Running a business is hard enough. You have to find new clients, keep current clients happy, source products and services, hire and onboard employees, ensure current employees are productive and motivated, and maintain a steady cash flow.
Small business shipping may be a minor part of your workload and relatively insignificant on the ledger line, or it could be a major issue for both.
Finding the best and cheapest shipping for small business is important no matter what role shipping plays in your venture, because costs matter, as does service — both affect your bottom line and ability to retain customers.
What is the cheapest company to ship with?
Let’s start with shipping costs for small businesses, understanding of course, that the shipping rate isn’t the only consideration when choosing a courier service.
Small packages: For small packages, the cheapest shipping provider is usually the USPS. By this definition, small packages are typically under five pounds. USPS shipping rate is almost always better than the competitors for a parcel under 13 ounces.
The USPS Flat Rate shipping process can also be an economical shipping solution, if the items fit into the postal service Flat Rate packaging, provided at no shipping cost. With Flat Rate shipping, you can send the parcel domestically at one rate, as long as the items fit in the box. There is a maximum 70 pound packaging weight, but given the box size, it would be difficult to reach that package weight.
Large packages: UPS is generally the cheapest way for larger packages, especially if you’re able to ship UPS Ground. This service takes longer than an expedited UPS shipping service, but customers may be willing to wait if they’re paying less, or if they’re getting free shipping. Large packages refer to those that are more than five pounds.
Hybrid: Get the best of both worlds by using a hybrid service, offered by UPS and FedEx. FedEx SmartPost and UPS SurePost start off with that carrier for pick-up and then pass the packages to USPS at a distribution center close to the customer. USPS handles last-mile delivery, which is cheaper for them since they will already be in the area. The advantages are that the initial carrier tracks the package along the way and gets the package most of the way to the customer. The downside is that USPS tracking isn’t as good, and delivery is less predictable than with UPS or FedEx. However it’s a more economical service.
Freight: You may be looking for a freight shipping company if you need truckload shipping or just for packages over 150 pounds. Both FedEx and UPS offer these truckload shipping services with time guarantees. Not surprisingly, cost is based on how far you’re shipping, dimensions and weight.
International: DHL is best known for international shipping. It’s worth using their free quote generator, and comparing the quote to UPS and FedEx as a small business shipping solution, to ensure you’re getting the best shipping option and value. Like with domestic packages, the weight, dimensions, delivery speed and location matters in determining pricing. These companies can all help with customs issues.
The best small business shipping based on timing
Sometimes the best shipping for small business means the one that gets your product to the customer the most quickly or by a guaranteed time. In that case, UPS and FedEx are often your best options. They have the infrastructure in place to meet specific delivery deadlines domestically and as an international shipping company. UPS and FedEx can schedule your delivery for first thing in the morning, for delivery by late afternoon, or within a specified number of days.
FedEx, UPS and DHL also offer same day shipping, which means the pick-up and delivery happen on the same day. USPS doesn’t offer same day shipping, but also their Priority Mail, regular mail, and parcel delivery experienced delays during 2020 and into 2021.
One other option for same day or fast delivery is using a regional carrier if they fit the locations you’re serving. A regional carrier might have more capacity and better rates than FedEx or UPS for your locations. A courier service is another option for local delivery when delivery time is your biggest priority.
Is UPS or FedEx better for small businesses?
There are other benefits of each shipping carrier to consider, when determining whether UPS or FedEx are better for small businesses, it’s worth comparing them to USPS as well. You already know that shipping cost is only one consideration in determining the best shipping carrier for small business.
There are a host of other factors that should play into your shipping strategy. Here are some things to consider with your shipping strategy.
Post-office box and military delivery: The USPS can deliver items to a post office box, but other carriers cannot do this. The USPS can also deliver to military destinations.
Saturday pick-up and delivery: The USPS picks up and delivers for no extra cost on Saturdays, but there may be an additional charge for Saturday service with the other carriers.
Pick-up: USPS will pick up shipments at your office for no charge, as their service mandate is to visit every address for regular mail delivery. UPS, FedEx and DHL will also pick up at your office, but may charge a pick-up fee.
