UPS, FedEx turn to US post office
United Parcel Service and FedEx Corp. are taking advantage of a U.S. Postal Service discount for package consolidators to steal away some of the post office’s biggest customers.
Atlanta-based UPS, already the world’s largest transportation company, on Thursday launched UPS Basic, a low-cost delivery service that will have the U.S. Postal Service making final deliveries of some of its packages.
The new program is targeting mail-order merchants, who are some of the post office’s biggest customers due to its cheaper rates compared to UPS or competitor FedEx Corp.
FedEx, based in Memphis, has mounted a furious assault on the ground delivery market, and is in the middle of a test with the postal service with an eye to adding a low-end delivery offering. No decision has been made on a full roll-out of the new service, an executive told Reuters.
FedEx has a seven-year, $7 billion contract to carry mail and postal service overnight packages on its fleet of jets. Its FedEx Express drop boxes are in thousands of U.S. post offices.
UPS will deliver packages in bulk to the post office nearest the final destination, allowing the post office to handle costly final delivery. The USPS Parcel Select discount program for package consolidators enables UPS to undercut even the prices that the post office offers business customers UPS is targeting. UPS did not disclose its rates, saying they are negotiated with individual business customers.
Basic service would be cheaper than standard UPS services but would typically take longer, involve one delivery attempt, instead of the usual three, and require return fees for undeliverable items, the company said.
The post office also handles residential deliveries for Astar, the former Airborne Inc. which was acquired by the DHL unit of Deutsche Post World Net.
