FedEx Vs UPS (United Parcel Service); Which Carrier is Best for eCommerce Shipping

Overview

Which one should you select: FedEx or UPS? Both provide reliable eCommerce shipping solutions and offer a wide range of services. If you are relatively new to the eCommerce industry, UPS and FedEx will most likely appear indistinguishable. However, each comes with its own set of unique features as well as shortcomings.

Both FedEx and UPS offer the best tracking services and are leaders in the logistics industry. They carry out deliveries faster than all government postal services.

But these two companies are competitors. So what exactly is the difference between them? Which one is likely to  better address your needs?

That’s precisely why we’re here! In this post, we’ve come up with a few critical parameters integral to eCommerce shipping.

We have studied the performance of FedEx and UPS and recorded how they measure in each criterion. Below is a review of both providers to help you understand which one your eCommerce business requires.

About UPS (United Parcel Service) Shipping

United Parcel Services (UPS) was established in 1907 in Seattle, Washington. UPS was founded by James E Casey and Claude Ryan, and it’s presently headquartered in Atlanta, GA. Presently UPS has got 543,000 employees and sales of over $84.4 billion. 

UPS is one of the largest courier and package delivery service providers in the United States.UPS covers ground freight, ocean freight and air freight. The company operates via U.S International Package, Domestic Package, Freight and Supply Chain.

Their international package includes operations in Asia-Pacific, Latin America, Canada, the Middle East, the Indian subcontinent, and Africa. They provide the complete package of U.S domestic guaranteed air, and ground transportation services.

 Likewise, the freight and supply chain segment offers transportation, international trade, distribution, financing and brokerage services. 

About FedEx Shipping

Founded in 1971 by Frederick Wallace Smith, FedEx is headquartered in Memphis, TN. FedEx is the second-largest courier carrier in the U.S, right behind UPS.  The company has employed over 475,000 people and has got a revenue of $69 billion. It has active operations in 220 countries. 

FedEx operates via FedEx Ground, FedEx Express, FedEx Freight, Corporate, Eliminations and other FedEx services. The main focus of the company’s ground branch is small package delivery services.

FedEx express includes domestic and international eCommerce shipping services for the delivery of freight and other packages. The freight service provides less than truckload freight services across the country. 

Lastly, the FedEx services include support sales, sales, marketing, communications, technical support, IT, billing and collection services. 

UPS vs FedEx: The Key Differences Between 2 Popular Shipping Carriers

To begin with, let’s compare the different approaches FedEx and UPS use. 

1) Delivery Mode

UPS specializes in domestic ground delivery and has a much larger fleet of vehicles. FedEx specializes in express air freight and has almost double the flights compared to UPS. This indicates that FedEx has cheaper rates on international shipping and UPS on domestic. 

2) Delivery Speed

Both FedEx and UPS offer a wide range of eCommerce shipping services at different prices and speeds. Additionally, they provide flat-rate services and deliveries ranging from ground to overnight. Although FedEx has more stores in more locations, both companies have physical stores across the U.S. 

3) Connectivity & Special Services

UPS provides freight and supply chain services like customs brokerage, freight distribution, and supply chain management. If you’re planning to scale up and become global, UPS will be an ideal partner.

On the other hand, FedEx has partnered with USPS (United States Postal Services) for several eCommerce orders. It handles the majority of logistics via air. Post this, the packages are handed off to USPS for the final delivery. This helps the company increase the delivery time for domestic deliveries and reduce costs. 

4) Dimensional Details

UPS uses a different formula for weight for their shipment. For international shipment, the volumetric weight is 13” X 12” X 2” and 3lbs. For domestic shipment, it’s the same volumetric weight with 2lbs.

Contrarily, the volumetric weight for FedEx is 13” X 12” X 2”, 3lbs regardless of domestic or international. If you’re planning to ship a 2lbs package domestically, UPS will likely give you a better rate than FedEx. 

FedEx vs. UPS: Ground Services Compared

As mentioned above, UPS and FedEx are close competitors. This means that both companies tend to offer services that are quite similar in terms of features, delivery times, and price. To get a clearer picture, we’ve broken this comparison in terms of the ground services provided. 

