Shipping is an important piece of the puzzle for most companies. But it’s not just about shipping quickly enough to make customers happy or shipping efficiently enough to realize productivity gains — it’s also about achieving lower costs without compromising the outcome.
Saving 10 percent on shipping costs might not seem like a large gain, but when you apply this to a company with high costs, the bottom line can see significant improvements. When this number is raised even higher to 20 percent, those gains quickly multiply.
When breaking down shipping, the final leg, known as the “last mile” regardless of actual distance, is where costs accumulate. That last mile might be a few blocks or 100 miles, but regardless, it’s where a large portion of your shipping dollars are going. As a result, reducing shipping bills and realizing sustainable cost savings start with this single factor.
A key strategy for driving down costs is using a well-known shipping service that is already achieving success but has created a method specifically for targeting these last mile delivery costs. Driving that big, heavy UPS truck to your shipping destination is expensive. This is especially true when dealing with rural deliveries. As a result, UPS found a way to make that final leg of delivery less expensive, passing those savings along.
That service is called UPS SurePost (similar to FedEx SmartPost), and it’s a good solution for many businesses looking to reduce shipping costs and preserve the quality of delivery. But what exactly is UPS SurePost and how does it work?
What is UPS SurePost?
Before services like UPS SurePost, shippers were at a loss for what to do when faced with expensive last mile delivery costs coupled with negative feedback from customers about the high cost of shipping. One of the drivers behind these complaints was the high cost associated with an increasingly popular free-shipping option. In fact, nine in 10 consumers say free shipping is the No. 1 incentive when making a purchase, according to Marketing Land.
As a result, UPS created an option that would focus on driving down the costs of the last mile so it could pass that savings along to customers. The existing model included using its own resources — big trucks, fully staffed shifts, and running many deliveries a day, sometimes to rural and expensive delivery areas. In contrast, the last mile needed to be more efficient, so the company had to think differently and utilize resources that were already in place.
The United States Postal Service has a long history of delivering packages in the United States, and what’s more, it delivers to most addresses in the United States on a daily basis. Since the USPS is visiting everywhere daily, what would happen if UPS teamed up with the postal service for the last mile of delivery, saving its trucks from duplicating delivery efforts? This is the basic strategy behind UPS SurePost, and it’s how it saves shippers money.
However, there are some differences between the traditional service and that of UPS SurePost. For example, with traditional UPS service, a package may require a signature. In this case, the UPS driver cannot leave the package and must instead revisit the address until a signature is obtained. With SurePost, this option is not available, and packages are delivered to the address on the first attempt, which is outlined in the terms and conditions.
When considering this option, you might also wonder about limitations and how large packages can be to achieve these savings. The options for delivery are outlined here, but a quick summary includes the following.
- SurePost less than 1 lb: 1 ounce – 15.9 ounces. Package dimensions cannot exceed 130″ (length × twice width × twice height).
- SurePost 1 lb. or greater: 1 lb. – 70 lbs. Package dimensions cannot exceed 130″.
- SurePost Bound Printed Matter: 0.05 kg – 15 lbs. Restricted to books and printed material. Requires a SurePost Bound Printed Matter contract in addition to a SurePost contract.
- SurePost Media: 0.45 kg – 70 lbs. Restricted to specific items such as binders, films and medical binders. Requires a SurePost Media contract in addition to a SurePost contract.
Once you decide that using SurePost is a good fit, you might have other questions, including some about the potential savings. Exactly how much can you save? Let’s take a closer look into the costs of SurePost to understand the potential savings and whether it’s right for your situation.
How much does SurePost save?
Shipping is a major expense for businesses, and SurePost promises to save you money. Every little bit helps when trimming costs, but is SurePost worth making a switch? It’s estimated that the savings from using UPS SurePost can be as high as 20 percent when compared with UPS’ own residential ground service. And if you’re using a more expensive option than UPS, these savings might be even higher.
In addition, you get further benefits, which we’ll highlight shortly. For example, since the postal service already operates on Saturdays, goods can be delivered on the weekend. Shipping packages to P.O. boxes and military addresses is also possible, a flexibility many other shippers, including traditional UPS service, don’t allow for. These benefits, in combination with cost savings, make SurePost a viable option for those looking to reduce cost and increase flexibility. But there are also drawbacks, and we’ll also cover those shortly.
