Fedex, UPS, or USPS – Which is the Best Option for Mailing Packages?

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

Click here to enter my free $50.53 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is April 30th, 2013.

If you’re like me, you’re probably all too familiar with THE FEELING.

You know – the feeling where you hurry over to your local post office during your lunch break or on your way home, just wanting to mail a small little package to someone. As you enter the building, BOOM, you see it; the post office line is so long that it is curled around the room and itching to push out of the door. The only option is to either a) wait in line for 30 minutes and deal with the huffing and puffing of the upset folks in line and the benevolent underpaid/overworked postal workers or b) come back later. Which do you choose?

Generally, I tend to just stomach the wait in line and mail off my package as opposed to coming back. At the very least, I get an interesting lesson in human behavior, right?!

However, during a recent family visit to my sister’s new condo in Raleigh, North Carolina, she mentioned that she now prefers to do all of her mailing by skipping the local post office (USPS) and using a UPS store instead.

I thought this was a fascinating idea. Whenever I have gone to Fedex or UPS stores, there is almost never any wait, and even though I sometimes get confused about which form to fill out, things seem to go pretty quickly. You can even use some of their packaging supplies at the store for free!

As such, the purpose of today’s post is to put some details to the comparison of the three big players in today’s package-shipping market, Fedex, UPS (United Parcel Service), and the USPS (United States Postal Service), in an effort to determine which is the best option. 

Let’s get started!

Comparison of the Companies and Business Models

First, I think it’s useful to take a brief look at how these 3 key companies that dominate the shipping industry are structured.

On one hand, Fedex and UPS are both publicly-traded for-profit companies. UPS (ticker symbol also = UPS) is a monster, with just under 400,000 employees, a market capitalization of $79 billion, 2012 year revenue of $53 billion, and has been profitable every year for the past 10 years. Fedex (ticker symbol FDX) is a little smaller, with only around 150,000 employees, a market cap of $30 billion, 2012 year revenue of $43 billion, and also has been profitable in each of the past 10 years. The stocks of each of these companies has averaged about a 5% increase per year for the past 10 years as well, so a pretty respectable performance.

Then, on the other hand, you have the USPS, which seems to be struggling more and more with each passing year. The USPS is an independent agency of the US Federal Government, created by the US Constitution. They have a very large employee workforce of 574,000 workers. The USPS received subsidies from taxpayer dollars up until 1980, and has been struggling ever since 2006 when Congress passed the Postal Accountability and Enhancement act and also since the use of email has drastically reduced the amount of first-class mailings around the country. One severe hindrance to how efficient the USPS can operate is that it is legally obligated to maintain enough manpower to serve everyone, meaning that even though there may be no mail to pick up, it must spend time and man-hours keeping up the same routes year-in and year-out.

Comparison of Package Mailing Rates and Delivery Speed – Larger / Heavier Items

Having gotten a feel for the way each of these three companies/agencies are structured, the next thing to investigate is the price-points they charge for mailing packages.

To give a basis for comparison, we’ll assume that I am wanting to mail a 15 lb package containing X-mas gifts from my parents’ house in Arkansas to my home here in Virginia. The package (no declared value or other value-added services) will be in a non-branded box of which the dimensions will be 24 inches long, 12 inches wide, and 8 inches tall. 

Listed below are the pricing results I found from the Fedex, UPS, and USPS websites for the shipment: (I am showing 2 prices, one for dropping off at a Fedex/UPS/USPS location, and one for having them pick up the package from my parents’ home. I also highlighted in bold the shipping level I would select for each carrier for this specific package)

• Fedex
• First Overnight – $176 / $180
• Priority Overnight – $141 / $146 
• Standard Overnight – $130 / $135
• 2Day A.M – $72 / $77
• 2Day – $63 / $68
• Express Saver 3 Day – $44 / $49
• Home Delivery 3 Day – $18 / $21

• UPS
• Next Day Air Early AM – $175 / $184
• Next Day Air – $141 / $150
• Next Day Air Saver – $130 / $140
• 2nd Day Air – $63 / $73
• 3 Day Select – $44 / $54
• Ground 3 Day – $20 / $30

• USPS
• With the USPS, we will assume there is no extra charge for picking up the package at my parents’ home, since the postal worker already comes by there and can just pick it up on his or her normal route. 
• However, there is a significant reduction in price when we pay/print shipping online vs at a Post Office. Therefore, I’ve listed both of these prices below (Post Office price first / Online Price second):
• Express Mail (overnight-2 days, 2 days guaranteed) – $92 / $60
• Priority Mail (2-3 days) – $35 / $30
• Standard Post (~7 days) – $25 (cannot print online)
• Media Mail (~7 days, must contain media) – $8.67 (cannot print online)

Comparison of Package Mailing Rates and Delivery Speed – Smaller / Lighter Items

Having seen that the conclusions that several of these other comparison posts came to was pretty much the exact opposite of what I found, I figured I should run a second analysis using different parameters to see if USPS could emerge as a less-bad option.

