Shipping School is in session!
Before we dive into the differences between top shipping carriers, a little background on myself: I had the idea for Shipping School after working at various ecommerce startups back in the day, where, to be honest, I made a lot of mistakes.
To speak candidly, staying on top of the ecommerce fulfillment game can be complicated, especially with something as ever-evolving as the shipping and logistics industry. Sometimes, navigating it feels a bit like trying to solve a Rubik’s cube made up of colors that continuously change.
So, I thought I’d channel my experience into a free, easy-to-digest resource where new shippers can go for the info they need, when they need it.
Speaking of new shippers: whenever an ecommerce business gets going, entrepreneurs always come to what I call the “ship-searching” stage. When it’s time to fulfill orders, they’re faced with two critical questions:
- How much are these packages going to cost to ship?
- Which carrier will give us the best rates?
There are three major shipping carriers to choose from in the United States: USPS, UPS, and FedEx. All three of them offer great services for both individuals and small businesses. Depending on what you and your business needs, one may be the best choice compared to the others.
Let’s get into it.
- USPS vs UPS vs FedEx: an overview
- Shipping carrier costs 
- 5 ways to cut shipping carrier costs
- USPS, UPS, & FedEx: Which is best for different use cases
- Having flexibility in carrier options is key
- USPS vs. UPS vs. FedEx FAQs
USPS vs UPS vs FedEx: an overview
While at first glance they may appear similar, all three of the major shipping carriers in the US specialize in different areas of the industry. As a crash course, I’ve written a brief overview of each carrier below.
USPS is the carrier built for the people. Literally. When it was founded in 1775, USPS built itself on the promise of universal services for all Americans at affordable rates.
USPS is the only carrier legally allowed to touch every mailbox in the country, and it has developed an unparalleled network to deliver mail to every household in America. It leverages this same network to also offer various mail types at the lowest rates.
One of the best things about USPS is that it also offers specially-discounted services such as Priority Mail Cubic, where shipping rates are based on a package’s outer dimensions and not its total weight.
Individuals and businesses can access these special “cubic” rates when they use online shipping software to buy discounted postage online — more on this later.
UPS is the go-to carrier for large, heavier packages. Think products like televisions, pre-assembled furniture, and more. While USPS only allows for a maximum weight of 70 pounds per package, UPS has a maximum weight threshold of 150 pounds.
UPS also offers an abundance of express services at affordable rates for ecommerce packages, though they’re typically at slightly higher price points than USPS.
They also offer an emergency delivery service called UPS Express Critical, which is the premier service for emergency deliveries under 24 hours around the world.
Another area that UPS specializes in is the shipment and delivery of high-value items. With UPS, shippers can insure packages up to a maximum value of $50,000. This makes UPS the choice carrier for sending luxury consumer products such as high-end watches, collectibles, and rarities. We’re looking at you, Pokémon card collectors.
If USPS is the “purified spring water” and UPS is the “Coca Cola” of the shipping industry, then FedEx is the “LaCroix.”
FedEx specializes in express and overnight shipping, when you need to send something fast, but it’s not quite an emergency. Their standard overnight delivery services are typically marginally less expensive than UPS. FedEx is also the premier carrier for B2B ecommerce.
In addition to specializing in those areas, FedEx is also the top choice for shipping specialty items, such as perishable food products or temperature-controlled goods.
In fact, FedEx offers specific boxes such as their proprietary cold packaging, which can keep shipments between 35°F-46°F for 48 or 96 hours without having to use dry ice or gel packs. This makes FedEx the go-to carrier for ecommerce food startups in the pre-packaged meal space.
Shipping carrier costs 
Below is a visual comparison of the different shipping carriers and the primary shipping options: ground, express, and overnight.
|USPS||Starting at $7.01||Starting at $3.01||Starting at $22.75|
|UPS||Starting at $8.76||Starting at $12.35||Starting at $32.09|
|FedEx||Starting at $8.76||Starting at $17.82||Starting at $29.05|
What USPS costs include:
- Scheduled pickups: USPS offers free package pickup services that you can schedule on their website. Pickups take place based on availability, but you can also request a specific time slot for a fee.
- Free tracking: All USPS shipping services offer door-to-door tracking, with real-time updates every time packages get scanned during their journey to their final destination.
- Free insurance: Priority Mail and Priority Mail Express packages come with $50 of insurance if you purchase postage at the post office or on the USPS website. If you use shipping software to buy USPS postage at commercial pricing rates, the free insurance increases to $100 per package. Note: other USPS mail type services such as First Class Package, Media Mail, and Retail Ground do not come with free insurance.
