UPS Surepost Rates

Discussion in 'UPS Discussions' started by eglassman88, Feb 7, 2012.

  1. eglassman88

    eglassman88 New Member

    Hello All,

    I'm a newbie to the forums and had a few questions about UPS Sure Post. I am not a UPS employee. So, the question is, just how much cheaper is UPS Sure Post compared to UPS Ground for residential deliveries? I understand that Sure Post is contract negotiated but just looking for a ballpark. For example a residential shipment from 08030 to 90001, 4lbs 12x9x4? Thanks for any and all help.

    Best Regards
  2. UPSGUY72

    UPSGUY72 Well-Known Member

    The rate most likely depends on the company that is shipping the box to you and the amount of packages they ship. Every shippers doesn't pay the same amount.
  3. eglassman88

    eglassman88 New Member

    I understand that's why I had asked if you could give a ballpark number. Even it is is percentages. Just curious.
  4. UPSGUY72

    UPSGUY72 Well-Known Member

    I have no clue and don't care it doesn't effect me. I still get paid the same.

    I don't believe just anyone can ship surepost the company most likely has to have a lot of volume in order to get that low cost service.
  5. Southwestern

    Southwestern New Member

    Surepost is only available to high-volume shippers who have contracted the service. Rates are propitiatory; if you're a high-volume shipper and you're interested in the service, you'll need to contact a UPS sales rep. Your final rate will depend on your volume, frequency & total relationship agreed to with UPS. If you're an average Joe, UPS Ground will be the most economical shipping option available to you.
  6. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    Basic would be the most economical shipping option available. Basic and SurePost are not one in the same.
  7. brownmonster

    brownmonster Man of Great Wisdom

    According to our DIAD training yesterday, present Basic customers will be switched to Surepost as their contracts expire.
  8. Southwestern

    Southwestern New Member

    But like SurePost, Basic is not available to the average Joe.
  9. rje

    rje New Member

    As others say, it varies from shipper to shipper, based mostly on volume, partly on typical package weights and zones (in general, the larger the packages and the more distant the zone, the bigger the discount). But I suggest you look at FedEx SmartPost list rates for starters, which are published (though I'll tell you below what they are). SurePost competes directly with SmartPost, the only difference being that SmartPost uses an entirely different distribution network (hub to hub) from FedEx, while SurePost uses the UPS network until the "last mile," for which both use USPS "DDU" drops. SurePost differs from its predecessor, UPS Basic, in that some UPS Basic packages were delivered by UPS drivers, whereas 100% of SurePost packages are delivered by the US Post Office.

    As you get very close to 10 pounds, SmartPost list rates start to get higher than corresponding FedEx Ground rates, and eventually are higher (that's to encourage shippers to use FedEx Ground/Home at higher weights), but at all lower weights and zones, they are identical, to the penny, to FedEx Ground/UPS Ground commercial rates. The difference is that, if you ship FedEx Ground to residential addresses, you pay a hefty "residential surcharge" ($2.55), whereas there's no residential surcharge on SmartPost rates.

    Incidentally, as you probably already know, FedEx Ground and UPS Ground list rates are identical, for every weight and every zone, and the essential difference between FedEx Ground/UPS Ground rates and FedEx Home rates is the residential surcharge, which applies to all FedEx Home packages but applies to FedEx/UPS Ground packages only if they're actually shipped to a residential address. Another difference is the "delivery area surcharge," which applies mostly to rural addresses, though not entirely: last I checked, 25% of US residential addresses were subject to this surcharge, and a small percentage of "super rural" addresses were subject to an additional surcharge. I'm not entirely sure about the following, but I believe SmartPost customers are NOT charged any "delivery area surcharge," though I have little doubt that the distribution pattern of shippers is taken into account by FedEx and UPS when they set discounts. Shippers who sell mostly to rural customers probably get a smaller discount than those who ship primarily to urban addresses.

    SmartPost list rates are discounted -- fairly heavily, I'm told by some savvy consultants, though I don't know the percentages. Since SmartPost (and SurePost) packages tend to be light weight, what is more important than the percentage discount is the "floor." What that usually means is that, no matter how big the percentage discount may be, the shipper will not pay less than the 1-pound, Zone 2 list rate (there is no Zone 1 -- don't ask). That is common in UPS and FedEx Ground contracts as well. That does not mean that FedEx and UPS never discount below that "floor." They do. But they tend to dig in their heels a bit more when a shipper wants to reduce that "floor."

    All of these rates get very skewed if you get information about very, very large shippers -- Amazon and the like -- who drive such hard bargains that I suspect many carriers end up taking a loss on their business. I think a better barometer is the category of shippers just below the Amazons. There are many hundreds of large shippers out there, far smaller than Amazon, who nevertheless ship upwards of 10,000 packages a day -- some ship many more than that. They get large discounts, but I doubt they get much off the "floor." About a year ago, I saw a contract between FedEx SmartPost and a shipper that shipped about 20,000 packages a day from Cincinnati. It had a blanket 30% discount from list, with NO discount below the "floor." It had some volume incentives in the contract that might have lowered it a bit, in theory, but I reviewed about 18 months of actual charges and not one of those many thousands of charges varied by a penny from the 30% discount (subject to the floor). I'm sure there are shippers with bigger discounts out there, though I'm sometimes suspicious of shippers' discount claims (especially after reviewing the actual billings of this large shipper). I've learned that shipping managers are not inclined to tell others their UPS/FedEx discounts. They're prohibited from doing so under their contracts, but I always get the feeling they wouldn't do so anyway, because they want people to think they're a big deal, and "big deal" means "big discount" in the shipping business. Asking them about their discount is almost as if you're asking them the length of their penis, and there's roughly the same amount of exaggeration in both cases.

    I hope this helps.
    Last edited: Apr 6, 2012
  10. OptimusPrime

    OptimusPrime Active Member

    Are eglassman88 and rje one and the same? Funny how eglassman88 comes in with a very specific question, and first time poster rje is there to swoop in with a pro Fedex post. Odd.
  11. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    rje--two clarifications to your novel. First, there is no "Zone 1" as that would be considered the zone in which the shipment originates. Second, FedEx uses our rate chart and takes 10% off.
  12. rje

    rje New Member

    I'm not eglassman88. I just tried to answer his question.

    I don't understand how my response can be interpreted as "pro FedEx." I just said what everyone familiar with the business already knows: UPS SurePost and FedEx SmartPost are essentially the same thing. That's just stating a fact. They both aim at large shippers of lightweight residential packages for which delivery is not time-sensitive. I don't know, but I am highly confident that their actual rates to actual customers are pretty close, since they're competing with each other for the same customers.

    How, exactly, is any of that "pro FedEx"?
  13. rje

    rje New Member

    On the "Why no Zone 1 rate" question, your reply is not correct. If I ship a package to my next-door neighbor, the rate that applies is the Zone 2 rate. That's true for both FedEx and UPS. There is no Zone 1 rate. Not sure why, but it doesn't matter. All that matters is that there isn't one.