1) Ground Service Details: FedEx 

•  Monday - Friday Delivery (No weekend deliveries) 
•  Provides guaranteed delivery 
•  Package tracking available 
•  Insurance up to $100 for packages  
•  1-5 business days for delivery with contiguous US and 3-7 business days for Alaska and Hawaii 
•  Length limit, 274 cms (108 inches) and circumference 330 cms ( 130 inches); Weight limit of 150 pounds. 

2) Ground Service Details: UPS 

•  Monday - Friday Delivery ( No weekend deliveries) 
•  Provides guaranteed delivery 
•  Package tracking available 
•  Insurance up to $100 for packages  
•  Weight limit of 150lbs (68kgs) 
•  In terms of ground services, both FedEx and UPS deliver to every state within a week. The delivery times are comparable and both offer package tracking and guarantee.

Disclaimer: Both companies have currently halted their guarantees due to the pandemic restrictions. 

UPS vs. FedEx: Which Is Cheaper?

Moving on, let’s find out which of these companies is cheaper. 

For a clear understanding, let’s assume you’re planning to ship a package domestically. You will send the package to New York from San Francisco, CA on Monday. The rates for a 3lbs package (13” X 12” X 2”) to NY from SF is as follows: 

•  UPS: Next Day Air Early delivers on Tuesday at 8 am at $121.22 
•  FedEx: First overnight delivers on Tuesday 8 am at $120.27 

Both FedEx and UPS provide similar time-sensitive deliveries at almost the same rate. However, the prices of FedEx are cheaper in comparison to UPS for in-state shipping. A ground service quote is not provided by FedEx. So it’s assumed that UPS provides a cheaper rate for ground service. 

Similarly, the rates offered by both companies for short distances are very close. The difference is often less than a dollar. It’s best to opt for a delivery speed that your customer prefers. 

Overall, FedEx has cheaper air shipping and offers more services as compared to UPS. 

UPS vs FedEx: Shipping Internationally

Again, let’s assume you are shipping a package internationally on Monday to London from San Francisco. The rates for a 3lbs package to London, UK from SF, CA is as follows:

•  UPS: Worldwide Express delivers on Wednesday at 9 am at $180.72
•  FedEx: International First delivers on Wednesday at 9 am at $181.80 

FedEx once again offers a cheaper rate as compared to UPS. This brings us to the conclusion that FedEx is cheaper while paying retail prices.

UPS vs FedEx: Which is best?

Now we’ve compared both companies. You can see how similar their delivery speed, service options, reliability, and prices are. However, if we look back at the prices and compare their services, they are almost on par.

Although there’s not much difference between the rates, FedEx is cheaper for air services, and UPS for ground services. Added to this, if you’re shipping packages less than 2lbs domestically then UPS is likely to give you a better price. 

Ecommerce businesses are now keen on offering sustainable shipping practices to their customers. Let's take a look at how UPS and FedEx perform under this category.

1) Sustainable Shipping 

Logistics solution providers like FedEx and UPS help businesses facilitate sustainability in shipping. Both carriers are involved in innovating and streamlining their operations with the goal of aiding environmental and social sustainability.

They are actively looking to better their carbon emissions offset. They are doing so by incorporating the use of electricity and alternative fuel in the fleet used for transit and delivery.

FedEx hopes to achieve carbon neutral operations by 2040, and UPS by 2050. They are both working on partnerships, mindful practices and charitable collaboration in order to achieve their vision of sustainability in business.

2) Sustainable Packaging

UPS in China has begun to introduce bio-degradable packaging in its operations. These packaging materials will totally degrade within six months of composting. UPS also assesses the packaging used by businesses on their performance against environmental standards.

Verified by SGS (Société Générale de Surveillance), it evaluates packaging against three criteria. They are - packaging materials, appropriate size, and prevention of damage. Businesses that perform well are awarded a green sticker on their shipment. 

FedEx uses these criteria, along with others, to address the importance of sustainable packaging. But they have approached sustainable packaging from a different angle.