- Volume discounts: USPS offers cheaper rates to shippers who use shipping software to access commercial pricing rates, and/or who partner with fulfillment providers like ShipBob that are given discounts due to a high volume of shipments (since they ship packages for thousands of ecommerce brands).
What UPS costs include:
- Free tracking: All UPS services offer free door-to-door tracking.
- Free insurance for anything under $100: Per the UPS Store Pack and Ship Guarantee, UPS will cover the cost of postage and package contents for up to $100 in the event of a missing or damaged shipment.
- Commercial discounts: Though not published publicly, UPS discounts are available to high-volume shippers on a case-by-case negotiated basis, or shippers who partner with a 3PLs to take advantage of economies of scale.
What FedEx costs include:
- Free tracking: All FedEx services come with door-to-door tracking.
- Free insurance for anything under $100: Per the FedEx Packing Pledge, FedEx will cover the cost of postage and contents of packages for up to $100 in the event of a lost or damaged shipment.
- Commercial discounts: Though not published publicly, FedEx discounts are available to high-volume shippers on a case-by-case negotiated basis, or shippers who partner with 3PL’s to take advantage of economies of scale.
5 ways to cut shipping carrier costs
Optimizing your shipping strategy, including costs, can help you improve your bottom line. Here are five useful tips on how you can lower shipping costs, no matter which carrier you’re using.
1. Optimize your packaging size (the smaller, the better)
Shipping is an industry where size matters; don’t let anyone tell you otherwise. No matter which carrier you decide to go with, making sure your packaging is as small as you can get it is the most effective way to keep shipping costs down.
If you use packaging that’s too large for your items, you may be charged for the dimensional weightof your package, instead of its actual weight. In a nutshell, dimensional weight (or “DIM,” for short) refers to the amount of space your package takes up on a carrier’s truck. Shipping companies will charge you whichever “weight” that will make them more money: your package’s actual weight or its dimensional weight.
Spoiler alert: DIM weight is always much more expensive than you want it to be, and like Vegas, the house always wins.
When it comes to a package’s dimensional weight, none of the carriers will hesitate to charge you these extra fees. It means more money for them, after all!
As such, new shippers often find themselves in one of those “don’t hate the player, hate the game” situations. However, you can rig the game in your favor by optimizing your packaging size to avoid dimensional weight charges in the first place.
“Pillows are not small items, which makes them difficult to store and expensive to ship because of dimensional weight. Even though they are lightweight, they are big, so you pay for the space they take up on a delivery truck. And the farther away the shipping destination is, the more expensive it is to ship them.
I knew I needed a cost-effective way to help me ship pillows at launch, and it turns out ShipBob was it.”
Tracey Wallace, Founder of Doris Sleep
2. Ask for discounted shipping rates
Saving the most money on shipping is all about taking advantage of “economies of scale.” In other words, the more packages you ship, the more leverage you have to negotiate discounted rates with the carriers.
However, entering into these kinds of negotiations isn’t as straightforward as walking into your local post office or UPS store with a briefcase full of cash. You need to go through the proper channels. That’s why it makes more sense to work with a third-party logistics (AKA a “3PL”) company like ShipBob.
When you partner with ShipBob, you not only work with logistics pros who handle all your order fulfillment needs for you.
Since ShipBob fulfills orders for thousands of online brands from fulfillment centers across the globe, you get access to discounted shipping rates from all of the major carriers that ShipBob partners with.
Think of working with a leading 3PL kind of like throwing on a jersey and stepping onto the court with the 1990s Chicago Bulls, featuring Michael Jordan in his prime. By joining up with an all-star team like that, you’ve just given your business the best shot at success when it comes to servicing your customers.
“Working with ShipBob has been great. Being able to take advantage of USPS’s Media Mail shipping rates through ShipBob has helped out a ton.”
Lee Nania, Founder of SubSubmarine
3. Ship from closer shipping zones
When most ecommerce businesses start out, they often keep inventory on-hand and fulfill their own orders. However, this can present a problem when you factor distance into the shipping equation.
On top of how much your package weighs and how big it is, the total distance it has to travel to reach its final destination matters.
There are eight shipping zones in total in the US. The location from which an order is shipped is the point of origin and located in Zone 1. The address it’s shipped to is the destination zone.
If you’re in California and you’re sending a package to New York, it’s going to cost you. That’s why it’s not uncommon for growing online brands to outsource fulfillment to a 3PL like ShipBob, so they can easily split inventory across multiple fulfillment locations.
When an order is placed, it is automatically routed to closest fulfillment center to its destination.
