USPS looks to move Standard Mail parcels to competitive products category

The United States Postal Service (USPS) recently announced it is petitioning the Postal Regulatory Commission (PRC) to move its Standard Mail parcels from its market-dominant product list to its competitive products list.

By ·

The United States Postal Service (USPS) recently announced it is petitioning the Postal Regulatory Commission (PRC) to move its Standard Mail parcels from its market-dominant product list to its competitive products list.

USPS officials said if this is approved, fulfillment parcels would become a lightweight subcategory of Parcel Select, a package delivery service geared towards large shippers.

This proposal was part of the USPS’s exigent price case to raise rates filed on July 6. This case is comprised of four-to-six percent price increases for various products, including its 18 Market Dominant products. These changes, if approved by the PRC, would take effect on January 2, 2011. The PRC’s decision is due in early October.

The USPS said the strategy for Standard Mail small parcels redesign would eliminate confusion for customers by breaking this category into two significant and distinct customer segments—marketing parcels and fulfillment parcels. And it said the main difference between the two products is weight, with Standard Mail fulfillment parcels weighing less than 1 pound and Parcel Select prices starting at 1 pound.

Standard Mail fulfillment parcels are heavily used by companies like Amazon, FedEx SmartPost, LL Bean, JC Penney, and many other large volume shippers of lightweight parcels.

“This is a competitive market and there are other shippers in the marketplace fulfilling this need for packages,” said USPS Vice President, Shipping Services, Gary Reblin, in a statement. “This is a logical change and customers will no longer have to navigate two different products and rate structures for one business need.

Parcel Research President Doug Caldwell told LM this move makes sense, because Parcel Select, Priority, and Express are already in the USPS’s competitive category.

“USPS previously had proposed a fairly hefty (20% plus) rate increase for Standard Parcels, since these parcels are a money loser for USPS, only covering 75% of costs,” said Caldwell. “Even with the increase, Standard Parcels will still be a comparatively good bargain. For instance, the proposed Standard Parcel rate for a 15.9 ounce package will be just under $1.04, vs $1.60 for a 1 lb Parcel Select.”

In its recently-released recently released fiscal year third quarter earning, USPS said it incurred a net loss of $3.5 billion compared to $2.4 billion for the same timeframe last year, with operating revenue at $16 billion, a $294 million annual decline. Operating expenses—at $19.5 billion—were up $789 million year-over-year. This is the 14th net loss in the last 16 quarters for the USPS, with its fiscal 2010 year-to-date net loss at $5.4 billion compared to $4.7 billion at this point in 2009.
Mail volume for the quarter—at 40.9 billion pieces—was down roughly 700 million pieces of 1.7 percent.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Improving Packaging: The Cost of Shipping Air is Going Up
Retailers and manufacturers that insist on using inefficient and sloppy packaging methods—oversized boxes, inefficient packaging, poorly constructed palletized contents—are paying for their mistakes in sharply higher freight rates. Pitt Ohio White Paper, Logistics White Paper, Dimensional Packaging
Download Today!
From the July 2016 Issue
While it’s currently a shippers market, the authors of this year’s report contend that we’ve entered a “period of transition” that will usher in a realignment of capacity, lower inventories, economic growth and “moderately higher” rates. It’s time to tighten the ties that bind.
2016 State of Logistics: Third-party logistics
2016 State of Logistics: Ocean freight
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....

Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...
Port of Oakland launches smart phone apps for harbor truckers
Innovation uses Bluetooth, GPS to measure how long drivers wait for cargo