�Seen but not heard� is an apt description for a U.S. Postal Service (USPS) program that delivers hundreds of thousands of packages each day to consumer doorsteps and Post Office boxes six days per week. Parcel Select is the USPS� wholesale ground package pricing program, widely known by the package consolidators who participate in the program. The heart of the service involves destination entry, where consolidators handle a variety of packages � from one to 70 pounds and up to 130 inches in length and girth � in conjunction with the USPS.
Now in its fifth year, Parcel Select is swiftly becoming the reliable and economical alternative over competitor ground products. �Parcel Select has grown tremendously since we started the program in early 1999. It�s becoming an answer more and more for the USPS as a top contender in ground service,� states Ron Eley, manager of Enterprise Sales Solutions at USPS.
Parcel Select was launched in January 1999, when the new postal rate structure in the form of workshare discounts took effect. At that time, many package and mail consolidators were already in place to offer the service to their customers: direct mailers, printers, catalogers, retailers and a range of consumer product companies.
As Eley explains, the lowered rates encouraged private companies to deliver presorted packages to the destination bulk mailing center (BMC), destination sectional center facility (SCF) or destination delivery unit (DDU). �Consolidators insert mail and packages into the postal system at these three levels of entry. Parcels are drop shipped by truck to the postal facility, with receiving appointments scheduled at specific dates and times,� Eley says. USPS takes these deliveries from the designated point of entry as the �last mile� solution.
The workshare discounts meant strong financial incentives for consolidators to offer services previously performed by the U.S. Postal Service�s bulk mail and sectional centers. Most Parcel Select packages are entered into the mail stream at either the BMC or DDU level. �The rates also provide for a price structure (to the shipper) that is significantly less than rates charged by other parcel carriers to deliver packages to private residences,� Eley adds. Moreover, when consolidators pick up, presort and deliver packages to a selected entry point, it reduces labor for the Postal Service. The consolidator receives economies of scale because of a variety of types of customers serviced, and often the consolidator uses other Postal Service services.
Depending on the point of entry, shipping costs are reduced by up to 25% compared to competitor ground services. Of course, discounts are steepest at the local post office level (DDU), as these entries are closest to the consignee. Deliveries made to DDU provide a postage discount of approximately 40% to 45% or more off the destination BMC rate and typically enable a one- to two-day savings in transit time.
In addition to facilitating faster delivery, destination entry reduces the number of times packages are handled because they bypass postal processing facilities en route to customers. The Postal Service works closely with 21 consolidators around the United States to deliver the best possible service to consumers, notes Jim Cochrane, manager of Package Services with the USPS. �Consolidators offer sophisticated EDI � or Internet-based tracking, manifesting, billing, insurance and other services, which make the shipping experience seamless for the consignee. Shippers enjoy the reliability,� notes Cochrane.
The Postal Service�s consolidator network is comprised of the most advanced distributors in the industry today. The consolidators are able to assist their customers in all aspects of the shipping process including sortation, transportation and automated barcoding services. In turn, these firms can pass on shipping discounts to their customers � savings which are a direct result of the consolidators� ability to capitalize on economies of scale.
As shipping trends illustrate, consumers have also tightened their reins on discretionary spending. Consumers are less likely to opt for extra charges in order to receive expedited deliveries for products from catalogs and Web sites. Virtually all marketers and retailers charge extra for overnight or even two-day or three-day guaranteed delivery services. Moreover, the enhanced transit time and reliability of service offered with Parcel Select make it an attractive low-cost alternative. Consolidators continue to enhance their service levels as they open new distribution centers to ensure nationwide coverage or align with partners to do so. Combined with their sophisticated tracking and tracing methods, including vehicles with GPS and other advanced technologies, consolidators are upping the service ante while also raising the service bar for the Postal Service.
Statistics also reveal the growing popularity of Parcel Select. The increased sophistication of participating Parcel Select consolidators in placing packages deeper into the Postal Service�s system is also upping the service ante as increasing amounts of packages are placed closer to the consignee. During its first year in 1999, four percent of Parcel Select packages were inducted at the DDU level, putting the vast majority of packages at the BMC level. Since then, the volume of parcels entered at DDUs has grown more than 50% each year. All in all, with a delivery network to some 130 million US addresses including Post Office boxes, offshore points and military addresses, the pricing and reliability of Parcel Select are unmatched.
For more information about Parcel Select or other U.S. Postal Service offerings, please visit the Postal Service online at www.usps.com.
