The U.S. Postal Service announced a change in postal prices, which took effect on May 12. With every change, there is opportunity. This is an opportunity for parcel shippers.
For the first time, USPS will offer two sets of rates, one for retail customers and a different one for commercial customers. The latter has rates that average 3.5% less for Priority Mail and 3% less for Express Mail than the retail customer will pay. Do you qualify for the lower commercial rates, or do you have to pay retail? The good news is that you can obtain the lower rates by shipping online!
According to the USPS.com, commercial rates are "Available to customers who tender payment via an authorized online service, Express Mail Corporate Account or specifically authorized third-party postage vendor."
This is how much you will save by shipping online:
- Priority Mail: 3.5% average
- Delivery Confirmation: Free vs. 65. (14%)
- Express Mail: 3%
- International Mail:
- Global Express Guaranteed: 10%; Express: 8%; Priority: 5%
In plain words, if you set up an account and process your shipments online, you qualify for the lower commercial rates. If you have a few parcels a day, you can sign up for a USPS Click-N-Ship account or you can obtain authorized solutions from companies that represent PC Postage solutions. Some PC Postage providers offer solutions that value added resellers can integrate and customize with your shipping software. This would provide the capability to compare USPS rates with services from your other carriers and select the best service based on business rules that you specify. I recommend that every shipper compare rates and services amongst multiple carriers. The U.S. Postal Service has some niches where the other carriers can't compete on price. Savvy shippers leverage every opportunity for saving on shipping.
Other significant opportunities include the following: Express Mail will become a zone-based pricing system, similar to the other carriers. This means that the cost will decrease for nearby destinations. For example, an 8 oz. Express Mail envelope was priced at a flat rate cost of $16.25 to any ZIP. Under the new pricing, if it is sent to a nearby destination (zone 2), it would be $12.22, a 22% reduction.
The Express Mail flat-rate envelope will still be available for $16.50 (retail) to any US destination regardless of weight; but this is not the best deal for an 8 oz. piece going to zone 2 or 3.
An historic change is that shippers will be able to obtain rebates based on shipping volume. For the first time ever, the USPS is offering volume-related price incentives for Express Mail and International parcels. In the past, all customers paid the same price regardless of how many pieces that they shipped. Now, under the new law, there are rebates that will be paid quarterly for commercial customers that have a corporate account or have an account with an authorized third-party postage vendor. A business that averages a couple of pieces a day can qualify. This is how much you can save from retail prices:
Volume rebates based on an average daily volume:
Express Mail
- 5% 2 pieces/day
- 7.5% 7 pieces/day
- 10% over 15 pieces/day
For International mail, the opportunity is even greater. I have found that the rates for Global Express Guaranteed packages to be 25%-35% less than the retail rates of other carriers with similar delivery guarantees. When you add the volume rebates, it is very competitive. For an annualized volume of $20,000, the rebate is 10% off retail and 12% for over $60,000 in annually.
One of the best deals is the Priority Mail Flat Rate Boxes that you can put up to 20 lbs in for a fixed price. The smaller Priority Mail International Flat Rate Box costs $23.95 when shipped to Canada and Mexico and $38.95 for other countries. The new larger Flat Rate Box (12" x 12" x 5.5") is 50% larger than the original and costs $29.95 when shipped to Canada and Mexico and $49.95 for other countries. In addition to receiving the box free, another benefit is that you can use the same packaging for both domestic and international shipping.
Another opportunity is for large-volume shippers to residential locations. Parcel Select has rebates and pricing incentives for shippers who exceed minimum levels of total Parcel Select postage, and who exceed their previous year's total Parcel Select volume, as specified in the Domestic Mail Manual. If your parcel shipping spend is over $5 million, then you should talk to your Post Office Account Manager.
According to PMG John Potter, "These innovative published pricing incentives will make our products more attractive to all shippers, especially small businesses. We're pricing our products to sell in today's competitive shipping market. In the near future, the Postal Service plans to explore contract pricing for larger customers similar to others in the market."
President Kennedy said, "Change is the law of life. And those who look only to the past or present are certain to miss the future." Take a look and see if this postal change can bring opportunities for your organization.
Mark A. Taylor, DLP, is the Chief Logistics Officer of RedRoller and President of TAYLOR Systems Engineering Corp. He has been featured on ABC News and in the New York Times and is the author of Computerized Shipping Systems: Increasing Profit & Productivity Through Technology. His blog, www.shippingcoach.com, provides tips and advice for shippers. Call 734-420-7447 or email Mark@RedRoller.com.