The eCommerce Shipping Wars: FedEx vs. USPS (United States Postal Service)

1) Introduction

Centuries ago, when there was no sign of transport companies, people walked, crafted boats out of logs, rode animals, and devised wheeled vehicles to move goods from one place to another. Later, when they learned to harness different power sources like water, wind, steam, and combustion, they switched to better modes of transportation.

Today, we have come such a long way that no transportation channel from trucks to airplanes or ships stands unutilized. eCommerce shipping companies like FedEx and USPS have been offering incredible services at unbelievable prices, that too at our fingertips. But with numerous such providers available on the market, it's really tough to figure out the best.

Though many people have the answer to that, it's usually a tie between FedEx (Federal Express) and USPS (United States Postal Service). Ergo, we decided why not compare the two and get our doubts cleared. So here's your personal guide to the two companies, the services and benefits they offer, and an overview of FedEx vs. USPS.

2) The history of FedEx and USPS

2.1) FedEx

Ask any college student about his/her dream, and most would say to land a high-paying job, but Frederick W. Smith was different. While studying at Yale with other notable students such as future President George W. Bush and Democratic presidential candidate John Kerry, Smith came up with the idea of a global shipping carrier. 

When he proposed the idea in his term paper, his professor didn't find it interesting and ignored it. But who knew that one day that same idea would give birth to the eCommerce shipping giant we know today that has almost 300,000 employees and sales revenue of over $40 billion.   

After graduating from Yale, in 1971 Frederick Smith initiated Federal Express at Arkansas’ Little Rock National Airport. He inherited $4 million from his father and accumulated another $91 million as venture capital. Two years after taking the first step, he shifted and set base in Memphis. This is where he began the formal operations of FedEx. 

The first three years of business were rough for Smith, but with the constant effort and unwavering support from his entire team, the company grew and saw its first profit of $3.6 million based on handling 19,000 packages a day. This was in 1976, and since then, the company has never looked back. 

Today, it stands tall with a market capitalization of $52.76 billion.

2.2) USPS

Unlike FedEx, the USPS (United States Postal Service) isn't a private company. Instead, it's an independent agency working under the United States federal government. 

From 1753 to 1774, when Benjamin Franklin oversaw Britain’s colonial mail service, he connected 13 fragments so efficiently that delivering goods between Philadelphia and New York City could happen in less than 33 hours. His efforts fueled the spark for independence among people, and many of his patriot friends found it an opportunity to create organizations. 

This led to the birth of Committees of Correspondence and Constitutional Post in the early 1770s. Five years later, before the signing of the Declaration of Independence, the Continental Congress took the initiative to convert the Constitutional Post to the Post Office of the United States and gave America its first-ever independent organization. 

Since then, the USPS has been working day and night to improve its services and satisfy its customer's needs. Today, the shipping carrier has approximately 516,636 career employees and 136,531 non-career employees.

3) Working: FedEx vs. USPS

Imagine going from one corner of the city to another. Doesn't the journey make you feel tired? Well, courier personnel have more than hundreds of packages to deliver to various locations every single day. 

Wondering how they deal with it? Read on to find out how FedEx and USPS handle their operations.

3.1) FedEx

According to a 2018 article, FedEx delivers 3.4 million packages in the U.S. every day. For ground and home delivery, it requests customers to either create a shipment or schedule a pickup through its website. It even provides a calling facility on its toll-free number or provides the option to visit its nearest store. 

Once an order's details are updated on the system, FedEx automatically assigns the route by looking at the postal or zip code. Thereafter, these routes (which are already configured in advance) are broken down into smaller geographical zones by ISPs (Independent Service Providers). This is done to save the delivery agent’s time so that he doesn't have to cover longer distances.

When the delivery agent arrives at the FedEx depot, he is allotted different piles as per the territory he is supposed to cover. Now, his job is to scan the barcode affixed on top of each parcel and then load it on the truck. In case any driver's pile contains a parcel that doesn't fall in his route, the system alarms him and saves him from any unnecessary trouble.

3.2) USPS

The USPS starts its process once the mail enters its Postal Service networks. There are multiple ways in which this could happen. You could deposit the mail in your private mailbox from where a carrier can carry it to the post office. Alternatively, the mail could also be deposited in a street-side collection box or by walking into a post office. 

Once the mail enters the postal network, its format is checked. This includes checking of address, zip code, and postage (cost of mailing an item). 

After this, all mail is sorted with the help of a multiline OCR (Optical Character Reader) machine, which reads and records the zip code from the receiver’s address, prints a bar code according to that, and sends the mail for further sorting or shipment. 

4) Services: FedEx vs. USPS

4.1) FedEx shipping services

FedEx offers numerous shipping services, both at reasonable and premium prices. Its revolutionary overnight delivery has won many hearts and is still bringing smiles to many faces. The shipping carrier's services include:

4.1.1) Ground Delivery: For deliveries within 1 - 7 business days. 

