What Is The Cheapest Shipping Option – USPS, FedEx Or UPS?

It has been a while since I’ve done a competitive analysis of the various shipping carriers so I thought I’d do a quick update. With the United States Postal Service jacking up their rates every 4-6 months, what used to be the most economical shipping method is now priced inline or even more expensive than some of the more reliable carriers like UPS or FedEx.

Photo By Atibens

Because there are so many different shipping variables and options to choose from, it’s difficult to make an apples to apples comparison without locking down some of the basic parameters. For the purposes of this article, I am going to assume the following.

  • A 14in X 12in X 3in package is being shipped cross country from California to a residence on the east coast. Incidentally, this is the same size as a USPS Medium Priority Mail Flat Rate Box.
  • Out of the box pricing for all shipping carriers which means that lower negotiated rates based on volume are not taken into account.
  • Labels are being printed online which means all associated USPS internet discounts apply.

At the end, I’ll also discuss the trade offs between price, shipping time and reliability and give my take on the best shipping strategy.

If You Are Shipping Something 2 Lbs Or Heavier With A 5 Day Delivery Window…

FedEx Ground or UPS Ground will almost always be cheaper than USPS Priority Mail. Between FedEx and UPS, FedEx will be cheaper than UPS out of the box because they provide you with an instant 15% off all shipments just for creating an online account(Note: The level of discount will vary but there’s always a discount program).

Update: As of 2015, both UPS and FedEx are now charging for what is called “dimensional weight”. Basically what this means is that if your package is large or oversized, then the shipping charges will be drastically increased.

The dimensional weight calculation for UPS is currently L*W*H/166. So for example, if your package is 20X20X20 and weighs 10 pounds, then you would be charged for a package weighing 20*20*20/166 = 49 lbs instead of 10 lbs. Otherwise, packages below 5184 cubic feet will be cheaper than USPS in this category.

The only exception to the above rule is that USPS offers 3 flat rate box shipping options, small, medium and large. If you can manage to shove merchandise that is heavier than 2lbs into a small flat rate box (unlikely), you can save about 4 dollars.

However more realistically, you will need a medium flat rate box to ship something weighing 2lbs or more. The break even point between FedEx or UPS Ground and a Priority Mail flat rate medium box is about 4 lbs.

The break even point for a large Priority Mail flat rate box is about 7 lbs. So if your item is heavier than 4lbs, use a USPS flat rate medium box.

If you need a large flat rate Priority Mail box, make sure it’s heavier than 7 lbs. Otherwise, FedEx or UPS Ground will always be cheaper.

Note: You can receive significant discounts on USPS shipping by signing up for a Stamps.com account.

If You Are Shipping Items Under 2 Pounds…

USPS will always be cheaper than FedEx or UPS hands down. However as the weight creeps closer to 2 pounds, USPS pretty much reaches pricing parity with UPS and FedEx Ground. USPS really shines when your package weighs less than 13 oz and can be mailed via First Class mail. If you don’t care about reliability, USPS is by far the cheapest shipping option for light items.

If You Need Next Day Service…

USPS Express is once again the cheapest solution by far and it is guaranteed. The only problem with USPS Express mail is that sometimes the delivery window is 2 days and you won’t know unless you check online. USPS also doesn’t offer a morning delivery time so if your client needs something at the beginning of the business day, they are out of luck.

I’ve also discovered that USPS Express Mail is less reliable than FedEx or UPS Next Day Service. While they “guarantee” their delivery times, what this really means is that they’ll refund your money if the package is delivered late. This has happened to me several times already and a shipping refund doesn’t make up for having an angry customer.

If You Need a 2-3 Day Delivery Window…

It is unclear which delivery service is better if you need 2-3 day delivery because USPS doesn’t guarantee their delivery times for Priority or First Class Mail. So while USPS Priority Mail cites a 2-3 day typical delivery time, it could be slower or faster depending on various unknown factors.

In my experience, I’ve had some Priority Mail packages delivered within a single day and I’ve seen delivery times as long as 1.5 weeks. While the latter tends to be an anomaly, overall the delivery speed is somewhat random.

FedEx and UPS however, always guarantee their delivery times but are significantly more expensive. In some cases, FedEx and UPS will cost you will over 2X the cost of USPS.

My Take On The 3 Carriers

While USPS is the cheapest shipping carrier in most cases, their reliability is easily the worst among the 3 carriers. Our online store primarily uses USPS because most of our orders are under 2 pounds. But we routinely get packages delayed or lost in the mail.