ShipBob has fulfillment centers in major cities all over the US, so we can spread out our inventory across the country to reduce the shipping zones and costs associated with shipping orders to destinations that are far away.”
Founder of My Calm Blanket
4. Switch to poly mailers
Poly mailerstake up less space than boxes on trucks and weigh less, and as a result, each of three carriers price them lower than three-dimensional parcels.
Obviously, this isn’t the best option for sending fragile items, but if you can get away with putting your products in poly mailers rather than boxes, this is an easy hack to reduce shipping costs right off the bat.
5. Select standard shipping
Opting for a slower shipping speed automatically reduces costs. Standard shipping is always cheaper than expedited shipping, and ground shipping is always cheaper than standard (UPS Ground, FedEx Ground, USPS Retail Ground).
However, standard is obviously slower than expedited, and ground service can sometimes take longer than expected. So, you’ll need to decide which shipping speed is right for you.
USPS, UPS, & FedEx: Which is best for different use cases
USPS, UPS, and FedEx all provide similar shipping options for ecommerce businesses, but there are some variations, especially when it comes to cost. Below is a breakdown of the best shipping carrier based on different use cases.
|Flat rate shipping||USPS||USPS offers the cheapest and widest variety of options for flat rate shipping services, with products like the Priority Mail® Flat Rate Envelope, the Priority Mail Flat Rate Padded Envelope, the Priority Mail Express® Legal Envelope, and all the different flat rate boxes (small, medium, and large).|
|Small packages||USPS||USPS is the premier carrier for small packages and offers the best rates for handheld shipments under 20 pounds. Letter carriers are able to drop off these packages on their regular mail routes, which is why USPS is able to keep rates low for smaller packages compared to the other carriers.|
|Larger packages||UPS||Large packages don’t create as much strain on the UPS network as they do the other carriers, so UPS charges the best rates for these types of shipments. In fact, UPS specializes in handling large-size packages.|
|Heavier packages||UPS||For the same reason as above, UPS is the premier carrier offering the best rates for heavy packages, and they handle packages weighing up to 150 pounds with ease.|
|Express delivery||UPS||UPS offers the widest amount of choices at the most affordable rates for express delivery, with their two flagship services being UPS Next Day Air® and UPS 2nd Day Air®. The latter is the cheapest UPS express service for shipments that don’t need overnight delivery.|
|Overnight shipping||FedEx||If you need something sent overnight that isn’t an emergency delivery, FedEx is the best bet. They specialize in overnight shipping, and even offer you different timeframes that you can choose for the package to be delivered on the next business day. Later in the day (with FedEx Priority Overnight or FedEx Standard Overnight) costs less money, but regardless, it will often cost less than UPS for similar timeframes.|
|3-day delivery option||UPS||Compared to FedEx, UPS offers the more economical 3-day delivery option with UPS 3 Day Select. While USPS Priority Mail may be much more affordable in most cases, on-time delivery has been dwindling, and reliability is not as up-to-par as UPS for 3-day delivery.|
|International shipping||USPS||This one is tricky, with much to consider. Ultimately, USPS wins out here, due to one thing above all else: low rates. Since they are private carriers with their own networks, UPS and FedEx charge an arm and a leg for international shipments. USPS, on the other hand, partners with other countries’ own postal services to deliver overseas shipments, which is why they’re able to keep costs so (relatively) affordable for international services.|
|Fragile shipping||UPS||While USPS and FedEx leave it up to you to properly pack your fragile items, UPS specifically offers fragile packing services. Their workers are trained in packing techniques such as block-and-brace, double box, and suspension, and they’ll properly pack your fragile items so you don’t have to.|
|Hazardous materials shipping||USPS||While you can ship hazardous materials with any carrier, USPS offers the most leeway. UPS and FedEx prohibit a good amount of hazardous materials to be sent in their network unless you’re an “approved shipper.” USPS, on the other hand, allows everyday customers to send items such as lithium ion batteries (as long as you use the proper services and affix the proper markings to your package).|
|For business deliveries||FedEx||FedEx offers the best rates for B2B shipments as one of their specialties is business deliveries. They also offer the most reliable and economical service for shipping documents such as contracts in their FedEx envelopes.|
|High-value item shipping||UPS||For shipping out items of higher value, UPS is the best choice. UPS allows for a much higher maximum declared value of $50,000 (or local currency equivalent) per shipment for insurance. This gives you way more wiggle room for sending expensive items, and often at a better rate than FedEx. For context, the maximum value most insurance companies will allow you to declare with USPS is $5,000.|
Examples of use case scenarios with answers (Updated on April 2022)
You need to deliver a small box, let’s say 5 in x 5 in x 5 in and weighing 2 lbs, containing cosmetics within the next 5 business days to a customer who lives in a different state.
