The ground economy services offered by UPS and FedEx have evolved significantly in the past few years. The latest example is UPS’s rebranding, which recently changed its name from SurePost to UPS Ground Saver. A big reason behind the evolution is the skyrocketing growth of e-commerce and the key role these lower-cost, residential delivery services play for online sellers. Both carriers (as well as the USPS) recognize the opportunity the market represents and the growing threat from new competitors such as Amazon and many regional carriers.
The main appeal to shippers of these services is offering lower-cost residential deliveries with a small sacrifice of delivery speed. It’s a trade-off that e-commerce buyers seem very willing to make more and more each year. From 2022 to 2024, delivery speed dropped from first to fifth on the list of online buyer’s preferences according to McKinsey.
‘Postal-Hybrid’ no more
Both carriers’ identities relative to what were formerly postal-hybrid solutions began changing with their breaks from the USPS to begin performing their own last-mile deliveries. Initially, the operating model for both FedEx and UPS was to use their drivers to pick up what are now FedEx Ground Economy and UPS Ground Saver packages, sort, and then deliver them to a regional post office closer to their destinations. USPS would then make the final delivery. This made sense from B2C-heavy online retailers economically because most are primarily residential shippers. This also made sense from the carriers’ standpoint because they were much more operationally focused on B2B deliveries at the time. The USPS is already committed to residential deliveries pretty much everywhere, every day. It was a win-win for everyone because it lowered the cost to FedEx, UPS, and shippers. It also pushed additional volume through the USPS network.
In the past several years, however, FedEx and UPS have decided to leverage their networks and cut the USPS out of deliveries. The two services that offer a pricing advantage over their regular ground solutions continue and are commonly referred to as ‘Deferred-Ground’ delivery services.
What’s in a name?
It hasn’t just been the operating models that have changed. In 2021, FedEx SmartPost became FedEx Ground Economy. Now, UPS rebranding to UPS Ground Saver aligns its service’s name closer with FedEx and that of USPS’s Ground Advantage (launched in 2023), which is one of its two main competitors in the e-commerce marketplace.
Looking past the names, the details of the carriers’ offerings are similar. This includes focusing on e-commerce sellers and B2B deliveries, along with returns solutions geared towards that market. Other similarities include accepting packages up to 70 lbs. and servicing all 50 states. Tracking is also provided.
Another similar, but more nuanced, detail of each carrier’s service is their delivery speeds, which are slightly vague. The following is from the carrier websites:
UPS Ground Saver: “Delivery times are comparable to UPS Ground service plus 1-2 days.”
FedEx Ground Economy: “Typically, delivery takes 2-7 business days.”
USPS Ground Advantage: “Expected delivery in 2-5 business days.”
Deferred-ground pricing comparison
Service performance aside, the bottom line is that cost is the main reason most shippers choose to use one of these delivery options. Each carrier offers its own pricing table and potential for other surcharges and fees. More importantly, all three will negotiate those rates. But before doing so, companies need to understand what a company of their size SHOULD pay and have a process to make an accurate comparison between all three carriers in terms of cost and service performance.
TransImpact can leverage advanced data analytics to compare the costs and services you’ll receive with all three so you can always choose the right carrier. We can even tell you BEFORE you negotiate within 1/10 of 1% what your rates will be.
Email sales-info@transimpact.com for a no-obligation analysis by our parcel experts.