This past few months alone, we have had 3 customers email us wondering where the hell their order was. Given our volumes, 3 customers is probably statistically insignificant but having to deal with any unhappy customers is a pain in the neck.

While we don’t check on the status of all of our orders, I can tell you from experience that the quoted delivery times from USPS for both First Class and Priority Mail are completely hit or miss. If you are sending a package to some podunk, middle of no where town, it’s more likely to get delayed. Meanwhile, I’ve yet to ever have a FedEx or UPS package delayed or lost.

In the end, it comes down to reliability vs cost. For light items, USPS is the cheapest if that is your goal. For heavier items >2lbs in which delivery time is not a factor, FedEx or UPS Ground is the cheapest.

It’s the 2-3 day delivery window where you have to weigh the trade offs. Do you value reliability? Is actual transit time a concern? If you need a package to be delivered on time, use FedEx or UPS. If you are trying to save money, use USPS.

Our online store offers a mix of both. By default, we use USPS shipping to keep the shipping costs low (our items are typically under 2 lbs). However, if a customer has a tight deadline, we use FedEx.

Speaking from experience, the savings of using USPS is not worth the hassle of pissing off a customer if there’s a deadline. But it’s tough decision to make because customers are typically turned off by high shipping costs. Of course, the other option is always to raise your prices and lose money on shipping. You have to make the call.

Cheapest Way To Ship USPS

If you decide to use USPS as your primary shipping carrier, the cheapest way to go is to use a service like Stamps.com.

Stamps.com lets you print “First Class” postage from your printer (the USPS website does not allow this) and offers significant discounts on practically every service that the United States Postal Service offers.

However, you’ll experience the most savings if you ship a lot of Priority Mail or Express Mail orders. The best part is that they’ll waive the monthly fee if you ship more than $500 in postage per month.

Stamps.com also integrates nicely with many shopping carts on the market. Check them out. We use them as our primary carrier.

Cheapest Way To Ship FedEx Or UPS

The only way to get a better deal on FedEx or UPS is to negotiate. Of course, you’ll need to demonstrate that you can and will ship in volume but that shouldn’t be too hard if you run an online store.

Ideally, you should pick one carrier and focus on them. In my experience, UPS seems to be a bit hungrier than FedEx for your business so they may be more willing to negotiate. But your mileage may vary. Don’t be too shy to pick up a phone and speak to a sales rep. Good luck!

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114 thoughts on “What Is The Cheapest Shipping Option – USPS, FedEx Or UPS?”

  1. If you are sending loads of parcels (if you are an eCommerce operation), then a fulfilment house would be cheapest, such as Amazon’s. However if you need to send only a few parcels then a local courier would be better, and DHL better for international deliveries. DHL is quite expensive, but their accuracy rate is very high.

  2. Consumers and Small Businesses should also try shipping optimization sites such as http://www.PostageAnywhere.com. You’ll get a free account which allows you to ship when you need to, without monthly fees, and you’ll also get noticeable discounts on custom packages (small parcels).

  3. Marianne Davey says:

    I am relocating and have about 15 small moving boxes (16″x12″x12″) that contain my possessions. Who would you recommend to save money: UPS, USPS, or FedX? Thanks, Marianne

    1. Christine Sine says:

      I’m in the process of shipping my sons’ personal items across country. While the cheapest is most probably USPS, I’ve had nothing but disappointment and frustration from them with smaller packages (Priority Mail flat rate medium and large boxes. Example: I paid almost $20 for a large flat rate priority box, going to Nebraska, ESTIMATED delivery of 2 days; 4 days later, it’s still not there.) Back to the cross country: I use Fed Ex exclusively. It’s a little more expensive, but at least the packages are guaranteed to get to their destination. Never had one lost or misdirected, or not delivered when they said it would be delivered. Especially with personal possessions, I’d rather pay a little more and KNOW they’re going to arrive.

  4. Bob says:

    You can also use a group shipper like Secureship (http://secureship.ca). They use a pretty simple concept of grouping everyone’s shipments under one roof so that you get volume discount without the need to have volume. So you get awesome prices

  5. vickie says:

    This is not up to date as you say! You say USPS doesn’t let you print your labels. What? i have been doing that for about 10 years!