With this example let’s push the limits of the contiguous United States. Seattle to Miami.
In this situation, FedEx reigns, but it is costly. It would take almost $50 to get your package delivered to a residential address in time.
USPS is vastly cheaper with a less than $15 delivery fee, but your package would arrive a couple days late.
You need to deliver 5 print books, all the same size, within the next 10 business days to a customer who lives in a different country.
Maybe they own a bookstore in Denmark. So from New York to a Danish bookshop would cost via FedEx at minimum $250.
Having flexibility in carrier options is key
Nearly every successful business grows to the point when it’s time to optimize their ecommerce shipping strategy. If you’re a growing brand, it might be time to partner with a 3PL like ShipBob.
If you’re sending a variety of packages to locations around the country (or even global shipping), a 3PL like ShipBob allows you to best service your customers by fulfilling customer orders from the most optimal locations, so you can meet customer expectations while keeping logistics costs low.
In addition, sometimes the “best” carrier for you might change, depending on what kind of package you’re sending, how far it needs to travel, and a slew of other factors.
For instance, it may be more cost-effective to overnight a heavier package with UPS instead of USPS. In this case, you don’t want to stay locked in with just one carrier. ShipBob automates this multi-carrier selection process for all of their customers, no matter the size.
Due to the amount of packages it’s responsible for fulfilling, ShipBob is able to pass along heavily discounted rates from all three shipping carriers (among others) to their customers. In turn, this kind of flexibility can even give your customers more choices when they place their orders, which ultimately leads to a better experience with your brand.
At the end of the day, partnering with a 3PL like ShipBob takes all the headache out of warehousing, shipping, and fulfillment, so that you can focus on doing what you do best: growing your business.
USPS vs. UPS vs. FedEx FAQs
Here are answers to three of the most common questions about the differences between USPS, UPS, and FedEx.
Which is cheaper: UPS, USPS, or FedEx?
Out of the three major carriers, USPS is typically the cheapest option. After that, UPS comes in at a close second, and FedEx ranks as the most expensive (yet arguably most reliable) carrier. Since it offers the best mix of affordability and service, USPS is the most popular small ecommerce shipping solution.
One thing to keep in mind when you ship with USPS is that what you enjoy on the cost savings end of things, you might pay for by dealing with delayed deliveries and lower standards of service than the other two carriers. That said, you can best combat this by protecting your packages with shipping insurance.
As ecommerce businesses grow and begin offering more products, it’s common to pivot to multi-carrier fulfillment for different shipments. When it’s time to cross that bridge, partnering with a 3PL like ShipBob is one of the most effective ways to scale your business as they already have partnerships and contracts with all major carriers.
Which is the best shipping carrier option for ecommerce?
It all depends on your needs, but many online brands prefer USPS (check out our how to calculate shipping costs page for more information). By partnering with various online shipping software companies, USPS offers small ecommerce businesses access to shipping discounts that typically only get offered to enterprise companies sending 50,000 or more packages a year. By offering the deepest discounts to all online businesses, USPS truly levels the playing field and allows small ecommerce to compete with the big guys.
Here’s a simple equation: the deepest discounts on shipping costs = the highest margins. Even if you take the cost of purchasing extra insurance on top of the cost of postage (which you always should), the money you’ll save by shipping with USPS blows the discounts from the other two carriers out of the water.
Is it better to use USPS or UPS?
UPS is the best choice for shipping out items of higher value and larger packages. USPS is the best option if you need to ship hazardous materials and small packages. We recommend that you still take time to assess which one is the “best” carrier for your needs. Consider the type of package, the distance it needs to travel, international shipping options, delivery time, and other factors related to your product and service specificities (see our table above for guidance).
Is it better to use USPS or UPS?
When you work with a 3PL, they’re the ones who buy and print labels on your behalf (so you don’t have to interact with shipping carriers at all). Some 3PLs work exclusively with a certain carrier, and others compare prices — or “rate shop” — from a variety of carriers to get the best rates. ShipBob is a 3PL that “rate shops” for the best prices, which allows them to offer their clients the most affordable pricing possible for the type of shipping speed that any particular client wants.
Once the shipping labels are purchased, carriers like USPS, UPS, FedEx, as well as DHL pick up the orders from the 3PL’s warehouses. Once the order ships, the 3PL then automatically pushes order tracking details to their clients’ online stores, assuming the 3PL integrates with their clients’ ecommerce platform (which it should).