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stating that they would not charge extra for peak-season residential deliveries unless the package required extra handling (such as with very large items, for example). Here is a list of some of the pricing differences by carrier as it relates to which has the most “shipper-friendly” advantage.

tures, and service parity, shippers that understand the differences between their services can use that knowledge as leverage to improve their negotiation positions. This article seeks to provide an opportunity to identify both carrier pricing and service differences and, more importantly, how to tie those differences into opportunities for improvements. PRICING Let’s start with pricing. FedEx and UPS rates and pricing policies are basically the same, right? Wrong! In 2017, for the first time in a long time, rates between these two competitors no longer match, accessorials are different, dimensional policies differ, and fuel surcharges don’t match. And while many industry pundits believed FedEx would announce a “holiday surcharge” to match UPS, FedEx did not,

FEDEX ADVANTAGES: Cheaper published rates: While published rates between FedEx and UPS are comparable, FedEx offers slightly less expensive published rates for all domestic Express (except Express Saver; UPS’s 3 Day Air pricing is significantly less expensive) and Ground (under 70 pounds) services. Lower Ground minimum charges: At $7.25, FedEx Ground Commercial and FedEx Home Delivery minimum charges are lower than UPS at $7.32. Lower fuel surcharges: FedEx customers pay less in fuel surcharges than do UPS customers. The weekly index comparisons for the week of 7/17/17 follow: Domestic Air & International Air Export (4.25% for UPS, 2.5% for FedEx); Ground Surcharge (5.25% for UPS, 4.25% for FedEx) No late payment fee: UPS customers are invoiced a late payment fee of six percent of the outstanding balance based upon the negotiated payment terms with UPS. FedEx carries no such fee. No third party billing fee: UPS customers pay a 2.5% premium when selecting third party billing. FedEx carries no such fee. Free Saturday delivery for FedEx Home Delivery: Many Ground Residential shippers and customers prefer delivery on Saturdays, as consumers are more likely to be home on weekends as opposed to during the week. Moreover, faster delivery (versus a Monday delivery) means customers receive their e-commerce orders two days earlier, prompting greater customer

satisfaction, fewer returns (less time for buyer’s remorse), and many other documented benefits. FedEx Home Delivery is a Tuesday-Saturday delivery solution. UPS has historically delivered all Ground packages Monday-Friday; however, UPS recently modified its Ground Residential service to make Saturday delivery standard to major metropolitan zones. However, the service only covers about half of the US population. Advantage, FedEx. FedEx SmartPost does not apply dimensional pricing: Rather, it uses USPS standards, including Balloon pricing. By contrast, UPS SurePost applies the same dimension-based pricing as Ground. No peak season surcharge: As of this writing, UPS shippers should leverage the fact that FedEx has not adopted any holiday surcharges to negotiate concessions to these new fees. UPS ADVANTAGES: 166 DIM first cubic foot: While both carriers modified dimensional pricing in 2017 from a divisor of 166 to 139, UPS customers enjoy the higher 166 divisors for packages up to one cubic foot. FedEx, on the other hand, applies the costlier 139 dimensional divisor to all packages. 3 Day Air: Comparing UPS 3 Day Air to the FedEx service equivalent (FedEx Express Saver), averaging all weights and zones one to 150 pounds, UPS is 17.05% cheaper than FedEx. Inner zones (zones 2-4) average 26.37% higher with FedEx Express Saver compared to UPS 3 Day Air. Accessorials: Comparing key accessorial charges for 2017, UPS tends to offer more attractive pricing for shippers. Some accessorials count towards revenue tiers: While both FedEx and UPS generally use revenue tiers to reward customers with higher discounts the more they ship, UPS allows transportation-related surcharges (including DAS, Large Package Surcharge, Residential Surcharge, and others) to contribute to revenue tiers. FedEx typically allows only freight


PARCEL September/October 2017  

PARCEL September/October 2017