USPS rolls out discounts
With express shipment rate discounts running deep, there’s another competitor tapping the stream – the U.S. Postal Service.
Under new postal regulations released Oct. 29, the USPS will be able for the first time to discount rates for high volume shippers and negotiate special contract terms.
The final rules, released by the Postal Regulatory Commission Oct. 29, also treat Priority Mail and Express Mail as “competitive” products, which means they are exempt from price caps placed on “market dominant” products.
The final rule – issued eight months before a statutory deadline – implements the Postal Accountability and Enhancement Act of 2006.
Analysts as well as officials from UPS and FedEx say prices have been holding firm – and FedEx recently announced its biggest base rate hike of the decade for 2008.
But shippers – and shipping contract consultants like GENCO – say contract discounts have been running more than twice what they had been previously for big-volume shippers.
Tim Sailor of Navigo Consulting, another shipper advisor, said FedEx has been aggressively discounting rates.
With the recent tentative pact reached with Teamsters, UPS will be hard-pressed not to follow FedEx with a substantial base rate increase. And, as shippers and their consultants say, the carrier is likely to offer discounts to maintain the customer base.
With the USPS in the mix, the discount competition is going to become even more pronounced.
In some cases USPS is a major customer of the other express carriers. But the postal service announced in September it would be aggressively pursuing the package business – that segment’s profits could be used to bolster letter and other operations.
The USPS also has turned up the heat as a competitor. The postal service this summer announced all-time performance bests for national on-time delivery of first-class mail in the third quarter.
Overnight service was 96 percent on-time, up from 95 percent for the same period last year. Two-day service was 93 percent on-time and three-day service was 91 percent on-time.
