This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
When you need to ship a package, which company first comes to mind? According to last year's Battle of the Brands non-scientific poll, an overwhelming majority said they favored United Parcel Service Inc. (NYSE: UPS) over FedEx Corp. (NYSE: FDX). Higher fuel surcharges, a weak economy, reduced domestic package volume, and a recent push from the U.S. Postal Service have impacted both of these international shipping companies in the past year, but Americans still want the same quality service at a discount price.
Let's take a look at a few changes since last year:
The US Postal Service Tries To Gain Ground
The largest player in the U.S. overnight package delivery business is attempting to increase its market share in the fast-delivery business next month. USPS is barely holding on to its 32% market share in the business, as FedEx and UPS continue to push the envelope at 31% and 25% market share, respectively. For the first time, shippers using Express Mail, Priority Mail, and several other parcel services will be able to get lower rates for large- and medium-volume contracts, according to the agency. Will UPS and FedEx need to cut their prices further to compete with the USPS?
Large Rate Increases For 2008
This year, FedEx and UPS announced that rates for ground packages would increase an average of 4.9% on the ground and 6.9% in the air (minus a 2% cut in fuel surcharges, creating a 4.9% increase in the air as well). So what does this mean for you? The key term we need to acknowledge is averages. Rates for certain packages will increase more than 4.9%, while other shipments will increase less than 4.9%, all depending on the characteristics of the package, the distance traveling as well as the service you use (ground or air).
Fuel Surcharges
If you've studied the fine print of the pricing that both FedEx and UPS use, the key is in the fuel surcharges. Don't let the 2% cut in air fuel surcharges trick you into thinking you're saving, because you're not. In a nutshell, carriers tack on a 0.5% surcharge for every four cents of an increase in jet fuel prices -- starting at the base price of $1.14 a gallon. With jet fuel prices up nearly 70% since April of last year, you're going to be paying more to for air delivery regardless of which company you use. For every eight cent increase in standard fuel prices, there is a 0.25% jump in the fuel surcharge -- starting at the base price of $1.50 a gallon. The price of gas has jumped nearly 50 cents over the past year, so going ground will also hurt your wallet.
The Cost
Don't believe me? Here's a quick look at what sending a package could cost you. I priced another 20 lb. medium-sized company box shipped to a residence in Huntington Beach, California 92605, from Bayside, New York 11361, and compared it to last year's data.
|
Delivery Service |
2007 |
2008 |
Difference |
|
UPS Next Day Early AM |
$146.91 |
$175.02 |
$28.11 (+19.1%) |
|
UPS Next Day Air |
$115.99 |
$140.82 |
$24.83 (+21.4%) |
|
UPS Next Day Air Saver |
$107.74 |
$134.40 |
$26.66 (+24.7%) |
|
UPS 2nd Day Air |
$81.48 |
$96.66 |
$15.18 (+18.3%) |
|
UPS 3rd Day Select |
$56.75 |
$67.08 |
$10.33 (+18.2%) |
|
UPS Ground |
$26.29 |
$28.19 |
$1.90 (+7.2%) |
|
|
|
|
|
|
FedEx First Overnight |
$140.40 |
$170.82 |
$30.42 (+21.6%) |
|
FedEx Priority Overnight |
$113.27 |
$140.82 |
$27.55 (+24.3%) |
|
FedEx Standard Overnight |
$102.80 |
$134.40 |
$31.60 (+30.7%) |
|
FedEx 2Day |
$68.14 |
$96.66 |
$28.52 (+41.8%) |
|
FedEx Express Saver |
$55.88 |
$67.08 |
$11.20 (+20%) |
|
FedEx Home Delivery |
$18.60 |
$24.27 |
$5.67 (+30.4%) |
Result estimates calculated on Tuesday, March 27, 2007, and Tuesday, April 22, 2008, using UPS.com and Fedex.com.
The data clearly shows a significant increase from last year's rates. But what really grinds my gears is that both FedEx and UPS have exactly the same rates for four out of six delivery services. So where can you find a cheaper overnight service?
