How to Save Money on Shipping - Part 1: Service Levels

Any company that does any business is engaged in some sort of shipping - either sending or receiving, and often both.  Subsequently, shipping is a major expense.  There are many ways to reduce your shipping expenses without dramatically altering the way you do things.  These posts will focus on UPS shipping in particular, but should translate equally to FedEx or any other small package carrier.

Can it get there in this?

Parcel carriers have multiple shipping levels - Ground, 3rd Day, 2nd Day, and Next Day.  Each service level gets progressively more expensive.  One of the easiest ways to reduce your shipping expenses is to know the transit times from you to your customer.  It is a waste of money to send something 2nd Day Air when it gets there in one day via Ground service anyway.  Essentially, you're paying more for it to take longer to get there.

The confusion with this stems from what the carriers will "officially" guarantee.  3rd Day, 2nd Day and Next Day Air are all guaranteed accordingly - 3 days, 2 days or 1 day transit.  Ground, however, is guaranteed in 1-5 business days.  This does not mean your package will take anywhere between one and five business days to get to its destination.  It means that the carrier doesn't know where your shipment originates and where it's going, and therefore can't tell you how long it will take to get there.  A shipment from Atlanta to Jacksonville, for example, is a guaranteed one-day Ground transit, while Atlanta to Denver would be three days, and Atlanta to San Diego would be a five-day transit point.  The only other difference is that Ground shipments are not time guaranteed.  They will get there whenever the consignee/receiver gets their usual delivery, while the air services are guaranteed by a certain time.

Or does it require this?

For example, if you have a 10 lb package that is going from Atlanta to Jacksonville and you need it there the next business day, you have two options (prices quoted are from UPS posted daily rates):

UPS Ground - $9.41
UPS Next Day Air Saver - $49.45

Both of these shipments are equally guaranteed to deliver the next business day.  The only difference is that the Next Day Air shipment is time-guaranteed and the Ground shipment is not, but both are guaranteed to deliver on the same day.

The web sites for both UPS and FedEx will let you determine transit times and freight estimates for any shipment.  Use these, or print the transit-time maps, to know when you need to upgrade the service level and when you can ship Ground.  This alone can save you significantly.

UPS Calculate Time and Cost	UPS Transit Map
FedEx Calculate Time and Cost	FedEx Transit Map

Choosing the appropriate service level and using Ground services where applicable instead of air services will offer significant savings.  Web sites for both UPS and FedEx will help you, and there is no charge for using either.  Choose wisely.  Pay less.

For additional information on how to save money on shipping, look at the next post in this series, How to Save Money on Shipping - Part 2: Bundling and Shipments and Part 3: Surcharges and Other Charges.