    1. Vickie,

      You misread the post. USPS does not let you print “first class” labels. I’m pretty sure you haven’t been doing that for 10 years on the usps Web site

      1. Like I mentioned many times already. I try to keep this post up to date as it gets a lot of traffic

      2. John says:

        Steve, That is a bit misleading. You cannot print “first class” labels through USPS’s website but (in addition to the Stamps website) you can print them through Paypal, and eBay. This hasn’t been the case for 10 years, of course, but it has been the case for quite some time.

      3. I don’t see how this is misleading. Sure you can print first class labels in PayPal, but that implies that you took the payment via PayPal. This post does not assume anything about the payment processing. It’s about the cheapest way to ship a package in the general case with no assumptions.

  6. Fernando says:

    You don’t say anything about the fact that UPS has the Postal Service deliver many of its packages for them. Many people don’t know about this. People claim UPS to be so great and that’s all they’ll use, then a mail man delivers their package. Too funny.

    1. ThomasM195 says:

      That is a different service. They aren’t just passing along random packages to the USPS. The shipper selects that option to get a lower rate. This is nothing new and this is nothing unknown to most people.
      UPS SurePost gets finally delivery by the USPS.
      FedEx SmartPost gets finally delivery by the USPS.
      Again, these are different services, so quit slamming companies about what they do when you don’t even know what you are talking about.

      BTW, I’ve never had a package lost by the USPS.

  7. sloane says:

    The information is a little wrong. Okay, a LOT wrong. I use USPS and it is much cheaper than both FedEx and UPS. I ship all my merchandise from California, and Flat rate boxes have saved me a fortune when shipping to eastern states. A rep from UPS called a few days ago and we compared prices. I recently shipped a package to New York that cost me $11.30 for a medium flat rate box, the package weighing 5 pounds. If I was unable to fit the merchandise in a flat rate, the shipping cost would have been around $18.50 for regular Priority mail. If I had shipped with UPS, it would have cost me $48.00 for ground shipping!!!! That is absolutely ridiculous. Even the sales rep seemed absolutely shocked. So we tried a different address, one going to California. It cost me $5.05 to ship a 1 pound package to a different city in California using USPS, however it would have cost over $7.00 to ship UPS. The sales rep quickly ended our phone conversation after that embarrassing price analysis.

    1. Hi Sloane,

      Recently as of Jan, 2015, both UPS and FedEx have drastically increased their rates. I will be updating the post soon once I get a better picture.

    2. One more thing, I have problems believing that shipping a 5 lb package to the east coast cost you $48….Was this an oversized package or something? Otherwise, we ship 5 lb packages every day using UPS. Not even close to $48.

    3. Ok, I just punched in a 5 lb package onto the UPS website and I got a quote of $15.79. There must be a piece of information you are not telling me.

    4. iamshipping says:

      I work for one of the big two, but to be frank our rates are the same. If you quote apples to apples list rates will run you the same thing, surcharges are the same, pickup fees are the same. They may be labeled indistinctly or combined but you can bet that they are the same. 2015 residential surcharge is 3.10 for both services and to your “podunk” areas you will pay an additional surcharge of 3.80.
      Service reliability, delivery times, convenience of pickup times are the difference and are usually a regional issue/preference.
      USPS, cannot compete in the game with a package over 9-lbs. This is my cutoff for a small business. Did you ever wonder how the post office can ship your package from California-New York cheap? Number one they are a several billion dollar deficit with your tax dollars every year. Secondly they have contracts with Fed Ex to send it on their planes. Odd huh?
      You most likely had an inexperienced rep trying to get your business that doesn’t know where these companies are competitive. It doesn’t take long, as the author said, 1-2lbs are shipping USPS with most companies that have not been burdened with 1,000′s of dollars in lost packages a year.

  8. Kevin says:

    I run an online store and do about $500 a month in shipping and 3X to 4X that from Sept to Nov due to holidays. Probably around $12-$15K a year. I did some comparisons between FedEx, UPS and USPS and for the most part….UPS was cheaper. USPS definitely was less for smaller or flat rate packages but not a whole lot of my shipments are small. UPS gave me a decent negotiated price right away and has gotten a little better each year. I do use USPS but for international shipping only which IMO cant be beat compare to UPS, FedEx or DHL. However, as on Dec 29, 2014….the prices changed and in a big way. UPS now charges based off dimensional weight. So if I shipped a 16x16x12….I’m charged a weight cost of 19lbs even if the weight was 10lbs. The way they figure the weight is you would multiply 16x16x12, then divide by 166. This equals to 18.5 and round up to 19. Most of my shipping is larger boxes but light weight so this really screws me. Many of my shipments have almost doubled in cost from previous year. I like UPS….never had any real issues and the ones I did was taken care of right away. But with shipping cost almost doubling….I’m afraid I will lose customers. Shipping plays a role when choosing overall price. I know I do it when I shop online. I don’t want to leave UPS but may have to….but I don’t think USPS would be any better. Maybe if I get a price break if using a service like Stample.com?

