USPS eyes growth opportunities in its global business

This time last year saw the USPS entering into an innovative tri-lateral shipping agreement with China Post and the Greater China division of internet retail marketplace eBay.

The agreement set up a simplified shipping platform for eBay sellers in China to ship lightweight parcels to the US, setting China Post and the US Postal Service as preferred shippers using co-branded shipping labels with barcoding for joint tracking systems.

Valera says the partnership has proven “very successful” at growing e-commerce volumes, ensuring that USPS and China Post are the shippers for those products.

eBay agreements for other markets in the region could follow suit, although arrangements are not yet far enough advanced to reveal which countries may be next.

Valera says: “We’re taking that same model that we’ve had with China Post and eBay and we’re trying to replicate that across the region to other countries in the Asia-Pacific area that also have eBay presence, and who want to work with eBay to ship consumer goods to the United States.”

As for one of the major cost-related concerns in the logistics world at the moment, global fuel prices, Valera says it has not been a huge concern for USPS so far.

The Postal Service has International Commercial Air (ICAIR) contracts in place that do not include fuel surcharge adjustments, providing it with some protection from the fuel pressures aside from extra contracts required for excess volumes.

However, this issue could come into play when it comes time to renew the current air carrier deal after its expiry in February 3, 2012, she says.

“That possibility of having fuel costs go up could impact our costs significantly,” Valera concedes, but says it “remains to be seen” what will happen next year.

Overall, however, Valera says there should be some incremental improvements on prices and services going forward, with her team “continually” looking for ways to cut costs and improve efficiencies both in working with foreign posts and on the homeward end of the international service.

Improving the customer experience

Another prong in the Global Business strategy for growth is to innovate in its line-up of products and services to encourage more volume.

Keeping with the existing structure of international services that was brought into line with USPS domestic service names in 2007, new product innovations will target particular areas of customer demand with an emphasis on making shipping easier.

One of the first of these new products will be a new lightweight parcel offering that will be especially targeted at the booming e-commerce segment. Set for launch this fall, the “e-Packet” service will be available for commercial customers that enter into a Negotiated Service Agreement, initially sending to select countries, and will include delivery confirmation to provide visibility.

Valera explains: “The idea is to work with some of the e-retailers and e-commerce segment and give them some value for sending small shipments that also provides the traceability they’re interested in.”

Elsewhere, the range of flat-rate international products is to be expanded, mirroring the expansion of flat-rate offerings in USPS domestic services.

A broadening of the line-up of Priority Mail International Flat Rate Envelopes will be followed by a new Express Mail International flat-rate box in January, Valera says. and pricing for the Express Mail flat-rate box would follow the current system of a separate price for shipments to Canada, with another price for the rest of the world.

These new products would fit in with Postmaster General Patrick Donahoe’s priorities of improving the customer experience and simplifying mail services, she explains, while building on particular areas of growth in the international market.

She says: “Our customers really find the simpler pricing more straightforward. They like the convenience of having the packaging products available to them for free, and it means shipping is easier for them – so it is in line with our strategy to simplify for our customers and to improve our customer experience.”

The theme of simplifying international shipping for customers – and potential customers – carries over into the US Postal Service’s work with the federal government’s National Export Initiative.

The USPS is one of the key shipping partners – along with FedEx and UPS – of the initiative launched by President Obama last year, which seeks to double US exports over the next four years by helping businesses with the potential to export to get into foreign markets.

Representatives from the US Commercial Service met with USPS officials at last month’s National Postal Forum in San Diego, with the two organisations running a joint workshop on the export initiative.

Valera says her team can provide valuable assistance to businesses referred by the US Department of Commerce in getting to grips with the complexities of cross-border trade.

“International shipping is very complex and most customers have a lot to consider when they are going into international shipping. And that’s what makes the partnership with the US Department of Commerce so valuable,” she says.

“But as much as we can do to simplify the process for the customer the better, and I think that is the key strategy to growing the parcel business.”