Shipping services products face considerable domestic and international market competition. These products represent the remaining 12 percent of revenue and include Express Mail, Priority Mail, Parcel Select, Parcel Return Service, Global Express Guaranteed (GXG), Premium Forwarding Service, Express Mail International, Priority Mail International, and M-bags.
On January 18, new shipping services prices took effect averaging a 5 percent increase in comparison with competitors’ increases that ranged between 5.9 and 6.9 percent. Unlike mailing services, shipping services are not subject to a price cap. Instead, prices are driven by the market and must meet certain statutory requirements that effectively establish a price floor.
The move to annual January price changes for shipping services tracks with industry-wide practices while allowing comparisons that show the affordable options offered by the Postal Service. This price change was the first to separate shipping and mailing services. An integrated multimedia advertising campaign was launched to build awareness among business customers that the Postal Service is in the shipping business. Extensive print and online outreach information was available at usps.com/prices. In addition, sales support materials were developed for Post Offices; for the local outreach programs Business Connect, Customer Connect, and Rural Reach; and for the sales force.
Carrier Pickup service, available for Express Mail, Priority Mail, Return Services, and international products, added 244 previously excluded ZIP Codes. With this addition, the service became available to an additional 280,184 delivery addresses. This expansion demonstrated the Postal Service commitment to provide increased support for customer preferences to use online programs such as Click-N-Ship. Carrier Pickup service has also been expanded on a contract agreement basis in shopping malls to increase retail shipping conducting door-to-door service. The Postal Service also increased support for companies interested in specialized and customized expedited packaging supplies.
Express Mail, the fastest postal product for time-sensitive items, offers guaranteed overnight or second-day delivery to most domestic addresses. Express Mail service performance was at an all-time high. The product includes tracking, proof of delivery, Sunday and holiday delivery where available, a flat-rate envelope option, and insurance up to $100. Any mailable matter may be sent as Express Mail. All Express Mail packaging is Cradle-to-Cradle certified at no additional cost.
Overall, Express Mail prices averaged a 5.7 percent increase that maintained a value advantage in the market, especially for lightweight items. Other than the flat-rate envelope, Express Mail prices are based on weight and distance (the number of zones through which an item travels). Unlike most other shipping companies, the Postal Service does not impose surcharges for fuel price increases, residential delivery, or Saturday delivery.
Commercial base pricing, a pricing category lower than retail prices, has been successful and was expanded to include customers paying postage with an approved information-based indicia (IBI) metering system, in addition to customers using an Express Mail Corporate Account (EMCA), Federal Agency Accounts, online Click-N-Ship, and registered end-users of PC Postage systems.
The rebate process for high-volume commercial base customers was replaced with a separate pricing category called commercial plus, which was set at 14.5 percent below retail prices. This new arrangement makes it easier for merchants to pass their savings in shipping costs onto customers because the merchants do not have to wait until the end of a quarter to receive the incentive. Commercial plus prices are available for existing customers whose cumulative account volume exceeds 6,000 pieces (about 25 packages a day) in the previous four calendar quarters and customers who have a “customer commitment agreement” with the Postal Service. Customers must use an EMCA or a Federal Agency Account, or be a registered end-user of a PC Postage system using approved shipping labels.
Express Mail Open and Distribute service allows mailers to enclose and expedite mail in bulk, such as Standard Mail, in an Express Mail sack or container and address it to a Postal Service facility. The receiving facility opens the container and sorts the enclosed mail for delivery within the service area of the facility. A new Open and Distribute tray box was made available at no additional charge for Express Mail customers shipping letters and flats. The customized design of the new tray boxes improves visibility of the service, secures all mail inside during processing, and eliminates the potential for mail to be misdirected. These tray boxes are also useful for remittance mail customers using Priority Mail Reship services, which now allow the use of Delivery Confirmation and the enclosure of most types of accountable mail.
A new Express Mail delivery endorsement was introduced for commercial mailers who have an agreement allowing for delivery by the end of the day, instead of a specific time. Express Mail shipments with the Guaranteed By End Of Day endorsement are delivered with a carrier’s regular deliveries — a potential workhour savings.
High-volume mailers looking for cost savings on overnight shipments now have the option under a customer agreement to use the new Express Mail letter-size envelope. When used with the Guaranteed By End Of Day endorsement and Waiver of Signature option, items can be easily delivered to mail receptacles.