A Possible Alternative
The fourth-largest overnight service is DHL, owned by Deutsche Post World Net AG, and holds a 9% market share in the United States. In the same 2008 study, DHL's prices to Huntington Beach were slightly cheaper than UPS and FedEx. Earlier this year, however, there were reports that DHL might leave the US shipping market due to considerable losses since 2004. One industry expert believes the U.S. shipping industry needs DHL to stay; fearing competitor prices would rise with DHL out of the picture. Gerry Hempstead, an ex-DHL Executive, told Supply Chain Digest in an interview that "DHL sets the benchmark for the bottom thresholds of pricing. There are deals out there that Fed [Ex] and UPS just would not handle at the price DHL offers." DHL plans to announce their restructuring plans in May. Let's hope they plan to stay in the states a little longer.
The Bottom Line
With pricing so similar, choosing a delivery service really depends on who you can trust getting your product where it needs to be on time. Last year, hundreds of people responded to this article claiming one service was better than the other, listing a myriad of reasons. If the cost to ship a package is nearly identical, then reliability, in my opinion, is the key to choosing your provider. Now the only question is, who can I rely on?
Which company do you rely on, and why?
Vote in our poll for FedEx or UPS as your preferred brand, and let us know in the comments why you love it.
Reader Comments (Page 1 of 1)
4-29-2008 @ 10:24AM
Lorraine said...
FedEx's tracking is better than UPS's. Their customer service is better, but it's decreasing in quality. HOWEVER, don't use FedEx for overseas delivery. They subcontract their customs representatives service, and your package can be held up for weeks, and you will more likely incur customs charges to your deliveree. USPS and UPS are better for overseas. But USPS has horrible tracking services. If there are no problems, it's the cheapest and pretty fast for overseas. But if something goes wrong, say goodbye to the package. They won't bother finding it.
4-29-2008 @ 10:49AM
mike said...
I disagree with saying not to use FedEx for overseas packages. I actually prefer their service for my international shipments. You may have had your packages held up in customs because you did not provide a commercial invoice with your shipment. If you are sending a package that is worth money to customs you usually will need this commercial invoice. If it is just correspondence then it does not matter.
4-30-2008 @ 9:29AM
Chris said...
For years I've been a hugh fan of mail order and now E commerce or shopping over the 'net'. By far UPS has been to my door with packages more times than FedEx, USPS and DHL combined. I simply cannot fault UPS. Of all the deliveries I have received not one has been damaged or been troublesome. Sure I've seen a few rough looking packages, some because of poor packing habits, use of old boxes and some who knows. Not once have I had to file a complaint with UPS. On the other hand I've had a few phone calls to FedEx for failure to leave a package when UPS always leaves theirs unless a signature is requested by the shipper. That's a major reason I always request UPS service. DHL has left several packages outside my garage door in the weather, plain view of the street and behind a vehicle??? Yes, I backed straight over it not knowing it was there not to mention it was raining and a year or two later nearly got another. DHL last Christmas took 6 days to make a first attempt to deliver a 2 Day air package claiming they were too busy because of the season but the kicker was the claimed UPS and FedEx were as well....UMMM Not true they got theirs on time to my address. Come on DHL you get what you pay for I guess. Of course the USPS is in a class all their own. My rule route carrier, now keep in mind I live in a suburb of a major city, has been known to leave me postcards to pick up my package at the postal center as well as throw smaller packages skipping up my driveway. Found one under the back tire of my SUV one day wondering how that got there until I noticed the scaring from the concrete on the underside of the package. I'd rate them first to last UPS, FedEx, USPS and last and certainly last DHL. I will add I give kudos to the FedEx Home delivery driver who recently came to my address on consecutive days with 2 different signature required packages. Day one I met and gave him my cell number and on day two he called to see if I was home and came straight to my home from his terminal making me his first stop. It was a large package and I guess he wanted to make sure it was out of the way but nonetheless I grade that delivery experience over the two days at 100 percent but if given a choice UPS will make my deliveries because of the years of friendly, competent, trouble free service they have provided.
