Package Deal

Jun 01, 2002 9:30 PM  By

Now that tax season is over, it’s spring, and everyone’s fancy naturally turns to the next event of universal conversational interest — the upcoming postal rate increase. June 1, 2002, marks the introduction of a new postal rate schedule. Although ordinary folks are already grumbling about using up stamps, some postal consolidators and expediters see that this rate change has the potential to help them provide better service at little extra cost to their customers.

Now you see it

This vendor optimism arises from the fact that although the new USPS rates signal a general increase, that increase is not across the board. In particular, the rate for delivery confirmation will be folded into standard Parcel Select fees. Where previously customers had to pay a 12-cent fee for each parcel to get a delivery confirmation, now the rate will include that service with no extra fee. The actual increase in cost to shippers already interested in delivery confirmation works out to a little less than 1%, according to Linda Carlisle, director of brand development for Aurora, IL-based consolidator R.R. Donnelley Logistics.

Pilgrim’s progress

James Cochran, manager of package services for USPS, says that the Postal Service will continue to move closer to true tracking and tracing capability — it’s only a matter of time and technology before shippers can see where their packages are anywhere along the way to their final destination. Meanwhile, the new delivery confirmation rate structure has consolidators excited for a number of reasons.

R.R. Donnelley Logistics, with volume of over 130 million packages a year, sees the new USPS rate structure as potentially positive, if not downright revolutionary. According to CTO William Naughton, the expected change from delivery confirmation for roughly 5% of the parcels Donnelley now handles to almost 100% will add another 500 million tracking events to the Donnelley systems alone. Donnelley allows its clients a choice of access to this level of tracking via the USPS Web site, the Donnelley Logistics site, or the client shipper’s own Web site. The challenge for Donnelley has been to integrate the USPS scan data with its own internal tracking data. “We’ve been working very hard on the data exchange to make sure it’s seamless for our clients,” says Naughton, adding that initial reaction to last year’s holiday season launch of this capability was quite positive.

Steve Zweig, vice president of development at Parcel/Direct, headquartered in New Berlin, WI, also anticipates at least a long-term increase in shipping volume from his firm’s current 50 million-plus packages a year. “The requirement of the customer going forward is no different than it is today for those who elect to use delivery confirmation,” Zweig says. Shipping customers who want to use Parcel Select service with delivery confirmation must produce a label printed with a 20-character delivery confirmation bar code, per specifications in the USPS technical guide.

Some expediters don’t view the inclusion of delivery confirmation as that much of a change for their business. For instance, most of the customers of Global Logistics in Clearwater, FL, already use delivery confirmation, according to president and owner Bob Thatcher. “We’re very focused on service, and most of our customers were paying the 12 cents,” Thatcher says. But he points out that the new rates do present an exciting opportunity for more shippers to afford a higher level of service.

Any way you look at it, more shipping detail will be more visible to more people. Just how the public will react is anyone’s guess, but R.R. Donnelley expects shippers to welcome the cheaper access to delivery confirmation. The USPS’s overall performance has been solid, and now that data will be more readily available, potential customers for delivery confirmation can only be impressed, says Naughton. “We think that it’s really going to open the clients’ eyes.”

Barbara Arnn is managing editor of Operations & Fulfillment.