This time, we’ll assume that I am wanting to mail a 1 lb package containing X-mas gifts from my aunt’s house near Los Angeles, CA to my home here in Virginia. The package (no declared value or other value-added services) will be in a non-branded box of which the dimensions will be 14 inches long, 12 inches wide, and 3 inches tall. 

Listed below are the pricing results I found from the Fedex, UPS, and USPS websites for the shipment: (As before, I am showing 2 prices, one for dropping off at a Fedex/UPS/USPS location, and one for having them pick up the package from my parents’ home. I also highlighted in bold the shipping level I would select for each carrier for this specific package)

• Fedex
• First Overnight – $123 / $127
• Priority Overnight – $88 / $93 
• Standard Overnight – $80 / $84
• 2Day A.M – $48 / $52
• 2Day – $42 / $46
• Express Saver 3 Day – $32 / $36
• Home Delivery 4 Day – $9 / $9

• UPS
• Next Day Air Early AM – $125 / $135
• Next Day Air – $92 / $102
• Next Day Air Saver – $83 / $93
• 2nd Day Air – $45 / $55
• 3 Day Select – $35 / $45
• Ground 4 Day – $14 / $24

• USPS
• With the USPS, we will assume there is no extra charge for picking up the package at my parents’ home, since the postal worker already comes by there and can just pick it up on his or her normal route. 
• However, there is a significant reduction in price when we pay/print shipping online vs at a Post Office. Therefore, I’ve listed both of these prices below (Post Office price first / Online Price second):
• Express Mail (overnight-2 days, 2 days guaranteed) – $36 / $28
• Priority Mail (2-3 days) – $7 / $7
• Standard Post (~7 days) – $7 (cannot print online)
• Media Mail (~7 days, must contain media) – $3 (cannot print online)

Comparison of Locations / Accessibility / Waiting Time for Mailing Packages

Having established that the pricing and delivery speed levels of the three carriers, we now need to explore whether or not UPS and Fedex are on par in terms of accessibility with the USPS (which we know is EVERYWHERE, per their legal obligation).

From a qualitative standpoint, I am thinking that there are likely MORE Fedex and UPS locations than Post Offices, since about every medium-to-large sized city I have lived in has had multiple UPS and Fedex locations, especially since Fedex merged with Kinko’s and operates out of Kinko’s locations as well. However, this is just my gut-feeling. Below are some actual numbers:

• Currently, there are around 9,000 manned Fedex drop-off locations globally and 36,300 Fedex drop boxes. 
• In the UPS world, there seem to be many more stores, with about 4,400 UPS stores in the US alone.

So, I think it’s safe to say that if you live in an area with more than 20-20k people, you will undoubtedly have access to a UPS or Fedex store close by. 

And, not only will it likely be cheaper/quicker to ship a package from there, but in my experience, there is almost never a line of more than 1-2 people at UPS / Fedex.

However, what if you live in a less-populated area, say a city that only has a population of 2-3k? In that case, it’s probably worth at least checking to see if there are any Fedex or UPS locations close by. But, I wouldn’t place much hope on it, judging from the results of the search I’ve done using the Fedex / UPS store locator tools in rural Arkansas and rural Virginia.

Therefore, if you live in a small town, you should take advantage of the fact that every town has a USPS Post Office and just do your mailing from there. You likely will not have the long waits that people in larger cities have to mess around with too!

Conclusions and My Personal Path Forward

After looking at the various considerations from this post comparing cost, delivery speed, accessibility, and ease of usage, the following conclusions can be made regarding Fedex vs. UPS vs. the USPS:

• UPS and Fedex have much more efficient business models, as we would expect for for-profit companies. However, the advantage that the USPS does have is a very extensive reach to serve basically everyone in the USA (even rural communities).
• For heavier items (using non-branded, non-media items / packaging) greater than 2 lbs, Fedex seems to be the cheapest and fastest option, and also offers very good rates for coming to pick the item up at your home.
• For lighter items (using non-branded packaging) less than 1-2 lbs, USPS seems to be the cheapest option, but is also quite slow compared to the other carriers. 
• If you live in a medium-to-largely populated area, you should have no trouble finding a UPS or Fedex store close by to your home/business.
• If you live in a rural area or small town, you likely will not have access to UPS / Fedex and instead, should just use your local USPS Post Office.

My Personal Path Forward – For me, since I am very close by both a Fedex and UPS store, I have no trouble with the accessibility issue. Therefore, it really all comes down to cost and ease of use.

Since Fedex is cheaper for heavier items and pretty close in pricing for lighter items compared to the USPS, I believe I will start using Fedex for all of my routine package mailing (where I can’t use media mail or just stick some stamps on an envelope and put it in my mailbox), since the waiting time is much less at Fedex.

How about you all? Do you normally mail packages using UPS, Fedex, the USPS, or another carrier?

How would you rate their service?

Share your experiences by commenting below!

***Photo courtesy of http://farm4.staticflickr.com/3009/2959726971_50fb4726f5_z.jpg?zz=1