. Both FedEx and UPS have invested heavily in building out extensive retail networks, but they’ve taken slightly different approaches. The accessibility of these locations can be a deciding factor for businesses, especially those that don’t have daily scheduled pickups or that need to offer customers easy return options.
The UPS Store vs. FedEx Office
The most visible retail locations for each carrier are The UPS Store and FedEx Office. The UPS Store locations are typically smaller, locally owned franchises that focus primarily on shipping services for individual consumers and small businesses. They are neighborhood hubs for packing and sending. In contrast, FedEx Office locations (which you might remember as Kinko’s) are often larger and offer a wider array of business services, including professional printing, copying, and document services, in addition to their full suite of shipping options. The best choice depends on whether you need a simple shipping point or a one-stop shop for broader business needs.
Convenient Package Drop-Off and Pickup Partners
Beyond their flagship stores, both carriers have expanded their networks through partnerships with other retailers. You can find FedEx services at thousands of locations across the U.S., including Walgreens, Dollar General, and select grocery stores, where you can drop off or pick up packages. Similarly, UPS has its Access Point network, with locations in local businesses like CVS and Advance Auto Parts. These partnerships make shipping incredibly convenient, allowing you or your customers to drop off a pre-labeled package while running everyday errands, which is a huge plus for streamlining logistics and improving the customer return process.
By the Numbers: A Look at Company Scale
To truly appreciate the FedEx vs. UPS rivalry, it helps to look at the sheer scale of their operations. These aren’t just shipping companies; they are global logistics titans that move a significant portion of the world’s commerce every single day. The numbers behind their fleets, daily volumes, and global reach are staggering. This massive infrastructure is what allows them to offer such comprehensive services, but it also highlights the complexity involved in their operations. Understanding their scale can provide context for why they operate the way they do and how they are able to connect businesses to nearly every corner of the globe.
Daily Shipping Volume and Global Reach
The volume of packages handled by these giants is mind-boggling. On an average day, UPS delivers around 25 million packages and documents, while FedEx moves more than 19 million shipments. Both companies operate in over 220 countries and territories, making them true global players. This extensive reach is what enables businesses to sell to customers almost anywhere in the world. Whether you’re shipping from Ohio to Japan or from Texas to Germany, it’s the vast, interconnected networks of these carriers that make it possible, turning a complex international journey into a routine delivery.
Fleet Size: Ground Trucks vs. Airplanes
The physical assets of each company reflect their core business models. UPS operates one of the largest ground fleets in the world, with its iconic brown trucks being a daily sight in neighborhoods everywhere. This massive ground presence is the backbone of its domestic delivery dominance. FedEx, on the other hand, boasts one of the world’s largest cargo air fleets, with hundreds of aircraft connecting hubs across the globe. This air power is what fuels its renowned express delivery service, allowing it to move packages across continents overnight with incredible speed and precision.
Standard Package Weight Limits
For most standard services, both FedEx and UPS have a package weight limit of 150 pounds. This covers a wide range of products, from small e-commerce goods to larger, heavier items. If your products fall within this limit, you’ll have access to the full suite of services from both carriers. For anything heavier, you’ll need to look into their freight services, which are designed to handle palletized shipments and oversized cargo. It’s important to know this limit, as trying to ship an item over 150 pounds through standard services can result in significant penalties or refusal of the shipment.
CHANGES TO RATES DURING THE HOLIDAY SEASON
Both FedEx and UPS have announced new, temporary holiday surcharges that will impact shipping costs for e-commerce businesses this holiday season.
UPS Rate Increases for Holiday 2017
In June, UPS announced a new peak season charge applicable during selected weeks in November and December 2017. The increase means that every residential package shipped at some point during the 2017 Christmas holiday will incur price increases. Residential packages will increase as follows:
- UPS Next Day Early, UPS Next Day Air, UPS Next Day Air Saver: $.81 per package, Dec 17-23, 2017
- UPS 2nd Day Air A.M., UPS 2nd Day Air, UPS 3 Day Select: $.97 per package, Dec 17-23, 2017
- UPS Ground (including Ground with Freight Pricing): $.27 per package, Nov 19-Dec 2, 2017 and Dec 17-23, 2017.
- UPS SurePost: $.36 per package, Nov 19-Dec 2, 2017 and Dec 17-23, 2017.
Other increases:
- Residential packages shipped from an origin within the 48 contiguous states to a destination within Alaska, Hawaii, or Puerto Rico will increase $2.99 for all services Nov 19-Dec 2, 2017 and Dec 17-23, 2017.
- Large Package Surcharges (length plus girth over 130 inches) will increase an additional $24.00 Nov 19-Dec 23, 2017.
- Over Maximum Limits surcharges (actual weight over 150 pounds, single side over 108 inches, or over 165 inches in length plus girth) will increase an additional $249.00 Nov 19-Dec 23, 2017.
