“Imitation is not just the sincerest form of flattery – it’s the sincerest form of learning.”
— George Bernard Shaw
It seems FedEx has taken a page right out of the USPS playbook, “If it fits it ships” Priority Mail service. FedEx has developed a new category of flat rated products called “FedEx One Rate”, which targets infrequent and low volume Express shippers that prefer unlimited weight products at predictable rates.
“With its simple, predictable pricing, FedEx One Rate takes convenience and flexibility to the next level for our customers,” said Raj Subramaniam, executive vice president of Marketing at FedEx Services. “For consumers and small businesses alike, FedEx One Rate pricing allows customers to plan and control their express shipping costs more easily. They can add to the box without adding to the cost.”
FedEx One Rate pricing is an alternative to FedEx Standard List Rates, Account-Specific Rates or FedEx Retail Rates. In other words, they will not be eligible for contract discounts.
This is a very important distinction to keep in mind as we compare these services, since larger shippers typically see greater than 60% savings on expedited parcels. I performed a detailed comparison of USPS cubic based boxes and the various FedEx One Rate products: When comparing the USPS Commercial Base rates*, the new FedEx program is as much as 70% more expensive! Keep in mind that the USPS offers 4 different pricing models (listed in magnitude of discounts): Retail, Commercial Base*, Commercial Plus (CPP) and Negotiated Service Agreements (NSA).
Are there advantages of FedEx One Rate over USPS? A FedEx Representative provided the following list:
- FedEx brand, reputation, and reliability backed by the FedEx Money Back Guarantee
- High-quality, self-adhering packaging (Extra Large boxes require tape)
- Greater variety of box sizes:
- FedEx offers an extra-large box and tube not offered by USPS
- FedEx small boxes are considerably larger than the USPS small box
- Customer can choose any FedEx Express white box for any Express service available to ship using FedEx One Rate pricing
- True day and time-definite shipping services
- Greater ability to track in-transit for shippers and recipients using FedEx Delivery Manager, which provides better visibility into package status and exception scans
- Residential recipients can customize delivery using FedEx One Rate with FedEx Delivery Manager
- Online access (via FedEx Ship Manager Lite) 24 hours a day
- Free declared value up to $100
Pricing for FedEx One Rate is listed on page 60a on the updated service guide: http://images.fedex.com/us/services/pdf/Service_Guide_2013.pdf .
It’s true that FedEx offers a greater number of service options for Express products including two next day and two second day options.
However, while the USPS is a paired origin/destination offering, virtually the entire country falls into the two day definite transit and is often less expensive then FedEx Ground and Home Delivery at the lighter weights.
FedEx does offer broader array of packaging choices, including an extra-large box (.8 cube) and a Tube option. On the other hand, the USPS offers an Extra Large Regional Flat Rate box, which at 1 1⁄4 cube is significantly larger than FedEx’s largest option. Moreover, its comparable Regional “Small” Flat Rate Box is twice as big as the FedEx Small box and slightly bigger than the FedEx Medium box.
Where FedEx One Rate has removed Fuel Surcharges, Delivery Area Surcharges (DAS) and simplified the distance component to only three zones, the Postal Service’s Flat Rate has no zones, has never charged fuel, DAS or other accessorial charges and offers Saturday delivery at no extra charge. Moreover, there is no additional charge for Alaska, Hawaii, U S Territories, along with APO/FPO locations, and the USPS is the only carrier that can delivery packages to more than 30 million P O Boxes in the U.S.
The USPS Priority Mail Flat Rate products offer high visibility packaging and utilize bio-friendly inks and cardboard for Cradle to Grave Certification. Many do offer self-adhesion and the Post Office will customize at no extra charge for larger clients.
USPS CPP and NSA customers can participate in exclusive programs including: Cubic, First Class Package Services up to 15.999 ounces (Retail and Base are limited to 13 ounces) and Critical Mail.
For most fulfillment shippers it is very difficult to use any of the flat rate packaging since the shipping method is often determined at the point of sale and pick/pack operations are standardized using generic packaging (boxes or bags). Since USPS Cubic does not require branded packaging, it fits well into existing production lines. Five tiers (.1 – .5 cube) and seven zones cover all domestic shipping.
Commercial “Plus” (CPP)
Customers now receive $100 per package insurance. Critical Mail is a Flat Rate Priority Mail envelope up to 3 ounces for $3.50 and includes USPS Tracking.
customers get the very best of all programs often better than CPP rates and occasionally deferred rate increases. For example, Shipware’s USPS pricing will not change until October 2014.
First Class Package Services
The single piece rate is a different kind of flat rate: there is no distance or dimensional tiers and is simply priced by the ounce. CPP customers have access to the 14, 15 and 16 ounce pricing tiers.
In summary, while FedEx One Rate is likely to generate additional revenues for FedEx, the USPS can sit back and thank them for the free publicity.
Gordon Glazer, CMDSM, CMDSS, MDP, MDC is President of Mail Consulting Services at Shipware LLC, an innovative parcel audit and consulting firm that helps volume parcel shippers reduce shipping costs 10%-30%. Gordon is a postal industry veteran with 27 years’ experience and is a sought after speaker and industry thought leader. He welcomes questions and comments, and can be reached at 858-879-2020 Ext 108 or email@example.com.
*Shippers can qualify for “Commercial Base” rates by using an approved PC Postage provider, EVS Manifest or approved Postage Meter supplier. Intelligent Mail Package Barcode (IMpb) is now also required.