POSTAL: THE USPS REVEALS NEW PARCEL OPTIONS

ALONG WITH ITS PROPOSED 2010 PARCEL RATE SHIPPING PRICES, the U.S. Postal Service in November announced several new products aimed at small-package shippers. These include cubic-volume-based pricing for large-volume commercial Priority Mail shippers, and a Priority Mail half-pound price based on distance in the Commercial Plus pricing category.

The USPS’s half-pound option will likely capture a lot of new interest, says Gerard Hempstead, president of Hempstead Consulting and a former vice president for DHL, “because an awful lot of 1-lb. shipments moving today weigh far less than 1 lb.”

And the Postal Service’s cubic-volume-based pricing means customers who ship small, dense, space-efficient packages will receive a financial incentive through a new, tiered pricing option. Hempstead says this new offering is the opposite of what the commercial carriers do, which is charge the higher of the actual weight or the cubic weight (L × W × H / 194). “The USPS is sharing its productivity improvement with incentive based lower pricing.”

The USPS purchases containers on the FedEx network and operates its own surface transportation network that has excess capacity on the trucks, Hempstead says. As a result, the more weight USPS can get into a cubic foot, the lower its costs are to transport and the better yield it will have.

As for USPS’s parcel rates in 2010, the overall average price increase will be 3.3% for Priority Mail and about 4.5% for Express Mail Commercial Base. But the price of domestic Priority Mail Flat Rate Envelope will go down from $4.95 to $4.90, while the Priority Mail Small Flat Rate Box will stay at $4.95.

The USPS’s product innovations and new prices are pending Postal Regulatory Commission review. Pricing is scheduled to take effect Jan. 4.

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