4.1.2) Home Delivery: For residential deliveries by ground within 1 - 7 business days.

4.1.3) FedEx Same-Day: For same-day deliveries to customer’s door within a few hours. This service usually operates 7 days a week throughout the year.

4.1.4) FedEx 2-Day: For deliveries within 2 business days to most areas of the U.S.

4.1.5) FedEx Express Saver: For deliveries within 3 business days across most cities of the U.S.

4.1.6) FedEx First Overnight: Being the most rapid logistics delivery service to date, this option gets your package delivered on the next business day anywhere between 8-9 a.m.  

4.1.7) FedEx International: FedEx ships to almost 215 countries and territories and takes two to five business days to deliver packages to their respective locations.

4.1.8) Insurance & Commercial Discounts

Before accepting an order, FedEx requests its customers to insure their packages. The document that the customers need to sign for this is called the “FedEx Office Packing Pledge” and it offers a $100 per package liability for any items shipped via FedEx Ground, FedEx Home Delivery or FedEx express (that is unless a higher value is stated). 

If you are shipping fragile or expensive items with FedEx, the $100 limit can go up to $1000 too. But the basic requirement states that FedEx employees (not the customer) need to pack and ship goods for the pledge to be applicable. 

In addition to that insurance, FedEx also extends commercial discounts to small businesses that can benefit by opening a free account. Under this scheme, they get:

1. Up to 30% off on services like FedEx Express, U.S. domestic, international, and return shipping
2. FedEx Express packaging supplies, including boxes, tubes, envelopes, and packs
3. 15% discount on FedEx home delivery and ground services covering returns
4. 70% off on FedEx Freight Select eCommerce company accounts 
5. Access to online account management tools, including online billing, address bookkeeping, and reporting 
6. Discounts on FedEx office supplies & printing services 
7. Benefits of the My FedEx rewards program (if they enroll)

4.2) USPS shipping services

Just like FedEx, USPS has a variety of services to keep its customers happy all year long. It charges different amounts depending on the size and weight of the package, but usually ensures the rate is nominal in nature. Here is a summary of some of its offerings:

4.2.1) Priority Mail:  For this service, users need to pay a flat rate on packages that weigh under 70 pounds. This service completes its deliveries between 1 and 3 business days.

4.2.2) First Class Mail: This service has been designed keeping small packages (weighing under 13 pounds) and envelopes in mind. It generally delivers within 1-3 business days.

4.2.3) Retail Ground: This is an affordable shipping option for larger packages for which there is no rush (time-bound delivery not needed). 

4.2.4) Priority Mail Express: Like FedEx, this service delivers overnight, operating 7 days a week.

4.2.5) Media Mail: This service is used to ship media and education related files (audios and videos) under 70 pounds within 2-8 business days.

4.2.6) Insurance & Commercial Discounts

At USPS, insurance completely depends upon the type of delivery service you are choosing. 

For standard shipping, USPS covers the value of the package’s contents but allows customers to purchase an additional $5000 of insurance. Each customer is requested to show their ID to purchase any amount of insurance above $500. In the case of Priority Mail, insurance up to $50 is provided, whereas, for Priority Mail Express, it can rise to $100. 

Again, like FedEx, USPS gives several discounts to startups and small ventures. This service is available as long as customers ship a minimum number of packages per shipment. Here's what you can expect from the service:

5) Pros and cons: FedEx vs. USPS

Like every other courier company, FedEx and USPS come with their distinct set of benefits and drawbacks. Given below are some of the pros and cons you must consider before using either of these services.

5.1) FedEx Pros

5.2) FedEx Cons

5.3) USPS Pros

5.4) USPS Cons

6) FedEx vs. USPS: Which service is better and why?

Both FedEx and USPS offer exceptional services at reasonable prices. But when you are running a global shipping carrier, it should be your priority to look at your specific needs and then pick a provider who fits best.

If you have larger operations covering both domestic and international boundaries, and you aim to achieve quick and safe deliveries, you should choose FedEx instead of USPS. Again, if you're handling alcoholic beverages or dealing in large appliances or furniture, you should trust FedEx for your shipments.

On the other hand, if you have a startup or a small venture and you are just starting out, you should rely on USPS for handling your shipments. Since USPS has a stronghold over domestic shipping, it can be great for new firms trying to stand on their feet. Small but precious items can be shipped through the company within a limited budget.

7) Conclusion

In this fast-moving world, there will be competition at every level. Whether it's two employees in an organization or two organizations in the same industry, there will be better options, some mismanagement, smooth working days, chaotic days, and so on. 

However, when one is comparing two established eCommerce shipping carriers, for example FedEx vs. USPS here, it is important to look at all the factors ranging from price, services, and security. Once you have a rough idea of all those things, look at your company's requirements and make the necessary decisions in favor of your organization's growth and health management.