What the 2014 USPS Pricing Changes for Shipping Services Means to Retailers
This is a guest post by Gordon Glazer, director of strategic partnerships at Shipware, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Gordon can be reached at email@example.com.
Every time the USPS announces rate changes, all the stakeholders come out of the woodwork, with many of them bemoaning the increases and how it will impact their operation. Relax! Take a deep breath. All told, this rate change will have minimal impact to most, favorable impact to some and not so favorable (but tolerable) changes for others. The positive outcome is that it motivates shippers to evaluate their processes and take action on the many strategies available to lower their costs on small parcel logistics.
Here are five tips for reducing your parcel expenses:
1. Restructure business rules to route packages by cost of transit and service times.
2. Reduce air space when possible to take advantage of flat rate, regional flat rate and cubic Priority Mail offerings. "If it fits, it ships."
3. Work with a parcel consolidator that has a negotiated service agreement (NSA) with the USPS. NSA's generally include special pricing with better discounts than the lowest volume discounts, called Commercial-Plus Pricing (CPP). Consolidators with NSA's carry additional benefits, including the following:
- Allows you to participate in cubic pricing tiers.
- Provides an extra $50 in free insurance. CPP and NSA customers receive $100 insurance per package, while "base" customers get $50.
- Carries no annual commitment.
- Allows you to ship 14-ounce to 16-ounce packages at the "Plus" tier for First Class Package Services. Without "Plus" pricing, packages over 13 ounces are priced at the more expensive Priority Mail rate.
4. Enable your customers to make a shipping cost decision based upon time of transit, not specific carrier service mode. Use a carrier management system to determine the lowest cost based upon dimensions and weight/zone that includes your negotiated rates with ancillary costs considered.