FedEx and UPS: Choose the Right Service for the Best Cost

FedEx and UPS offer great, reliable services.

FedEx UPS Slogans

They have become synonymous with on-time, guaranteed transportation service.

They offer services such as “Standard Overnight”, “Priority Overnight” and “First Overnight”.

But what do these service levels mean as far as delivery time commitments and cost?

Most of us (at least in my company) don’t know!

I have discovered that the majority of people do not know how to choose these services efficiently and that can lead to companies paying 100% more than needed!

FedEx and UPS market themselves very well to the public; this makes everyone feel like they are a logistics professional, when in fact it takes a logistics professional to see what they really mean behind those creative advertising slogans…

FedEx UPS Slogans Modified

At my company, I make it a point to walk through our Shipping & Receiving area a couple of times per day and what I find there is astounding.

On one particular morning, I found these packages had arrived by 8:30am on a Monday morning. At 12:30pm, I went back to the Shipping & Receiving area and found them still sitting there!

FedEx First Overnight

Really?

We hunted down both the sender and the receiver to understand why these had been sent with such an expensive option only to sit for hours uncollected. It was a case of miscommunication: the sender believed that the receiver needed the package A.S.A.P. when a later service would have sufficed.

Other instances found that the sender simply ticked the first box on the waybill…the most expensive service!

We found that our employees were making these costly mistakes far too often, so we started a campaign to educate all potential users of FedEx and UPS services to the costs associated with the various service levels. We didn’t stop them from using the more expensive options, because there may be a true business reason to have the material by 8am the next day.

We did, however, monitor the persons who used the more expensive services and followed up to be sure it was indeed an emergency. Over the course of several weeks, we saw a dramatic decrease in the use of the premium services and the use of more appropriate, less costly services.

FedEx and UPS are fulfilling a great service for all of us, but it is our responsibility to be sure our company is using FedEx and UPS and not the other way around.

Some other ways one can save on these parcel services:

a). ensure that you are sending the material in the proper sized package or box.

We found the below material (in the small plastic bag!) shipped using a box many sizes too big. FedEx Wrong Box Size

b). ask whether all packages need to move with a “Next Day” service? Can some of the packages move with a 2nd day option? If so, that would greatly reduce your costs.

c). FedEx provides FREE boxes and tubes! And, if you use their packages, then you receive discounted pricing.

Be sure to speak with your FedEx and UPS representatives. They will certainly be able to help you with reports and metrics and other information that can help you reduce this very expensive mode of transportation.

Good luck!

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About Lenny

Many years of experience in a Fortune 1000 companies, especially in the logistics and I.T. areas of manufacturing companies. Through process improvements and the use of many of the tools mentioned here, I have been able to identify and implement savings opportunities worth up to $10 million. I hope that some of these real-life stories, suggestions and tools can help you!
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