UPS vs. FedEx Shipping Rates: Which Are Better For Your Business?

Updated March 22, 2024

When it comes to choosing a shipping provider, everyone has their own opinion. For businesses, however, personal preference oftentimes must be set aside for more practical reasons such as budget.

Services like shipping consulting can help to identify which shipping carrier offers the cheapest way to ship. They can further lay out each shipping option benefit like the FedEx international priority from FedEx ground economy, or the USPS first class mail from UPS worldwide express and many others. Some businesses may find that the cheapest way is by using just one carrier. Still others may ship some items with FedEx or UPS, and others with USPS shipping, having a preferred shipping carrier for their home delivery, international shipping and ground shipping.

While it can be difficult to compare carriers in an apples to apples manner, knowing which shipping service offers the cheapest rates — whether that’s FedEx, UPS or another carrier — is ultimately critical to maximizing your business’s shipping budget.

Is FedEx or UPS cheaper?

Determining which shipping company, FedEx or UPS, offers cheaper shipping rates can depend on a list of factors. Here are a few of them:

• Delivery timing (Overnight delivery? Saturday delivery?)
• Shipping zone used
• Residential delivery or commercial delivery
• The weight and size of the shipment (a larger package or heavy items can cost considerably more to ship)
• Dimensional weight
• Negotiated discounts for UPS rates and FedEx rates

Other questions to ask yourself as you consider factors that could influence your shipping rates include:

• “What accessorial charges will be assessed?”
  • This could include whether or not you’re shipping an odd sized package, if it requires special handling, or if a delivery confirmation or signature is needed.
• “What additional services need to be taken into consideration?”
  • For example, are you including a return shipping label? Where is the package being picked up, either from your location, the FedEx Office or The UPS Store? Does the shipment need increased insurance?

Is FedEx cheaper than UPS? And vice versa

Regardless of the many factors involved, it can still be helpful to see shipping rate comparisons to better understand the question: is FedEx or UPS cheaper?

These comparisons won’t cover all contingencies and shipping service factors, but as a shipping company, you can certainly do your own comparison on the FedEx vs UPS shipping calculator pages.

Here are some sample rates:

Small parcel

This scenario involves sending a 2-pound parcel (6” x 6” x 6”) from San Francisco 94103 to Miami 93130, residential delivery service. Drop-off is at FedEx Office or The UPS Store. No additional services are used. The parcel is sent on a Tuesday.

Large or heavy packages

For this example, you’re sending a 50 pound parcel (12” x 12” x 12”) from San Francisco 94103 to Miami 33130, via residential delivery. Drop-off is at FedEx Office or The UPS Store. No additional services are used, and the parcel is sent on a Tuesday.

Note that Fedex does not have retail pricing for this and offers FedEx One Rate® rates and delivery dates only.

Flat rate

Both UPS and FedEx offer flat rate shipping services, though they call them different things. With FedEx, it’s FedEx One Rate, and UPS, it’s UPS Simple Rate. With flat rate services, you can ship with a FedEx flat rate box or with UPS, your own packaging of a certain size.

FedEx One Rate allows flat rate shipping for 20 pounds or less, while UPS Simple Rate has a limit of 50 pounds.

Let’s say you want to ship a 20 pound medium box that is 251-2650 cubic inches (UPS) or a FedEx medium box (their packaging) from San Francisco 94103 to Miami 33130, on a Tuesday.

 
The good news is that FedEx and UPS both offer multiple options for time-sensitive shipping. The cheapest way to ship also depends on what surcharges are used in your shipping and what rates you negotiate with UPS and FedEx.

How to find cheaper shipping rates

To start, it’s worth considering how to get shipping discounts with both carriers, either through the available UPS shipping discount or FedEx shipping discount. Along with these, here are some other factors to think about when it comes to finding cheaper shipping rates.

USPS: Though the USPS postal service is not the focus of this post, don’t forget to look into USPS shipping as a shipping method as well. USPS Priority Mail is a cost-effective service for some shipping needs. That includes if you’re shipping a small package or parcel under one pound.

Other carriers: While FedEx shipping and UPS are two of the largest and most recognized names, it may pay to consider another carrier like DHL Express for time-sensitive shipments, DHL for other shipments, and regional carriers as well. That is especially true for international shipping, as rates vary widely based on the carrier’s international coverage.

Carrier Diversification

Many shippers find it valuable to use both FedEx shipping and UPS shipping, even if the shipper prefers one carrier for the larger volume. There are a number of reasons for this. One reason is that carriers often offer discounts for increasing your shipping volume with them. But the higher the volume, often the more negligible the discount at a certain point. If your volume drops, though, you could end up in a different pricing tier that dramatically decreases your discount. It’s called a pricing cliff and you can see some examples of this in our video.

Negotiate your carrier contracts

A big caveat in determining whether UPS or FedEx have lower shipping rates is the contract you negotiate with your preferred carrier. If you haven’t renegotiated your contract in a while, now may be a good time to do so.

One thing that shippers don’t always realize is that you have more negotiating power than you think — and you can use the competition or the threat of defection to negotiate lower rates. This all takes planning and expertise, though.

Shipware helps shippers do this with a thorough evaluation of the shipper’s history and shipping costs. That means digging into data to better understand where parcels go, the most common shipping zone or zones used, whether you ship heavier packages, if you primarily use overnight shipping, if there’s a common surcharge like for home delivery or Saturday delivery, etc. This can help determine things like whether your company would be better off using flat rate shipping or adjusting packaging due to dimensional weight. There are a lot of factors involved with optimizing shipping contracts, and those should be addressed before starting any carrier negotiations.

Our experts were on the industry side first, and they know what rates are possible and where to aim. We’ve found that our services can save shippers up to 30%, a much higher rate than shippers can get on their own.

Invoice audit recovery

The other step to save your company money on shipping, no matter which carrier, is invoice audit recovery services. Imagine getting credit back when carriers make mistakes that you wouldn’t notice from just manually reviewing the invoices. That could include inappropriate surcharges, missed negotiated discounts, and other mistakes introduced on the invoice.

Our proprietary software checks for dozens of common errors, identifying them on invoices and automatically requesting credit. That credit is then directly applied to the customer account.

The service pays for itself through the savings, which means there are no out-of-pocket costs for you either. Our customers usually save 1% to 9% of their carrier invoiced amounts, while putting in no work. The program is easy to set-up by connecting your shipping account to our system, and it runs in the background. You’ll save staff time as well as get carrier credits.

So to answer the question, “Is FedEx or UPS cheaper?” Well, it really depends on your needs as a shipper. Consider the examples we provided, and run your own numbers. Every shipper’s situation is different. Shipware is happy to help your company optimize your carrier contracts, after determining the best carrier for your needs. We can help you save money on your shipping, while increasing your service levels.