Drop-off: You can drop-off your outgoing parcels at specific locations if that is easier or more economical for you. Of course there are post offices in most towns that can accept USPS packages, as well as mailboxes for smaller items. FedEx Office and the UPS Store will accept drop-offs at their retail locations, and other companies serve as official drop-off sites. DHL also has drop-boxes and authorized service centers which can accept packages for shipping. This can be a cheaper option than scheduling pick-ups at your location, but you have to factor in your time or your employee’s time, as well as vehicle costs. You’ll also have to factor in timing for the drop-offs, so they can make the cut-off for the desired delivery service.
Packaging materials: All carriers offer some free shipping supplies like the shipping label, pouches, envelopes and boxes. The caveat is that the materials may need to match the service level. For example, if you use USPS Flat Rate or Priority Mail packaging, you must use that service level with those items. Your company can’t ship media mail or a First Class parcel in these specific boxes or envelopes. You’ll want to check the rules with each carrier before relying on their packaging for your shipping.
Liability insurance: Each carrier offers a certain level of insurance, though the amount varies. This can affect your cost to ship a package, as you may want to insure the package for more. You can add more shipping insurance through the carrier or use an outside service.
Tracking: Tracking is included with UPS, FedEx and DHL. The USPS offers tracking with some services, but not all, and the tracking may not be as detailed as your company wants.
Customer service: Customer service is arguably better with UPS, FedEx and DHL, than it is with the USPS.
Guaranteed delivery date and time: Each carrier offers a guaranteed delivery for various service levels, though during the COVID-19 pandemic, they may not honor these guarantees with refunds for failing to meet the deadlines.
Platform integration: If you have a high shipping volume, you’ll want a small business shipping solution where you’re integrating with the carrier platform. For example, UPS Marketplace Shipping allows your ecommerce store to manage your shipping process across your shipping platform. You can use it to print shipping labels, automate tracking, get shipping discounts for small businesses, and pay for your shipping needs with a credit card. FedEx offers various Ship Manager software as well, depending on your company’s shipping needs. USPS has Click-N-Ship to pay for postage and print shipping labels online.
Temperature-controlled shipping: If you have shipping needs requiring temperature control, you’ll want to find a carrier that can offer this service. As we’ve learned with the COVID-19 vaccine shipping, the major carriers have this capacity. But is it available to small businesses who are shipping food products, smaller pharmaceutical quantities, and other temperature-sensitive items? FedEx offers temperature-controlled ground shipment even for smaller packages, where items can be shipped in a cargo van.
Business services: Both UPS and FedEx offer some small business services, where they can help optimize packaging and dimensional weight, and offer other business tools to improve your company’s supply chain.
Which shipping company is best for small businesses?
So you’ve probably figured out by now there is not one answer for all small businesses. Many businesses find success in either negotiating with multiple carriers to get a shipping discount, or using a shipping platform that provides shipping software to get discounts and choose the best rate per package.
Even the USPS offers retail rates and commercial pricing. Priority Mail cubic pricing is not available to the public, as an example. This type of shipping service is important for ecommerce businesses sending small parcels.
If you use an ecommerce platform or want to integrate shipping software into your system, you can take advantage of their shipping discounts and other services, like label printing, tracking, dashboards and metrics. This way you don’t have to negotiate your own discounts, and you can use the other benefits they offer. You do pay for these services, though, like a monthly fee or a per label charge.
You can also negotiate your own rates with one or multiple carriers. Negotiations are based on volume, and you can negotiate not only rates, but accessorial charges as well. This can be intimidating to small businesses without experience in this area. Even large businesses can benefit from professional help in negotiating. Shipware offers contract optimization solutions, where our experts, all former carrier-side professionals, can guide you through the negotiation process.
Even before you get that far, though, Shipware will analyze your shipping usage to determine the most important factors for your specific situation. Your data will be compared to benchmark data to understand where you stand to benefit and how much your cost can be lowered through negotiations. This proprietary data combined with the analysis of your own data, is a foundational part of negotiating success. The Shipware experts also know what factors can be negotiated, and by how much, from their experience working in-house. This type of guidance saves Shipware customers up to 30% on their shipping invoices.
If you have more questions and want to learn more about how to save money on your shipping, reach us on our contact us page.