With a showdown looming over international postal rates at a Sept. 24 congress of the Universal Postal Union, uncertainty reigns in terms of the United States’ continued participation in the organization, leaving merchants wondering about parcel shipping rates heading into peak season. Consolidators are making contingency plans.
UPS will not add a residential delivery surcharge this holiday peak season, unlike the past two years, but will add surcharges for larger packages and those requiring additional handling. The company expects to exceed record volume of 800 million packages set last year, with 75% of it handled by automated sortation systems.
The U.S. Postal Service reported a drop in its parcel volume for the first time in nine years during its third quarter, as major customers like Amazon continue to shift business away from the USPS and take on some of the deliveries themselves. However parcel revenue was up thanks to rate increases and a DIM adjustment this year.
Two months after deciding not to renew its contract with Amazon for air freight service, FedEx is now parting ways with the ecommerce giant on the ground as well. FedEx will not renew its ground contract with Amazon when it expires at the end of August, effectively severing the long-term relationship as Amazon grows its own capabilities.
Five months after it was initially scheduled to go into effect, the U.S. Postal Service will change how it calculates dimensional weight pricing while expanding DIM pricing to all zones across its Priority Mail Express, Priority Mail and Parcel Select products. The USPS is also lowering its DIM divisor from 194 to 166, increasing the cost.
The U.S. Supreme Court declined to hear an appeal of a lower court ruling, which denied UPS’s legal claim that the U.S. Postal Service’s pricing model gave it an unfair advantage over parcel shipping competitors. In 2018, a U.S. Appellate Court in Washington, DC upheld the pricing methodology. Amazon backed the USPS in the case.
Postmaster General Megan Brennan told the House Oversight and Reform Committee that the USPS will run out of cash by 2024 if reforms are not enacted. Brennan also proposed saving billions by cutting back mail delivery to five days a week and increasing package delivery to seven days, which it already does for Amazon.
Eastern Connection, a regional carrier with a 35-plus-year history, shut down its operations earlier this month, the company announced, leaving shippers in the Northeast from Maine to Virginia looking for alternate capacity. Other regional carriers, including Lasership and CDL, stand to benefit along with UPS, FedEx and the USPS.
In a bold and unexpected move, Stamps.com, which built its business through an exclusive shipping partnership with the U.S. Postal Service, is now severing that relationship as it seeks to offer its ecommerce customers more options, while keeping a sharp eye on Amazon logistics. See what the CEO had to say and how analysts reacted.