FedEx Rate Increases for Holiday 2017
Unlike UPS which is increasing surcharges on every residential package, FedEx limited its increases larger packages only, whether shipped to a commercial address or residence. The following FedEx surcharge increases will take effect during the holiday shipping period of Nov. 20, 2017-Dec. 24, 2017:
- Additional Handling Surcharge: Will increase $3 (27.3%) to $14
- Oversize Charge: Will increase $25 (34.5%) to $97.50
- Ground Unauthorized Package Charge: Will increase $300 (260.9%) to $415
Details of the FedEx surcharges are available here.
CHANGES TO SERVICE GUARANTEES
In addition, both package delivery companies announced changes to standard guaranteed delivery times, elongating the time they have to deliver a package and still be considered “on-time”, and also eliminating the service guarantee altogether.
FedEx Service Guarantee Changes for Holiday 2017
FedEx Express
The FedEx Money-Back Guarantee will be suspended temporarily on the following dates:
- Wednesday, Nov. 22, 2017, for shipments that reach their destinations within 90 minutes of the scheduled commitment time.
- Monday, Dec. 18, through Saturday, Dec. 23, 2017, for shipments delivered by the end of the day on the published delivery commitment date for the selected service and destination
FedEx Ground
Packages tendered to FedEx Ground for delivery on the day after Thanksgiving will be scheduled for delivery on that day if the recipient business is open, but in any event, the delivery commitment will be extended to the next business day for application of the money-back guarantee. The money-back guarantee for FedEx Ground and FedEx Home Delivery® will be suspended temporarily for packages picked up on Monday, Nov. 27, through Sunday, Dec. 24, 2017. It’s important to note that FedEx also made changes in 2017 to Valentine’s Day and Mother’s Day service guarantees. FedEx gets an extra 90 minutes on top of published Express transit times to make delivery before the shipment is considered “late”. The FedEx holiday money-back guarantee policy can be found here: http://bit.ly/2vEL0v9. Shippers can also access FedEx’s holiday schedule for important dates and deadlines to avoid shipping delays at: http://bit.ly/2iFqQAj
UPS Service Guarantee Changes for Holiday 2017
Like FedEx, UPS is changing its published guarantee times to allow additional time-in-transit as follows: From Nov. 20 to Dec. 30, a limited number of UPS® Ground and UPS® Standard packages, with transit times of three or more days, and with specific origins and destinations, will require an additional day in transit. Visit ups.com/holidays to use the Holiday Ground Impact Tool to identify changes by ZIP code pairs. All UPS 2nd Day Air and UPS 3 Day Select packages tendered Dec. 18-19 will require an additional day in transit. UPS 3 Day Select packages tendered on Dec. 19 will be delivered after Christmas. UPS advises shippers to reference www.ups.com/ctc at the time of shipping for the most up-to-date time-in-transit details. UPS Air and international Air packages picked up or delivered within the United States are guaranteed throughout the holiday season. However, commitment times for Air and international Air packages scheduled for delivery Nov. 24 and Dec. 18 – Dec. 23 will be extended as follows: UPS Next Day Air Early and UPS Worldwide Express Plus services will be extended by 90 minutes and all other Air and international Air services will be extended to end-of-day. On the other hand, the guarantee for all UPS Ground shipments, including shipments to and from Alaska, Hawaii and Puerto Rico, and UPS Standard shipments picked up or scheduled for delivery between Nov. 27 – Dec. 24 will be suspended. UPS’s year-end holiday schedule is available at: http://bit.ly/2xIir1u. Additional information on the UPS service guarantee during the holidays can be found on the UPS website at: http://bit.ly/2vzpNUg
Cost-Saving Strategies for High-Volume Shippers
While seasonal surcharges and annual rate increases can feel unavoidable, they don’t have to derail your budget. High-volume shippers have several powerful levers they can pull to mitigate these costs and protect their margins. It’s all about shifting from a reactive stance to a proactive strategy. By focusing on key areas like packaging, fulfillment strategy, and carrier agreements, you can build a more resilient and cost-effective shipping operation. Let’s look at some of the most impactful strategies you can implement to keep your shipping spend in check, not just during the holidays, but all year round.
Optimize Your Packaging to Reduce Costs
One of the most direct ways to control shipping costs is by taking a hard look at your packaging. Every inch of empty space in a box can cost you money, especially when you ship thousands of packages. Carriers use a pricing model that considers not just the weight of a package, but also its size. This means that a large, lightweight box can be surprisingly expensive to ship. By rightsizing your boxes to fit your products snugly and using lighter materials when appropriate, you can achieve significant savings that multiply with every order you send out the door.
How to Avoid Dimensional Weight Charges
Dimensional (DIM) weight is a pricing technique used by carriers like UPS and FedEx to charge for the amount of space a package occupies. If your package’s DIM weight is greater than its actual weight, you’ll be billed for the higher of the two. To calculate it, carriers multiply the length, width, and height of a box and divide by a specific “DIM divisor.” The best way to avoid these extra charges is to minimize your package dimensions. Conduct a packaging audit to identify products that are being shipped in oversized boxes and find smaller alternatives. This simple change ensures you’re only paying to ship your product, not empty air.
