UPS and FEDEX have typically charged shipping per package based on the weight of each package. But with the current ground networks being as big as they are now and most areas in the U.S. covered, they are both now focused on building more density into their existing routes.
One of the biggest costs associated with shipping and delivering any product on a truck is the number of stops that truck has to make. Let us take a simple example. How much time would it take to deliver 100 packages to 100 different houses on the same street versus delivering 100 packages to 1 house on that street. Those 100 packages get picked up by the carrier at the store, run through their sorting facilities, shipped out on delivery trucks, and then delivered to each destination. Each of the factors in this equation would be equal until the last. The same amount of packages would be handled, virtually the same amount of miles driven to get the packages there, but much, MUCH more time to stop at 100 houses than just 1.
So fedex and ups have decided to give volume discounts on orders over 200 lbs and multiple packages to entice customers to do bigger shipments. This adds packages and sales to the ups and fedex existing ground networks with very little incremental cost to them because the the number of stops on the truck do not increase.
I wonder how long it will take the post office to figure simple things like this out? Do they really need to deliver daily 6 days a week. If they delivered Mon, Wed, and Sat instead of Mon, Tue, Wed, Thu, Fri, Sat, they could cut their delivery costs by 50% and still get the mail there in virtually the same time. Of course, we are talking about a government entity and unions with a monopoly on mailbox delivery, so I don’t expect that brainchild of an idea to come to fruition any time soon.
Anyway, back to the multiweight program. There is one advantage with the multiweight programs that fedex has over ups. Fedex pools the orders together for volume discounts on a single day on delivery zipcode. So if you have 10 packages at 30 lbs each going to the same zipcode on the same day, the packages will qualify for the multiweight discounts with FEDEX even though they are 10 separate orders. As far as I know, ups does not do it by zipcode yet, just by address.