Also, newly designed triangular mailing tubes that are easy to assemble were introduced with Express Mail graphics printed on one side of the unfolded container and Priority Mail graphics on the reverse. This change increases customer satisfaction and operational efficiency without increasing costs for these mailing tubes.
The Express Mail Hold For Pickup option was made available through usps.com. The service allows customers to use a destinating Post Office to pick up their Express Mail.
Express Mail was added to the suite of products for Electronic Verification System (eVS) to allow commercial mailers to manifest Express Mail to pay postage with a permit imprint in order to benefit from paperless transactions and reports.
To simplify the deposit of prepaid packages at Post Offices, customers who use Click-N-Ship or PC postage have the option of printing a single Shipment Confirmation Acceptance Notice form for multiple packages to be mailed at the same time. The employee accepting the packages only has to scan the barcode on the form for all packages associated with the form rather than scan each package separately.
Priority Mail offers customers delivery within 1 to 3 days for letters, documents, and merchandise weighing up to 70 pounds. It provides 6-day per week delivery, security, and preferential handling. Priority Mail service performance was at an all-time high. Priority Mail includes Delivery Confirmation at no additional cost for the electronic option, convenient prepaid envelopes, custom-designed boxes, a convenient flat-rate envelope, and three Postal Service flat-rate box prices. The flat-rate boxes are now imprinted with the words “Small,” “Medium,” or “Large” to help customers choose among available options. All Priority Mail packaging is Cradle-to-Cradle certified.
Overall, Priority Mail prices averaged a 3.9 percent increase that maintained a value advantage in the market, especially for lightweight items. Other than the flat-rate envelope and boxes, Priority Mail prices are based on weight and distance (the number of zones through which an item travels). Unlike most other shipping companies, the Postal Service does not impose surcharges for fuel price increases, residential delivery, or Saturday delivery.
A new Priority Mail small flat-rate box, priced the same as the flat-rate envelope, was launched on January 18, giving customers four convenient flat-rate box options, including two different medium size boxes and the discount for the large flat-rate box sent to APO/FPO addresses.
Commercial base pricing, a pricing category lower than retail prices, was expanded to include customers paying postage with an approved information-based indicia (IBI) metering system, in addition to customers using a permit imprint with a manifest mailing system (MMS), online Click-N-Ship, and registered end-users of PC Postage systems.
New commercial plus pricing was launched for existing Priority Mail customers shipping more than 100,000 pieces (about 420 packages a day) in the previous calendar year using a Postal Service-approved PC Postage system or a permit imprint with a MMS; Priority Mail Open and Distribute customer shipping more than 600 containers in the previous calendar year under an MMS; and new Priority Mail customers establishing a customer commitment agreement with the Postal Service.
Customers can handle virtually all of their mailing needs at usps.com.
Open and Distribute service allows mailers to enclose and expedite mail in bulk, such as Standard Mail, in a Priority Mail container and address it to a Postal Service facility. The receiving facility opens the container and sorts the enclosed mail for delivery within the service area of the facility. Priority Mail Open and Distribute processes provide greater visibility, including standardized labels and identification, tracking, and a flat-rate packaging option for direct shipments to destinating delivery units. The flat-rate packaging option makes sending smaller volumes easier and provides pricing that does not vary by distance or weight. Improvements were made to the Intelligent Mail handheld scanning device to allow manual entry for unscannable barcodes. A new Open and Distribute tray box similar to the Express Mail tray box was made available. The tray boxes are also useful for remittance mail customers using Priority Mail Reship services, which now allow the use of Delivery Confirmation and the enclosure of most types of accountable mail.
Parcel Select offers an economical ground solution for medium-sized to large shippers and consolidators who prepare, sort, and handle large volumes of packages that they tender to the Postal Service. Parcel Select combines the logistics expertise of parcel consolidators with the vast delivery network of the Postal Service to provide highly competitive prices and excellent delivery service. Postal Service strategies to increase volume include increasing partnerships, optimizing pricing, developing new customer contracts based on flexible pricing, better leveraging the first- and last-mile pickup and delivery network, and shortening the start-up time for new customers to begin using this product. As part of the commitment to service, the Postal Service holds quarterly meetings with the national consolidators’ senior management to discuss issues such as scanning, service, and manifest accuracy. Parcel Select service performance achieved an all-time high in 2009.
