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Originally published on July 20, 2023, updated August 2, 2023
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In this article, Brian Gibbs, founder of Refund Retriever, shares how to reduce shipping costs with FedEx and UPS so you can put that money back into your business.
FedEx and UPS are among the world's leading shipping couriers that you can trust for quick delivery of your packages, even though some might argue about the shipping costs.
Shipping costs can vary based on factors such as shipping destination, package size, weight, and shipping service selected. This guide offers proven ways to reduce shipping costs with FedEx and UPS.
Discover how to save money on shipping costs by utilizing these tried-and-true methods.
With numerous shipping couriers at your disposal, compiling a list of the best and most reliable couriers is relatively easy. FedEx and UPS offer various shipping options with unique delivery speeds and pricing. Compare the options available and select the one that best meets your needs while minimizing costs.
FedEx and UPS are very similar in service level and accessorial fee categories. The carriers increase rates at the end of each year with little differences in the increases. In 2023, the general rate increase for FedEx and UPS was an average of 6.9%.
If you frequently ship with FedEx or UPS, you may be qualified for discounted rates based on your shipping volume. Contact FedEx and UPS to inquire about negotiating rates based on your shipping volume or business needs.
The carriers will discount service levels, accessorial fees, and pricing terms to reduce shipping costs. Shippers must know what services they utilize and what accessorial fees impact shipping costs. Shipment reporting and analytics like those provided by us at Refund Retriever are the first steps of any contract negotiation.
In the transportation industry, accessorial fees are charges imposed by freight transportation carriers when they provide services that surpass the usual pick-up and delivery process. Accessorial fees largely come into play whenever there is a requirement for extra workforce, equipment, time, or fuel.
Make sure you're getting the best pricing from your provider by reviewing and renegotiating your contract. Refund Retriever's skilled team of carrier contract negotiators can help you with the entire process.
FedEx and UPS provide flat-rate packages for certain services, such as FedEx One Rate or UPS ground flat rate. These boxes enable you to ship items of a specific weight and size for a flat rate, which can reduce shipping costs compared to regular shipping rates.
Additionally, the carriers will provide packaging material for flat-rate services. FedEx currently offers 12 different flat-rate packaging options, which include envelopes, padded packs, boxes, and tubes.
It is more advantageous to simply pay for delivery online as you can save up to 16% on UPS priority mail orders. And for express delivery, this percentage can go as high as 60%, which is considerable when you evaluate how many products are shipped each month.
In addition, you also receive a free pick-up, which is rewarding.
Another way to reduce FedEx and UPS shipping costs is by adequately packing your items. Optimize packaging using correctly sized boxes or envelopes to transport items safely. While doing this, ensure that you use appropriate packing materials to ensure your package's safety without adding unnecessary weight.
In addition to safely transporting products, an appropriately sized box will reduce the dimensional pricing applied by FedEx and UPS. Each box you send will be charged the higher of the actual or dimensional weight. The standard DIM divisor is currently 139.
Therefore, a 12x12x12" box will have a dimensional weight of 13 pounds, and FedEx and UPS will charge you a minimum of 13 pounds unless the actual weight is greater.
Shipping insurance can significantly reduce your profit margins, particularly for expensive items. However, choosing a third party could result in bigger savings.
Most people choose insurance from the shipping business alone. Usually, a third-party shipping insurance provider is less expensive than what your shipping business will provide.
If multiple packages go to the same destination, multiweight pricing can also help reduce shipping costs. This will allow you to incorporate numerous packages into one shipment, resulting in lower shipping costs than shipping each package individually.
UPS also offers a ground with freight pricing option to reduce the costs of multiple packages going to one location.
FedEx and UPS offer discounts to specific customers, including small businesses, non-profits, and eBay sellers. Check if you are qualified for third-party discounts and take advantage of them to reduce your shipping costs.
Check with trade associations or organizations for member discounts if your shipping volume is seasonal or low. Additionally, American Express offers promotions on FedEx shipping.
International shippers can also use the FedEx Great Rates program to ship internationally. Airplanes have a set amount of space to transport packages, and if an aircraft is not full, it is beneficial for the carrier to fill it up. So, FedEx will offer reduced rates on ready-to-go packages to maximize space on the already scheduled flight.
Regularly review and tweak your shipping preferences, such as address verification, delivery confirmation, and insurance. You can reduce FedEx and UPS shipping costs and save money by ensuring your settings are precise and appropriate for your shipping requirements.
If your shipping software has address validation, use it. Packages will arrive on time and reduce the amount of address correction fees on your invoices.
UPS and FedEx offer a money-back guarantee on packages delivered late. Historically, all UPS and FedEx packages were guaranteed to arrive on time or it’s free.
If a package is delivered more than a minute after the guaranteed delivery, your company would be eligible for a refund for the shipping charges. Unfortunately, this has temporarily changed after COVID.
Currently, UPS guarantees on-time delivery for next-day air and international express packages. FedEx guarantees on-time delivery on all service levels for members of FedEx My Rewards.
Did you know: Refund Retriever specializes in finding late deliveries in your company's billing invoices.
Evaluating the FedEx and UPS terms and conditions, pricing policies, and shipping guidelines will enable you to understand your shipments' costs fully.
It is a good idea to periodically review your shipping costs and explore different alternatives to find the most cost-effective shipping solution for your shipping needs. If you need more help, reach out to Refund Retriever today!
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