With FedEx rates rising each year, we help many small parcel shippers evaluate current contracts and discount rates. One of the most commonly asked questions, “Would Smart Post be an option to lower shipping costs?”
There are many pros and cons to take into consideration. Customer expectations, additional customer service costs, time in transit, current discount rates, and much more. So let’s take a look at two different customers sending a Home Delivery and SmartPost package with the same weight and zone.
The published rates for all 4 packages are the same, the base rate is $12.05. The best part of SmartPost is the lack of a residential surcharge fee. Take a look at the two different scenarios, one shipper sees huge cost savings with SmartPost and the other shipper is only saving a few cents.
Yes, SmartPost is a viable option to lower your shipping costs if you have deeper negotiated discounts for this service. As you can see above, shipper 1 has a huge advantage using SmartPost. Shipper 1 is saving $5.24 and shipper 2 is only saving $0.34! Shipper 2 should not be using SmartPost until he can successfully negotiate shipping rates to lower that cost. Proper business intelligence and supply chain visibility are key.
Pros of SmartPost:
- Saturday delivery: Since USPS is the final delivery method, packages are delivered on Saturdays at no extra cost. Home Delivery is delivered Saturday, Ground deliveries are not made on Saturday.
- Ship to all addresses: USPS will deliver to PO boxes.
- No residential surcharge: SmartPost residential delivery will not have an additional residential surcharge fee.
- Normal driver pickup
- Weekly FedEx spend still good: Your tier levels and spend stays with FedEx and not USPS so other service discounts are greater
Cons of SmartPost:
- Time in transit – Expect an additional 2-5 days in transit over Ground or Home Delivery
- Complete lack of the on time or its free guarantee – Ground/HD both offer a day-definite on time policy or you get a full refund
- Tracking goes over to USPS tracking
- We see more undelivered packages for our clients
- FedEx now applies a dimensional weight (DIM) factor of 139 to all SmartPost packages, check out our post about DIM weight.