Parcel Select has several pricing options, depending on level of sortation and point of entry into the postal system. The most favorable pricing is for packages entered closest to final delivery at a destination facility. The three levels of entry with corresponding prices are destination delivery unit (DDU), destination sectional center facility (DSCF), and destination bulk mail center (DBMC).
Loyalty Rebates for DDU postage range between 0.25 percent and 1.50 percent and are based on the total annual amount of all Parcel Select postage paid starting at $5 million. Growth Rebates for DDU postage are available for shippers who qualify for a Loyalty Rebate and who increase their Parcel Select volumes by more than 10 percent in the most recent 12-month period (compared with the previous 12-month period). The rebate, determined by Parcel Select postage spent and the percentage of growth, ranges from 2 percent to 14 percent.
On January 18, Parcel Select saw an average increase of 4.7 percent for DDU prices, 6.8 percent for DSCF prices, and 9.1 percent for DBMC prices. Parcel Select destination entry parcels retained both the no-fee (electronic) Delivery Confirmation service and the Loyalty and Growth Rebates implemented in May 2008 for DDU entry. As a result of this pricing strategy, ground packages entered at DDUs and DBMCs represented more than 97.5 percent of Parcel Select volume as shippers continued to move packages closer to destination. This transition to DDU and DBMC entry accelerated after the January and May price changes.
Parcel Select also includes three other price options: Origin BMC (packages sorted by BMC and entered at the BMC serving the shipper’s plant), BMC Presort (packages sorted by BMC but not entered at a BMC), and Barcoded Nonpresort (barcoded packages not entered at a destination facility). Both the pricing and the timing for price changes for these three categories are currently tied to single-piece Parcel Post, which increased prices on May 11.
A major revenue development was FedEx SmartPost (part of a FedEx ground service that uses Parcel Select). All existing FedEx Ground customers, including FedEx Home Delivery customers, qualify for SmartPost. Customers can price shop and select FedEx SmartPost if they use a FedEx shipping system or have a FedEx corporate account. This arrangement opens the FedEx Ground business to Parcel Select. The General Services Administration (GSA) provided another new potential source of revenue and volume growth when Postal Service ground shipping solutions were offered for the first time in GSA schedule 48.
Post Offices and delivery units began using new Enhanced Visibility Tracking Events (EVTE) for expedited and ground packages with Delivery Confirmation or Signature Confirmation services. With EVTE, track and confirm services are on the same playing field as Postal Service’s competitors, enabling customers to track packages at their convenience from time of acceptance to time of arrival at a delivery unit to the final delivery point. Product visibility contributes to growth and high service performance of Parcel Select.
Parcel Return Service (PRS) offers an easy, convenient way for customers to mail items that need to be returned, repaired, or recycled or that were recalled. Customers use a pre-printed label provided by the merchant or agent that does not require them to pay postage. Customers can take the parcel to a Post Office, request pickup during the normal delivery of their mail, or at usps.com/pickup. The merchant or agent retrieves returned parcels from Post Offices (“return delivery units” or RDUs) or BMCs (“return BMCs” or RMBCs), after paying postage through an advance deposit account set up with the Postal Service. PRS provides full end-to-end product visibility through the logistics partner, who reverse-manifests each shipment.
There was no price increase for RDU parcels and an average 7.1 percent price increase for RBMC parcels. Because PRS items retrieved at RDUs continued to receive more favorable pricing, RDU entry grew by 40 percent.
UPS introduced its Flexible Access program in February so that return customers can tender their packages either to UPS or the Postal Service. It has all the same convenient methods for the customer to give us the package: at the retail counter; at the door step by giving it to the carrier; or arranging for carrier pickup through usps.com/pickup. In addition to UPS, FedEx became a returns consolidator with its FedEx SmartPost offering. FedEx announced the product launch using PRS in September after a successful test during the summer. These partnerships give customers other options to use the Postal Service’s unparalleled first-mile capabilities, while providing the Postal Service other revenue growth opportunities.
Parcel Return Service offers customers a convenient way to mail items that need to be returned, recalled, repaired, or recycled.
Premium Forwarding Service (PFS) reships all mail from a household customer’s primary address to a temporary address weekly via Priority Mail service, for a minimum of two weeks and up to one year. PFS was created to meet customer demand for an alternative to temporary forwarding service. The service remains popular with customers, and volume has been growing steadily.
