UPS teams up with US Postal’s Parcel Select

United Parcel Service is to introduce a customised service combining its ground delivery service with the US Postal Service’s Parcel Select.

UPS will use Parcel Select for deliveries up to five pounds, primarily to rural or super-rural areas. After moving these packages through its ground network, UPS will identify those for delivery to the rural areas and hand them over to the local post office for final delivery.

This service may result in lower rates for mailers using UPS. UPS currently charges a US$1.75 surcharge for rural deliveries. It is not known how much UPS will pay the postal service for each package.

UPS spokeswoman Susan Rosenberg said customers have signed on, but are not yet using the service. She declined to name the customers or say when the service would begin. “We’re working with customers that are not currently UPS customers,” she said.

Doug Caldwell, VP at AFMS Transportation Management Group, said that UPS has lost a lot of residential lightweight package volume to consolidators who can offer a lower rate, particularly on lightweight, residential packages.

Caldwell also said that Parcel Select consolidators are concerned about the partnership. They have been able to get business for deliveries to rural areas from mailers who might be UPS customers, but use the consolidators for shipments to rural locations to avoid the UPS surcharge. Because UPS will now share delivery of packages that have gone exclusively through Parcel Select, the postal service could lose some fairly significant volumes, at least in the short run. “In the long run, however, the relationship with UPS may benefit the postal service,” he added.

Industry insiders have suggested that FedEx might announce a similar partnership soon.