Their line of reusable packaging options include envelopes and padded FedEx paks. Armed with two sealing stripes, the first adhesive strip is used for the forwarding journey from business to customer. The second may be used by the customer for forwarding or repurposing.

Both carriers perform equally well when it comes to sustainability. It is a tough choice to pick between these two companies. In the end, it all comes down to the services offered on your preferred route. It also depends on the delivery time for the package. 

5 Ways to Reduce the Shipping Carrier (FedEx and UPS) Costs

1) Third-Party Services

This is the best way to reduce shipping costs. Third-party services provide eCommerce shipping options and buying insurance. Additionally, they make time for you to focus on other critical elements of your eCommerce business. 

2) Aggregators 

Aggregators team up with courier companies and facilitate a cheaper rate of shipments. Once you sign up on their platform, your marketplace is integrated and shipping your eCommerce products gets easier. This reduces costs when tracking shipments and choosing your courier priorities.

3) Postal Shipping 

If you’re trying to reduce costs, then postal shipping can reduce costs significantly. However, you will not be able to track your packages. Thus, it’s best to use postal services locally and for short distances. 

4) Prepaid shipping 

Prepaid shipping means buying labels in advance instead of doing it over and over again on each item. Several carriers provide discounts on prepaid shipping. This works best if you’re sending the same weight packages daily. It is also suitable when the shipping costs are predetermined. 

5) Buy Insurance from the third party

Most third-party providers offer a 50% discount on insurance as compared to regular carrier providers. In the long run, this can significantly increase your savings.

Sales and Market Share

In 2020, the total market revenue of FedEx was $84 billion. At the same time, the revenue of UPS was $84.6 billion. FedEx has a global CEP market size of 343.6 billion euros and a 30% market share in same-day deliveries. UPS has a global CEP market size of 375.5 billion euros. 

Competition and Controversies

Through a campaign worth millions of dollars, FedEx accused UPS of trying to get a government bailout. UPS' strategy was designed to limit the competition for same-day deliveries. This disagreement was over the provision in the FAA (Federal Aviation Administration) bill.

It classifies the non-airline employees of FedEx under the NLRA (National Labor Relations Act) instead of the RLA (Railway Labor Act). This difference makes it easier for employees to form unions.

Whereas, the ground employees of UPS are already covered under the NLRA. Hence most of their employees are members of the International Brotherhood of Teamsters.

UPS alleged the ground employees of FedEx to be covered by NLRA so that employees of both companies can have the same rights. However, FedEx claimed that UPS was trying to force the company to expose the local work stoppages. Which in turn could affect the time-sensitive deliveries and lower competition. 

Final Conclusive Words

Since FedEx and UPS are so similar to each other it’s easy to assume that they are the same. However, the main focus for FedEx is international shipments and time-definite deliveries.

And UPS focuses on domestic shipping and offers lower rates. Overall, FedEx has managed to consistently edge out UPS according to American Customer Satisfaction Index (ACSI).

AND UPS's revenue has been significantly greater than FedEx despite its lower shipping rates. It is still quite hard to figure out the fan favourite.

But which one should you pick for your business? You need to understand exactly what your business needs from a carrier and then make your decision.

Keep these three factors in mind when you do deliberate- the timeline at hand to deliver the package, the shipment size, and destination address. And considering the two are titans of the shipping industry, rest assured you can't go wrong with either!

FAQ

1) FedEx or UPS, which one is more reliable? 

Generally, reliability is a feature that you have to pay for. However, both these companies offer insurance, package tracking and delivery guarantee for most of their services.

UPS is a specialist in domestic shipping and has proven to be more reliable within the U.S. Likewise, FedEx specializes in international shipping and is a better choice for overseas. 

2) FedEx or UPS, which one is better for shipping a large package internationally? 

As mentioned above, FedEx specializes in international shipping and UPS focuses on domestic shipping. Nevertheless, both companies have a maximum weight limit of 150lbs for international deliveries.

Any extra weight could cost you an additional amount. For easier comparison, use a rate calculator to see the price differences for each specific shipment size.