In the packaging business, the U.S. Postal Service has lagged behind competitors such as United Parcel Service, Federal Express, and DHL due to pricing constraints. But that’s all changed, thanks to the Postal Reform and Accountability Act passed in December 2006.
For the first time ever, the USPS is now offering volume related and other price incentives for its Express Mail, Priority Mail, and other shipping services. USPS officials believe this will allow the Postal Service to compete on “more of a level playing field,” according to Jim Cochrane, vice president of ground packages for USPS.
In a session at the National Conference for Operations & Fulfillment, held in Orlando, FL, April 8-10, Cochrane and Gary Reblin, vice president of expedited mail for USPS, told attendees that the service is now in position to sit down with customers and negotiate customized pricing. “We now have freedoms we never had before,” Cochrane said.
USPS shipping products have been priced with a “one price fits all” approach — customers pay the same price per piece regardless of the number of packages sent or the method of payment. But due to the change in federal law, customers can now take advantage of commercial volume pricing, minimum volume rebates, online price breaks and other pricing incentives.
Here are a few examples of savings opportunities for some of the USPS parcel services:
Express Mail, premium overnight delivery, is switching to an industry standard, zone-based pricing system, resulting in lower prices for closer destinations. Customers will enjoy a 3% price reduction by purchasing Express Mail online or through corporate accounts. And up to an additional 7% price reduction is available for those who meet quarterly volume minimums.
Priority Mail, USPS’s economical expedited delivery service, will be available at an average 3.5% savings to customers who use electronic postage or meet other requirements.
Parcel Select, the Postal Service “last mile” advantage of delivery to every door, will offer pricing and volume incentives for large- and medium-size shippers.
Parcel Return Service, a simplified method for customers to return items to businesses, will move entirely to a weight-based pricing system, resulting in significant price reductions for lighter packages.
Thanks to postal reform, “no one can deliver more economically than the USPS,” Cochrane boasted. “We really want to sit down and talk to shippers. This is an opportunity to leverage another player in the game.”