Using Poly Mailers for Non-Fragile Goods
Not every product needs the protection of a corrugated box. For non-fragile items like apparel, accessories, or books, switching to lightweight poly mailers can be a game-changer. Poly mailers weigh significantly less than boxes and take up less space, which translates directly into lower shipping costs per package. They are also often cheaper to purchase in bulk. By reserving boxes for items that are fragile or require more structured protection, you can streamline your packing process and reduce material and shipping expenses for a substantial portion of your orders.
Leverage a Distributed Warehouse Network
If you’re shipping nationwide from a single warehouse, you’re likely paying a premium to reach customers on the opposite coast. Leveraging a distributed warehouse network, either by opening your own facilities or partnering with a 3PL, places your inventory closer to your customers. This strategy drastically reduces the average shipping zone and distance each package travels. The result is not only lower shipping fees but also faster delivery times, which is a huge competitive advantage. For high-volume shippers, the cost savings from reduced transit distances can quickly offset the investment in a multi-warehouse fulfillment strategy and help you reduce distribution costs.
Negotiate Better Carrier Contracts
As a high-volume shipper, you have significant leverage—you just need to know how to use it. Carrier contracts are notoriously complex, filled with tiered discounts, minimum charges, and a web of surcharges that can be difficult to understand. Simply shipping more packages doesn’t automatically guarantee you the best rates. Proactively negotiating your agreement is essential. This involves a deep analysis of your own shipping data to understand your profile and using that information to secure more favorable terms, discounts, and surcharge waivers that align with your specific shipping patterns.
Working with a 3PL or Shipping Consultant
Navigating the complexities of a carrier negotiation can be daunting. Carriers have teams of pricing analysts dedicated to protecting their margins, so why shouldn’t you have an expert in your corner? Partnering with a shipping consultant or logistics expert can level the playing field. These specialists use proprietary data and industry knowledge to benchmark your rates against similar-volume shippers and identify specific areas for improvement. They can manage the entire negotiation process, ensuring you secure the best possible terms and optimize your carrier contract for maximum savings.
Frequently Asked Questions
So, which carrier is actually cheaper, FedEx or UPS? There isn’t a simple answer because the “cheaper” carrier changes depending on the package. As a general rule, UPS often has an advantage for domestic ground shipments due to its dense network. FedEx, with its massive air fleet, frequently offers better rates for international express services. The only way to know for sure is to analyze your own shipping data, as the size, weight, and destination of your packages will ultimately determine the most cost-effective choice for your business.
My shipping invoices are always full of unexpected fees. What are the most common ones to watch out for? You’re not alone in this. The base rate is just the beginning, and surcharges can significantly increase your final cost. Two of the most frequent fees are for residential deliveries and additional handling. Carriers add a charge for every package going to a home address, which impacts most e-commerce businesses. They also apply an additional handling fee for packages that are large, heavy, or have unusual packaging that requires manual sorting. Keeping an eye on these specific charges on your invoices is a great first step to understanding your total shipping spend.
Do I have to choose one carrier and stick with them for everything? Absolutely not. In fact, one of the smartest strategies is to use a mix of carriers. Relying on a single provider out of habit can be incredibly costly. You might find that UPS is best for your standard ground shipments, FedEx is ideal for your urgent overnight deliveries, and USPS is the most affordable for your small, lightweight items. Using a multi-carrier approach allows you to select the most efficient and economical service for every single package you send.
I ship a lot of packages. How can I get better rates than the ones I see online? As a high-volume shipper, you have negotiating power. The published rates are just a starting point, and you should never settle for them. The key is to negotiate your carrier contract based on your specific shipping profile—things like your package volume, weights, and common destinations. This process can be complex, which is why many businesses work with shipping consultants who can benchmark their rates and manage the negotiation to secure deeper discounts and more favorable terms.
Besides the carrier, what’s the most important factor I can control to lower my shipping costs? Your packaging. Every extra inch in your box costs you money through what’s called dimensional weight pricing. Carriers charge based on a package’s size, not just its weight, so shipping a small item in a large box can be surprisingly expensive. Auditing your packaging to ensure you’re using the smallest and lightest materials possible for each product is one of the most direct and effective ways to reduce your shipping expenses on every order.
Key Takeaways
- Play Carriers to Your Advantage: Understand that UPS’s dense ground network often makes it more cost-effective for domestic shipping, while FedEx’s massive air fleet gives it an edge for fast, international deliveries. Analyzing your own shipping profile is the only way to know which carrier saves you more on any given shipment.
- Look Beyond the Base Rate to Find Savings: Surcharges for package size, residential delivery, and additional handling can significantly inflate your shipping costs. You can directly combat these fees by rightsizing your packaging to avoid dimensional weight charges and consistently auditing invoices to recover incorrect fees.
- Treat Your Carrier Contract as a Negotiation, Not a Rulebook: Your shipping volume is a powerful asset, so use it to negotiate custom discounts and waive common fees. Working with an expert can help you benchmark your rates and secure the best possible terms, ensuring you don’t leave money on the table.