  9. RogerBay says:

    I was checking the price to ship a 10 pound box that was 22″ x 20″ x 20″ and got hit with “dimensional weight”, my 10 pound box suddenly became a 46 pound box that could cost over $100 to ship, depending on zone! Prices varied drastically, zone 4 would cost $14.50, while zone 5 would jump to $67.40, and zone 9 would be $125.45. Wow, what a difference!

    1. Yep. This whole dimensional weight calculation is putting everyone up in arms. There are lots of rants on various ecommerce forums. However, you can negotiate with UPS and Fedex as long as you pit them against each other.

  10. Great information about shipping. Please check it out
    Sam

  11. Diago says:

    Actually, you are completely wrong about the reliability part. Let me tell you of my experiences with all 3 companies;

    USPS: I routinely get packages for other people and stuff just shows up whenever it shows up. If something is sent by USPS to me, I just resign myself to the fact it will get here when it gets here.

    UPS: Most reliable, but yet not. Just recently (yesterday) had two packages delayed due to ‘severe weather’ that never existed (even the airport said there was none at the time). When the shipper told them to ship them on Saturday to fix it, they agreed, and never put it into the system.

    FedEx: Oh….I wish you hadn’t mentioned them. Where should I start? Well, for one, I plan to start some kind of movement to deal with them and I won’t settle until they either go the way of DHL, or every person on this planet stops using them. You might ask, ‘Geeze! Isn’t that a little bit too far? I mean, how bad could it be?’ Well, since you asked…..

    I have had over 10 packages shipped to me that were completely lost in transit and had to be replaced, about 3 destroyed, and 2 they just never even picked up. Currently, I have one package that was sent to me via Home Delivery with a “Guaranteed” Saturday delivery. I’ve had them do it before, even see them around town driving their ‘Home Delivery’ truck on Saturdays. Well, this last time was completely different. I get a text message telling me the package was on the truck and out for delivery (at about 4am). So, I sit there for about 12 hours before I call them, only to find out, they decided they didn’t want to drive out here, set my entire area as ‘not eligible’ and changed the service to ground shipping (a service I might add which is like, 1/3rd the price that was paid for). To make matters even worse, the location is specific to Home Delivery packages so they are not open on Sundays and Mondays, thereby causing the package to arrive even later.

    So, yeah, while you might not have seen ‘much’ problems, trust me, out of the three, I would say UPS is the most reliable and even will all the problems, I would still choose USPS over FedEx. I’ve even told Amazon that I will refuse anything sent through FedEx, and I have. I’ve even gotten my entire community to based on what that one driver did. So, when FedEx comes around here now, they are just wasting time, money, and gas lol.

  12. Randy says:

    This article is awful. Didn’t read, just skimmed through. It’s filled with an opinion and not facts. You should take it down. Very Bias! I’ve never had a problem with USPS in regards to lost packages, however I’ve had multiple issues with UPS.

  13. Bob says:

    What is the lowest cost carrier to ship a 9x7x15, 10 lb box. Speed is no issue.

  14. FedEx Ground is usually the best bet for us, when it comes to the combination of speed, reliability, and price. Sometimes USPS takes two days to deliver within the same city! However, if I need something to go cross-country overnight, I always use USPS Express. It’s about 75% cheaper than using FedEx Express or UPS.

  15. This is a great post, since I sell a lot on ebay.

  16. Thank you for writing this, it definitely gives me an overview of the shipping market, and there are quite a few valuable tips, especially if you include the comments. Very Grateful! :)

  17. Sridhar says:

    You should consider claiming refunds for the late deliveries by FedEx & UPS to bring down the shipping cost by around 12%. Late even by 60 seconds is eligible for full refund of the shipping charges. Of course, tracking every parcel and submitting the claim manually will be a very difficult job. But automated tools like Lateshipment.com will be very useful to automate the tracking and claim process.

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