Understanding the Pros & Cons of SurePost
How would saving 20 percent on shipping costs affect your bottom line? The answer is likely positively. But cost savings aren’t the only benefit of using this option. There are several more potential benefits to consider, including the following:
- Normal pickup options are available: Using SurePost does not require special treatment for drop-off or pickup. Trips to the post office are not required, and shipments can even be mixed with your typical UPS pickup.
- Packages are still trackable, even during the last mile: One key feature of UPS is the ability to track packages. You don’t lose this ability when using SurePost. That last leg of delivery with USPS is still trackable with the same tracking number you received when initiating shipping.
- Integration with shipping software is possible: Software is key when managing large numbers of shipments, and integration is important. SurePost integrates with most software, which is critical if you already have a software program in use.
- The most expensive part of shipping is managed: As highlighted above, the last mile of shipping is the most expensive piece of the cost. This single factor makes up 28 percent of a shipment’s total costs — nearly a third. SurePost directly tackles this high cost and creates a more cost-efficient option for those who ship large volumes of packages.
- Access to Saturday delivery is available: The SurePost model dictates that most packages are passed on to USPS for the final leg of delivery. No extra charge is assessed for delivering packages on the weekend — it’s included in the service. This is an important factor because one drawback to SurePost is that it’s slower than traditional UPS service (more on this in a minute). Weekend delivery helps offset this drawback.
- The ability to ship to more addresses is possible: UPS normally will not deliver to P.O. boxes. Depending on your business, this may or may not be a sticking point. But it’s important to note that since USPS delivers to all addresses, through this hybrid UPS and USPS model, you have the flexibility to reach many places geographically that UPS would not normally go.
- Packages are primarily lightweight (less than 10lbs) and being delivered to residential addresses.
Members can also use “UPS My Choice” membership, which allows them to use features to reschedule or redirect delivery to an alternative address or The UPS Store. Additionally, upgraded packages may arrive one day earlier.
With all the benefits of SurePost, it’s also important to note there are a few drawbacks. As mentioned previously, SurePost might take a little longer. Making the last mile more efficient does slow down the delivery process slightly. UPS drivers must pass the packages off to USPS, which then must sort them and ensure they get to the correct addresses. Is it cost effective? Yes. But is it slower? Absolutely. But how much slower?
UPS states that packages mailed via SurePost may take anywhere from two to seven days until arrival. Some users report an average delay of about three days when compared with using UPS’ typical service.
The major source of the delay is the transfer of packages from one carrier to the other, but this is also the source of savings. Before using SurePost, it’s important to consider the benefits and the drawbacks to determine what is right for your business. In some cases, when shippers are under intense pressure to offer free shipping, it’s worth the delay as long as customers have clear expectations about shipping times upfront.
Who Should Use SurePost?
SurePost is not right for every shipping situation, but when it’s a good fit, the result of using it can be significant. For example, if you’re worried about rising shipping costs and want to get those costs down and your profits up, this might be a good option. When making the decision about whether this service is right for you, it helps to understand who might benefit most.
- A large number of packages are shipped weekly: SurePost might not be right for those who ship occasionally, but if you ship a large quantity of packages frequently, it may be a good fit.
- The last-mile delivery costs are high: Since last-mile delivery makes up so much of the shipping cost, SurePost may be a good option to decrease these costs.
- Expedited delivery is not required: SurePost is not the right option if you need something to arrive at a destination fast. SurePost does have the added benefit of Saturday delivery, but if recipients expect fast shipping, this is not the right option.
- Weekly spend with UPS is required to drive down costs: UPS determines negotiated rates based on average weekly spend. Increasing your spending and consolidating shipping from other carriers to SurePost can boost that weekly spend. As a result, you may benefit from lower fees based on increasing this spend.
The best approach is to look at your current shipping costs. Ask this question: Do these shipments need to arrive quickly? If the answer is no, then you may benefit from another option, and in the case of reducing last-mile costs, SurePost is a viable solution.
Moving Into the Future With Greater Efficiency
UPS SurePost offers a good balance of a low price and a reasonable delivery speed. It also offers significant savings over typical ground shipping options by offloading shipping to a large delivery area to USPS, which is already visiting many of the locations and can handle Saturday delivery.
When looking at the market, there is no shortage of shipping options. But the key is to find a match between the customer’s expectations and the most cost-effective method for delivery. Once you find this match and utilize creative options to slash that last-mile cost, you can create maximum efficiencies within your business.
Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our contract audit and negotiation services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has over 200 years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts and saved our clients an average of 19 percent.