Retailers are facing intense pressure in the contemporary economy. To compete on a global scale, they must offer products to customers anywhere and everywhere. Shipping networks have expanded dramatically to support sellers and buyers around the globe.

It’s kind of amazing to think about. But shipping has become so ubiquitous that customers no longer see it that way.

Customers want items fast, often in as little as two business days, regardless of origin. They want to be able to track their packages through every step of the shipping process. And they want to pay as little as possible for this service. Ideally, they want shipping to be free.

This level of demand puts pressure on shipping carriers, who need to move parcels further and faster than ever – especially priority mail. It also puts pressure on shippers, who pay them for that service. Both parties want to do whatever they can to reduce costs.

So FedEx and UPS have each turned to the U.S.’s oldest shipping carrier — the United States Postal Service — for help.

FedEx now offers a service level called FedEx SmartPost. With SmartPost, FedEx carries packages through its network of warehouse and truck beds. But instead of dropping packages on customers’ porches, FedEx merely drops them at the local post office. USPS carries SmartPost parcels for the final leg of their journey, known as the “last mile.”

Cheaper than standard ground shipping, SmartPost offers shippers a cost-saving option and reduces FedEx’s workload. It’s also slower, and while it offers unified tracking, customers may find it confusing.

Is FedEx SmartPost right for your business? Let’s find out.

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What is FedEx SmartPost?

FedEx SmartPost is a shipping service that utilizes both the FedEx ground shipping network and the U.S. Postal Service. In this hybrid model, shippers give parcels to FedEx in whatever way they normally would. FedEx transports that shipment through its trucks, warehouses and fulfillment centers.

Normally, the final leg of this journey is from the final FedEx warehouse to customers’ doorsteps. But this is the most expensive and inefficient part of the journey for FedEx. Instead of transporting dozens or hundreds of packages at a time, drivers have to drop them off one by one.

The U.S. Postal Service drives those house-by-house routes every day, however. Its mail carriers deliver to every address in the U.S.

So why shouldn’t FedEx pay USPS to complete that final leg of deliveries on its behalf?

With SmartPost, FedEx delivers parcels to the post office nearest their final destination. Then, usually the next day, USPS delivers them to customers.

To shippers, SmartPost ought to feel a lot like FedEx Ground, the company says. Shippers’ and customers’ tracking abilities are unchanged. Package pick-up works the same way. SmartPost even offers a couple of advantages: Shippers now have access to all addresses served by USPS, some of which may not have been served by FedEx; and there are no residential surcharges.

There are some sacrifices, however. SmartPost delivery time is slower than standard ground shipping by at least one day. The unified tracking offering is reliable, but may be confusing to some customers who don’t realize their shipper is using SmartPost. And once you get outside a zip code in the lower 48 states, fees are high.

How much does it save?

FedEx SmartPost rates include:

  • For a one-pound package, rates range from $8.23 in Zone 2 to $9.96 in Zone 8
  • For a 5-pound package, rates range from $9.37 in Zone 2 to $14.22 in Zone 8
  • For a 7-pound package, rates range from $10.23 in Zone 2 to $15.18 in Zone 8

FedEx SmartPost is an estimated 20 percent cheaper than standard FedEx ground shipping costs. That may not seem like much on a single parcel. But multiplied over hundreds and hundreds of packages, a 20 percent savings can really add up.

Most standard surcharges, including additional handling fees and peak season surcharges, still apply. As of 2018, FedEx applied dimensional pricing to SmartPost shipments as well as ground shipments. Package minimums apply, although they differ from other FedEx services. Residential surcharges do not apply, however.

It’s important for shippers to note that SmartPost rates increase in line with other FedEx rates. Traditionally, base rates have risen by about 4.9 percent every year; surcharges can rise much faster than that. Shippers may save money the year they switch some parcels from ground to SmartPost, but soon enough, costs will start rising again.

Who should use FedEx SmartPost?

The more volume a retailer ships, the more that business can benefit from the savings offered by FedEx SmartPost. It’s also a good option for companies who ship a large number of parcels to residential addresses, since it eliminates residential surcharges.

FedEx SmartPost versus FedEx Ground

FedEx SmartPost is cheaper than FedEx Ground, but there are some trade-offs.

How long does FedEx SmartPost take?

First, delivery times are slower. Shippers should plan for two to five days more than standard ground shipping, which in some cases could double transit times. (It’s worth noting that this is a longer delay than from UPS SurePost, a similar hybrid service from FedEx’s primary competitor.)

Slower transit times aren’t necessarily bad, however. As long as customers know what to expect, they may not mind waiting a few extra day for a package that isn’t time-sensitive. And since SmartPost offers unified tracking with FedEx, customers can track their packages throughout each leg of the journey.

Does FedEx deliver with USPS?

SmartPost typically utilizes USPS service for the last leg of deliveries — but not always. In some cases, when FedEx is already near a package’s destination and the delivery would be easy and efficient, FedEx drivers deliver parcels themselves. But the majority of SmartPost packages move through USPS trucks.

Is FedEx SmartPost right for my business?

FedEx SmartPost is a no-frills service. It does not save time or offer new perks to either shippers or customers. In fact, customers may not even notice the difference between ground and SmartPost service. But it does save money — potentially a significant amount — for shippers and customers alike.

Many competitors in the shipping space are rolling out new options on the low end of their rate sheets, which could force FedEx to keep SmartPost rates competitive. DHL Parcel Metro seeks to solve the last-mile inefficiency problem, but instead of giving parcels to the U.S. Postal Service, it turns them over to third-party couriers who drive them to their destinations. Shipping With Amazon is a third-party courier service too.

UPS SurePost is a direct competitor to FedEx SmartPost and works much the same way, letting USPS cover the last mile with existing routes and vehicles.

SmartPost (and SurePost, for that matter) are good for USPS, too. The centuries-old public agency has been losing business for years to UPS and FedEx. And unlike those private companies, USPS can’t decide that it simply won’t serve addresses that are too hard to reach — it’s required to deliver to everybody. These offerings give some of that responsibility, and funding for it, back to USPS.

However, in 2018, President Donald Trump ordered a review of USPS policies. The commission he appointed recommended reconsidering the mandate to deliver every parcel to every American address. Specifically, it suggested, USPS should consider promising universal delivery only to individual customers — not to commercial shippers like Amazon and other e-commerce retailers.

If that change were made, it would mean the end of FedEx SmartPost and UPS SurePost. But that certainly shouldn’t prevent shippers from taking advantage of SmartPost now. It’s an opportunity to save money on shipping rates — and opportunities like that don’t come along often.

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