4-30-2008 @ 2:42PM
Woody said...
I will never ship my packages with UPS without (INS.). I shipped two packages worth 600+ $ each . They was suppose to reach N.C. from New York in two days, one did one didn't. One is lost in Laurel,MD. Note to UPS users, put insurance on your packages.
4-30-2008 @ 9:11PM
UPS BITES! said...
I have yet to get a package delivered to me on time by UPS. Thier next day Air is more like four day Air and the second day is a week. I find this really dismaying as they have a huge UPS hub only 16 miles from me.
FedEx has always delivered on time even in the middle of a blizzard! Very nice folks working for Fed Ex they will carry the stuff up my stairs for me due to my handicap status. UPS won't they make me come down two flights of stairs even when they are buzzed in and lug the stuff back up even thou I am on crutches.
FedEx you are doing Great I can'tr wait for the day you bury UPS!
5-01-2008 @ 10:58AM
mike n,j said...
ups rocks. I live in nothern nj and recieve pkgs daily ,my ups driver will leave my shipments out of weather and out sight the rest will toss pkgs on front steps regardless of weather.i've had the same ups driver for over 19 yrs ,friendly and consiencious,kids on my block just love THE BIG BROWN TRUCK.
5-05-2008 @ 6:05PM
Chief said...
I have used both. Sometimes they are real close to each other in on time deliveries. Other times they are far apart. Bottom line, I prefer UPS for it's work force which seems more owner operated than FDX who has more hired hands, especially their contract workers who lack professionalism in their service providers.
5-05-2008 @ 7:49PM
Bobby said...
No contest between these 2 companies - what they so is the same, HOW they do it is light years different. FedEX wins hands down because they have the best employees in the industry - they created the overnight trade and FedEx is still the benchmark. GO 800 FedEx!
5-06-2008 @ 4:49PM
steve e said...
Both UPS and FedEx are good companies and provide top notch service. But why is UPS able to do this and pay thier employees fairly with full benefits. Drivers make over 75k per year plus bennies. If I worked for the other companies I'd be asking this question and trying to get hired at UPS as they seem to be more efficient. Perhaps its because the same Driver delivers Air and Ground, not 3 different Drivers doing the same thing-------go figure????
5-06-2008 @ 10:22PM
Jason said...
Are you kidding me, did i hear someone say "cant wait for the day you bury UPS"? thats really funny considering all the internal problems fedex has with their drivers and lawsuits. lets remember who started this all over 100 years ago, and has been a fortune top 50 company for who knows how many years. UPS IS America. The last fedex driver i saw had cookie crumbs and ice cream running down his shirt. fedex is just a copy cat company who is just trying to tweek a few things here or there. UPS isnt going anywhere, they will be here long after we die because of one reason...CONSISTENCY! we all should be proud we have a company like UPS to start off in America, and next time you see your driver, pat him/her on the back.
5-07-2008 @ 5:53PM
Iyad said...
UPS is a much better company than FEDEX, at least, they pay their people fairly, Fedex hires x-ups employees in a pursuit to better their ops.
5-07-2008 @ 5:54PM
Ray said...
UPS does a great job on international shipments. I forgot a invoice once and they called me so I could fax them one. By auditing their int. shipments they prevent them from getting stuck in some foreign countries customes like Fed Ex allows to happen.
5-09-2008 @ 8:01AM
Jason Gauthier said...
I would choose UPS over Fed, DHL, and the Post Office. Ever ask yourself why the post office can offer sifnificantly lower prices than Fed Ex and UPS? Try that they do not need to show a profit to investors, and compare the cost of your stamps now to 5 years ago. I have never had a problem with UPS delivers, always on time and put out of the weather, the last time Fed Ex delivered anything it was a computer at x-mas and they left it in the snow at the end of my sidewalk. Go on-line and check out the class action lawsuit against Fed Ex by its own drivers. As for DHL I refuse to use a company that is run by the German Post office. Americans complain about jobs going elsewhere....Save a buck give it to Germany.
5-09-2008 @ 8:32AM
Curtis said...
