The story on shipping with USPS

Billing

The USPS billing options do not match the rich detail of weekly electronic invoices and convenient online claims processing of FedEx and UPS.

Permits

Unlike UPS and FedEx, USPS shippers must apply for annual permits and prepare packages (sortation, metering, etc.) within USPS guidelines.

Automation

Outside of its online shipping application, the USPS does not provide shipping automation hardware or software. Many UPS and FedEx shippers enjoy automation for manifesting, labeling, rating, tracking, reporting, address storage, etc. at no additional charge.

Pricing

While the USPS is beginning to roll out custom pricing, it has been offered only to the largest shippers in the U.S. In the meantime, smaller shippers can take advantage of marginal incentives to ship online at www.usps.com.

While many of the USPS products offer a value over FedEx and UPS published charges, most volume shippers have negotiated steep discounts with the private carriers — which can wipe out any USPS cost advantage. (To ensure an apples-to-apples comparison, evaluate all costs including accessorial charges.)

And given the pricing authority afforded to the USPS under the Postal Law, shippers could realize significant annual rate increases in the future. For example, machinable parcels shot up 20% in January 2009 after a 10% increase in May 2008 and a 35% increase in 2007.

MAKING PROGRESS

To compete with FedEx and UPS, the USPS realizes improvement is necessary and has focused resources to improve service performance, billing and tracking options, and customer convenience:

Improved delivery performance

Thanks largely to transportation subcontractor FedEx, Express Mail and Priority Mail service levels are at all-time highs.

Web functionality

Customers can ship online, look up Zip Codes, compare services, calculate shipping costs, track packages, order supplies, print postage or schedule a pickup.

Billing convenience

With an Express Mail Corporate Account (EMCA), you can charge your Express Mail shipments to one account. You can deposit shipments paid through an Express Mail Corporate Account at any Express Mail collection box, at the Post Office, or with a postal letter carrier.

Web tools

USPS also provides free application program interfaces (APIs) to integrate a variety of Web tools into your Website, shipping operation or customer service center.

The USPS has also developed a residential delivery product called Parcel Select Service, which provides incentives for consolidators to induct packages deep within the postal delivery stream, with the Postal Service handling the final-mile delivery to the residence.

What does all this mean to you? The USPS now has the authority to develop competitively priced products. Although some services lag behind those of UPS and FedEx, it's probably worth your while to consider the Postal Service for at least some of your parcels.

Rob Martinez (rob@NavigoInc.com) is a partner at Navigo Consulting Group, which provides contract benchmarking, distribution analysis and carrier negotiations.