The U.S. Postal Service is stepping up efforts to wrest a bigger share of the parcel delivery market from its private sector rivals. And this time around, it's trying a new tactic. In years past, the federal agency has typically challenged its competitors—FedEx, UPS, and DHL—on the basis of service (for example, by adding tracking and tracing capabilities for express and parcel shipments). Now, it's attacking on another front: pricing.
Beginning May 12, the USPS will offer volume discounts for its Express Mail, Priority Mail, Parcel Select, and Parcel Return services. Thanks to the Postal Accountability and Enhancement Act of 2006, the independent agency is able to change its pricing structure to reflect what it calls "industry standard" practices.
For instance, Express Mail will for the first time use zone-based pricing, and customers who establish corporate accounts or pay online will receive a 3-percent discount. Commercial shippers who meet quarterly volume commitments could knock as much as 7 percent more off their bills. Parcel Select will offer volume-based pricing incentives to large and medium-sized shippers, and Parcel Return will now be priced by weight, which the USPS says will significantly cut prices for lightweight packages. (For full details, go to www.usps.com/prices.)
Postmaster General John Potter fired a parting shot at the Big Three parcel carriers in a statement announcing the new rates and incentives. "We're pricing our products to sell in today's competitive shipping market," he said. "In the near future, the Postal Service plans to explore contract pricing for larger customers similar to others in the market."