UPS, FedEx, & DHL Small Parcel: Benefits and Differences [+Infographic] | DCL Logistics

Differences: Surepost, Ground Economy, and eCommerce

While all three services share the primary attribute of offering a cost-effective solution for selling shipping small packages, there are important differences between them that a seller must understand during their evaluation process. Some of these differences may seem trivial, but could ultimately have a major impact on the shipping costs and delivery speeds.

Pro Tip: Factoring Dimensional Weight

It’s important sellers factor in dimensional weight (DIM) early on in the packaging design process. While actual weight is the primary way the shipping cost is determined, the DIM can add material costs. DIM becomes a more significant factor for sellers with large, light weight packages.

Did you know DIM factor is something you can negotiate? Each carrier has a default DIM factor denominator of 166. The start of your contract with a shipper is the only time you can negotiate a lower DIM factor.

UPS Surepost

In 2019 UPS delivered 21.9 million packages each day, totaling 5.5 billion, making it the largest (by deliveries) of the three carriers. UPS has physical retail stores throughout the US and often small, independently owned by franchisees. 

UPS Surepost has a fuel charge for every package which varies by month. On average, sellers should expect to pay between 5% to 7% fuel surcharges in addition to initial shipping cost. Fuel surcharges are disclosed upfront and quoted when the order is initially processed and shipped. 

Delivery area surcharges, categorized as accessorial charges, may be added to the shipments once the shipment is delivered. Delivery area surcharges are added to specific zip codes, primarily because they are in hard to reach or rural areas. These fees can range between $1.95 and $2.45 but impact less than 10% of the US zip codes. Most sellers won’t be materially impacted by these surcharges.

Another factor that sellers need to account for when calculating shipping costs that vary by carrier is dimensional weight (DIM). While physical weight is the weight of the shipment according to the scale, dimensional weight is calculated based on the package’s length, width, and height. UPS Surepost DIM factor is calculated for every package regardless of dimension or weight and the seller is charged for the greater of the two. The cost difference can be meaningful, especially for sellers who have lite weight shipments in large boxes.

The manner in which UPS passes the packages to USPS is slightly different as they take the packages directly to the local post offices as opposed to larger USPS distribution centers. Additionally, UPS delivers approximately 40% of the Surepost package to the end consumer using their own trucks and employees. By handling some of their own packages for last mile delivery, there is an increase in delivery speeds, quality of service, and reliability. 

Editor’s Note

As of March 2021, FedEx Smartpost is rebranded to FedEx Ground Economy. There’s been no material change of the FedEx Ground Economy service.

FedEx Ground Economy (formerly Smartpost)

FedEx is the second largest carrier of the three, delivering an average of 18 million packages per day in 2021. They have a large physical presence with over 2,000 owned and operated stores, FedEx Office.

FedEx Ground Economy has fuel and accessorial surcharges similar to UPS Surepost. They charge between 5% and 7% fuel surcharge which is disclosed and charged upfront. They also follow a very similar model for delivery area surcharges. The specific zip codes between Ground Economy and Surepost do vary between the two services.

Like UPS, FedEx factors the dimensional weight (DIM) for every package, regardless of dimensions or weight, so both physical weight and DIM weight are considered when calculating the cost of the shipment. 

Lastly, FedEx previously injected Ground Economy in the USPS system at USPS distribution centers as opposed to taking it as far as the local post offices. At the beginning of 2021, FedEx stopped using USPS to deliver FedEx Smartpost packages when it rebranded FedEx Smartpost to FedEx Ground Economy. As a result all FedEx packages, including FedEx Ground Economy, are delivered by FedEx truck and driver which should provide faster delivery speeds and more reliable service.

DHL eCommerce

DHL eCommerce is one of two transportation companies owned by Deutsche Post DHL Group. DHL eCommerce provides domestic and international shipping services, while DHL Express exclusively focuses on international services. DHL eCommerce has three products that are comparable with Surepost and FedEx Ground Economy: SmartMailParcel Plus Ground, Expedited, and Expedited Max (or eMax). Although there are many nuances that distinguish these three DHL eCommerce services, there are a few important broad differences that make a difference for small parcel shipping.  All three have a weight range of 1 to 25 pounds with the primary differentiator being the delivery speeds of each.

DHL eCommerce has a flat rate fuel surcharge that is charged by the pound which differs from the percentage rate that Surepost and FedEx Ground Economy charge. For example, in August 2020, DHL eCommerce charged a fuel surcharge for $.03 per pound and FedEx Ground Economy charged 5% of the cost of the shipment. For a 5lb package that cost $7 to ship using either service, the seller would pay $.15 (5 lbs X $.03 per lb) versus $.35 ($7.00 X 5%) in fuel surcharges for DHL eCommerce and FedEx Ground Economy, respectively.

DHL eCommerce treats DIM weight slightly differently than UPS and FedEx as they do not charge a DIM factor for packages less than one cubic foot. This can make a significant pricing difference for lite weight packages in larger packaging.

Since 2003, DHL eCommerce has used USPS exclusively for their last mile delivery and they inject their packages into USPS distribution centers. Unlike UPS and FedEx, DHL eCommerce has less control of their packages in regards to delivery speeds and reliability since they don’t use their own delivery trucks or employees for any of their last mile deliveries.

COVID Impact

As the surge in ecommerce sales has been a boon for many online sellers, transportation carriers had to ramp up their operations to keep up with the shipping demand. Compared to the same time last year, UPS and FedEx shipping volume increased by 23% and 20% in Q2 2020, respectively. However, labor shortages and capacity issues in the transportation chain have created delays. Since March, deliveries for Surepost, FedEx Ground Economy, and DHL eCommerce have averaged delays of one to three days.

UPS and FedEx have implemented additional delivery surcharges due to the spike in shipping volumes. In June, FedEx implemented a $.40 surcharge for each package and there is speculation that these fees will increase over the holidays. In August, FedEx announced that they will implement a holiday surcharge from November 7th, 2020 to January 17th, 2021 ranging from $1 to $2 surcharge per package depending on when the package is shipped. UPS recently announced an escalating surcharge as customers send 110%, 200% and 300% more shipments than their average weekly shipping volume in February. These fees can be as much as $3.00 per Surepost shipment.

The impact COVID-19 will be felt for the foreseeable future and play a significant role in online sellers’ shipping strategy. Sellers using Surepost, FedEx Ground Economy, and DHL eCommerce need take into account delivery delays and the additional surcharges when evaluating their options.

Delivery Speeds During COVID

All domestic carriers experienced shipping delays during 2020, impacting Surepost, FedEx Ground Economy, and DHL eCommerce. With the shelter-in-place rules, ecommerce sales went up significantly. Carriers were overloaded without enough notice to absorb the impact.

Predominantly all carriers saw a slight rise in the average delivery times in March and April, when the shelter-in-place orders were instituted around the country. Though these numbers seem small, to have the average shipping time go from two days to three, is quite a lot when you consider how many disgruntled customers that includes. Carriers have invested heavily in their infracture and added to their workforce and as a result, delivery speeds are back to normal.

We’ve pulled month over month data on carrier shipping times by average days in transit.