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
Partnering for Supply Chain Success with FRAM Group and True Value
Disruptive forces such as new technology, changing regulations, talent shortages, and infrastructure bottlenecks continue to be the prime focus for supply chain executives and managers.
Download Today!
From the March 2017 Issue
WMS vendors are stepping up to the plate and developing functionalities and solutions that meet the complex needs of today’s companies. Our top analysts take a peek into these developments and discuss the DC of the future and the software that will support it.
5 Supply Chain Trends Happening Now
2017 Warehouse/DC Equipment Survey: Investment up as service pressures rise
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2017 Trucking Regulations & Infrastructure Update
In this session our panel brings shippers up to date on the state of transportation regulations. Discussion will revolve around regulatory reform, aspects of the federal highway bill and what the transportation landscape looks like in the early days of the Trump administration.
Register Today!
EDITORS' PICKS
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...
ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...

2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...