The USPS does the best job. Not only can I ship international products overseas with discounts of up to 70%. I can also track them and they do get there when they say they will. I also do all my shipping utilizing USPS.com and beginning May 12 I will start receiving discounts for printing my shipping labels online. I have had trouble with UPS losing my parcels or delivering to the same address but the wrong street. Thank god for honest people. As for FedEx and UPS the biggest problem is that I can ship my products thinking I am getting the best deal with the prices shown, then I get a bill in the mail saying that I owe more with all the surcharges that they bill me for. How ironic that they do not put the US Postal Service up against FedEx and UPS. The Post Office Wins HANDS DOWN IN PRICING and SERVICE. Everyone that ships needs to take a closer look at the Postal Service
5-09-2008 @ 11:08PM
Richard said...
I prefer Ups over Fed Ex or DHL, USPS is very fair on small package Priority Mail. I just hope all of these services can survive the Gas Crunch today!
I believe that UPS Drivers are more Professional than the other guys, I guess when you reward your workers fairly you will always receive a better work ethic from individuals.
I think all delivery services share the same types of flubs such as damaged pkgs, delay's, billing inquiries and so forth, that is why I truly belive that UPS excels in service and timeliness more often.
5-11-2008 @ 12:09AM
ron said...
From an employees view. Well--ive read a whole lot of comments on this mater.Even though its sad to say, most people dont realize how much demands are put on us a couriers/I work for company X and we are so overloaded and maxed out on our routes everyday.Also we are timed on everything down to hour shoelaces.Company X has demands on us so high,that if our i and t's are not dotted or crossed we get a preformance reminder in our mailboxes by the next morning--Simply put, compared to UPS standards we as couriers are way underpaid. I just wish everybody could see behind the scenes one day. Ask yourself this question? Why does company X's drivers always seem to be in a hurry and Brown is more laid back and less stressfull,well they are paid 5-10 dollars more an hour and have much more time to do thier job.As long as they get their frieght out that day its all good.Also Company X has to load and unload thier truck before going on road--well this makes staying in a top notch apperance very hard to do,especially when its 95 degress and humid, before you can even get started.
5-24-2008 @ 9:03PM
KENNY said...
I work for UPS, ive been with the company for 14 yrs. As a driver, we have to be on the go at all times, we are followed by sups and watched by a gps system. I must say, I love my job, I have great benifits and I make $28.17 per hour. Im glad to see alot of people use UPS...I feel bad for the FEDEX drivers (ground and air) They need more pay and all the things ,we get.. I SAY JOIN A UNION!!!! FEDEX is making a killing of of cheap labor...
5-28-2008 @ 12:53AM
Johnnie said...
What about the lawsuits that are hurting FedEX.
FedEx has exhibited a DEFIANT attitude. In a group meeting a Manager said, "FedEx has a team of lawyers, sue us, we will win!" A FedEx's Manager denied me time off to attend my Father's Funeral. He also denied a Hispanic employee time off to attend his StepFather's Funeral. A fellow employee informed me that this Manager gave a white employee time off to pay court fines for writing bad checks. This is the Most INHUMANE TREATMENT an employee can experience at his workplace.
6-18-2008 @ 9:10PM
jl neuman said...
I have used UPS for about 8 years. Very seldom did I have damage in the delivery, and when some brake or damage occurred, the claims service was prompt in its remedy . The USPS, is a never ending process if there is a claim for loss or damage. I have experienced USPS delivery carriers, actual throwing the package to my door step from 6 feet away even when visibly marked "FRAGIL". The last time I had a complaint, it was totally ignored unless I put "it in writing".
6-23-2008 @ 11:04PM
John said...
FedEx and UPS are both great companies. But if it matters to you, as the shipper, how these companies treat their employees, then you will use FedEx every time. UPS has always enjoyed being on top but is rapidly losing market share. It is funny to watch if you care anything about how Big Brown treats their employees. The days of big stock awards and people getting rich are long gone. Dont believe me, jusk ask your closest UPSer - they will tell you!