USPS targets large shippers

The U.S Postal Service, or USPS, is expected to announce a slate of large express freight contracts in August after being allowed to bid for commercial contracts for the first time.

Earlier this month, USPS was allowed for the first time to offer tailored contracts to customers, having been almost frozen out of the commercial market.

Previously, the company had to offer flat-rate pricing to all customers. “In express, it was extremely limiting,” said Gary Reblin, vice president for expedited mail at USPS. “We realized we were behind the eight-ball.”

Reblin said in an interview that USPS is bulking up its sales force to target niche markets such as small businesses and the retail returns sector, focusing on smaller packages.
USPS said it had an advantage over rivals by leveraging its existing mail and package delivery infrastructure. “Every house, every day: we’re already there,” said Reblin.
He said a number of larger shippers were starting to commit to its service, and the company plans to announce a number of three-year contracts later in the summer.
USPS differs from existing operators in offering flat-price deals with annual increases, avoiding the fuel surcharges that shippers said were becoming an increasingly important part of contract negotiations.

The company has a market share of around 30 pct in the U.S. air express market – ranking first above FedEx – but only 4.3 pct of the expedited segment for next-day and two-day delivery.

Reblin said it aimed to grow its share of the expedited market, but declined to provide targets.

All of the express operators have seen a shift by customers from premium services in recent months, with more opting for cheaper ground options or longer delivery times.
Reblin said USPS was putting more business on trucks, having previously relied on air services to transport most of its volume on segments of 600 miles and above.