Parcel Shippers: New USPS Priority Mail Undercuts UPS and FedEx Pricing!
Transit comparisons are quite favorable for the USPS as well. Priority Mail is a one-day to three-day product. Compare that with UPS and FedEx ground, which are typically one-day to five-day deliveries. In addition, the Postal Service has made significant improvements to Priority Mail. It's improved tracking with more frequent scanning events, including a real-time final delivery scan. And tracking is now free. The service now includes one- to three-day specific delivery, comes with $50 in insurance ($100 for CPP), and is offered at several pricing options.
The Postal Service offers many flat rate, unlimited weight options. These convenient prepaid boxes feature predetermined rates regardless of weight or destination, and are available in multiple sizes and shapes.
Most importantly, many USPS products are competitively priced, especially when compared against fully-landed costs — with accessorial charges included — for UPS and FedEx. A pricing analysis reveals that the USPS is particularly competitive for lightweight, residential packages, especially for close-in zones. It's a low-cost choice for offshore shipments to Alaska and Hawaii as well U.S. territories.
Many of Shipware's customers are realizing savings of 10 percent to 70 percent through USPS modal optimization. Finally, there's no complex contract with the USPS. Even custom NSAs are less complicated than most FedEx and UPS revenue-based contracts.
Of course, with growth comes service challenges. As package volumes continue to grow, the USPS will have to consider expanding its delivery fleet with larger trucks and optimized shelving for parcel delivery. It could take a page out of UPS's playbook and invest in package flow, dispatch, routing and rerouting technologies. At a minimum, the USPS needs to continue to invest in additional package-sorting equipment, a bottleneck for an increasing number of sorting facilities.
Parcel shippers looking to curb FedEx and UPS expenditures are wise to explore USPS services and pricing to complement the national, private carriers. New Priority Mail pricing for volume customers is as much as 57 percent lower than previous pricing, making it an attractive option for one-pound to 40-pound packages traveling less than 1,000 miles.
Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.