A parcel is simply a package. Parcel shipping is how many ecommerce orders reach customers, one box per order or a few boxes per order, delivered to homes and businesses. Each package travels on its own through the carrier's network and is scanned along the way, so it can be tracked on its own.
The national carriers handle most of it, alongside regional carriers that cover part of the country and consolidators that combine many shippers' packages before handing them to a carrier.
Parcel Carrier Size and Weight Limits
Each carrier sets its own limits, by service. For the main ground services:
- USPS Ground Advantage: up to 70 lb, and up to 130 inches in combined length and girth.
- UPS: up to 150 lb, up to 108 inches long, and up to 165 inches in length and girth combined.
- FedEx Ground: up to 150 lb, 108 inches in length, and 165 inches in length plus girth (length plus twice the width plus twice the height).
Packages near these limits can draw extra handling or oversize charges, and a package over the UPS and FedEx Ground limits goes as freight. UPS describes less-than-truckload (LTL) shipping as typically pallet freight weighing over 150 lb.
How Parcel Shipping Works
- Pack and label. The shipper packs the item, weighs and measures the box, and prints a label with a tracking barcode. Ecommerce shippers usually do this in shipping software that also picks the carrier and service.
- Hand over to the carrier. Packages go to the carrier at a scheduled pickup or a drop-off point, and the shipper sends the day's package details to the carrier electronically.
- Sort and move. The carrier sorts packages at its hubs, by machine where it can, and moves them between hubs by truck, rail or air. Scans along the way update the tracking.
- Deliver. A local station sorts packages onto routes for last-mile delivery to a door, a locker or a pickup point, and the driver records proof of delivery.
How Parcel Rates Are Calculated
- Billable weight. UPS and FedEx charge on the greater of the actual weight and the dimensional weight, which converts the box's volume into a weight; USPS does the same for packages larger than 1 cubic foot. UPS divides length × width × height in inches by 139 for daily rates and 166 for retail rates. A large, light box can cost as much as a small, heavy one.
- Distance. Rates rise with the shipping zone, a band of distance between the origin and destination ZIP codes.
- Speed. Faster services cost more. UPS, for example, calls its ground shipping service, UPS Ground, its most affordable option.
- Surcharges. Carriers add charges such as a residential delivery surcharge, a fuel surcharge, and additional handling for heavy, long or oddly shaped packages. They differ by carrier and service: UPS applies a residential surcharge when an address is considered residential, FedEx adds one for FedEx Home Delivery, and USPS says Priority Mail has no surcharges for fuel or residential delivery.
Parcel vs. LTL vs. Truckload
Fig. 1 · Comparison
| Item | Parcel | LTL | Truckload (FTL) |
|---|---|---|---|
| What ships | Individual boxes and envelopes | Usually pallets or crates sharing a trailer with other shippers' freight | A full trailer for one shipper |
| Handling | Sorted package by package through hubs, often by machine | Moved by forklift and cross-docked at terminals | Loaded at origin and unloaded at destination |
| Priced by | Billable weight, zone, service and surcharges | Freight class, weight, lane and accessorials | The truck: per trip or per mile, plus accessorials |
| Tracked by | Each package's tracking number | The shipment's PRO number | The truck and load |
| Typical use | Ecommerce orders to homes and businesses | Wholesale orders and store replenishment | Large replenishment and full-trailer moves |
The line between parcel and freight is mostly size and handling. An order of a few boxes ships as parcel. A wholesale order of many cartons may cost less on a pallet as LTL, and a full trailer's worth goes as truckload.
Ways to Lower Parcel Shipping Costs
- Right-size packaging. A smaller box can lower the dimensional weight. Packaging optimization matches box sizes to the products shipped.
- Compare carriers on every package. Rate shopping picks the cheapest service that meets the delivery promise, package by package.
- Ship from closer to customers. Inventory in more than one warehouse cuts the average zone and the transit time.
- Skip zones in bulk. Zone skipping trucks many packages together to a hub near their destination before they enter the parcel network.
- Negotiate. Shippers with steady volume can negotiate discounts off the carrier's published rates, and a 3PL may offer rates it has negotiated on its combined volume.