FedEx and UPS Discounts: Small Parcel Weight and Zone Incentives


FedEx and UPS Discounts: Small Parcel Weight and Zone Incentives

Every January UPS and FedEx tariff rates change. When comparing FedEx vs UPS rates, one has to consider contracted incentives relative to the carrier’s annual price increase. Your contract incentives will more than likely carry over from one year to the next; however, the incentives will now be applied to your carrier's higher list rates.

In terms of weight incentives, when you look at FedEx vs UPS rates, both substantially increased their pricing on small parcel shipments weighing 5 lbs. or less. For most packages, the higher weight brackets rose far less. This amounts to a positive thing if you're shipping heavier packages. Looking at zone incentives, if you ship outside of Zones 4 and 5 (considered the "average" zones for most shippers), you "dodged the bullet" of big price increases for base package transportation charges.

Comparing FedEx vs UPS rates further, for the most part FedEx Express rates are more than UPS Air across all zones and all weights. When comparing FedEx Priority Overnight with UPS Next Day Air, FedEx rates are higher--depending on weight and zone. Looking at FedEx Standard Overnight compared to UPS Next Day Air Saver, FedEx small parcel rates averaged higher. Even FedEx 2 Day was higher than UPS 2nd Day Air.

One way to manage small parcel costs is through a procedure called zone skipping. If you need to save money and delivery time is not of the essence for your residential shipments, you can zone skip. Here, a carrier sorts your packages and takes them to the nearest post office who provides the final leg of delivery for your packages. You'll typically beat the standard USPS delivery time and pay less than standard FedEx or UPS rates. Here, the FedEx vs UPS rates comparison won't reveal a significant difference.



Finally, there's Hundredweight or multi-weight pricing. Using this technique, multiple small parcel packages shipped to the same destination are rated as a single shipment per pound instead of the standard per package rate. Express shipments greater than 100 lbs. and ground shipments over 150 lbs. qualify for hundredweight pricing. Here, again, a comparison of FedEx vs UPS rates won't show appreciable differences.