Ben Franklin once said, �In this world, nothing is certain but death and taxes.� But I think we can also be certain that small parcel carriers will increase their rates every year. While UPS, FedEx and DHL have an annual increase, the U.S. Postal Service seeks increases only when necessary and has not increased rates in three and a half years. In April, the Postal Service filed a rate case with the Postal Rate Commission seeking to raise rates and fees 5.4% for almost all categories beginning early in 2006. This is a flat rate increase that was required to meet an escrow payment mandated by a law passed by Congress in 2003 (Public Law 108-18).
While we all prefer not to see a price increase, I believe that for parcel shippers, the Postal Service remains competitive in a number of areas. Here are some strategies that parcel shippers can utilize the Postal Service for and save considerable money compared to the other parcel carriers. (Note: The pricing given in the examples is based on the assumption that the rates as requested by the Postal Service will be approved by the Postal Rate Commission.)
The first place a shipper can save is First-Class Mail. What can you ship anywhere in the US for less than $2.50? If you ship items weighing less than 13 ounces, you can put them in a box and ship them First-Class Mail with Delivery Confirmation for a bargain. For example, the new rate for an eight-ounce piece with Delivery Confirmation is $2.21. For $1.01 you can ship a three-ounce item. And, according to an independent study by IBM Consulting Services, the U.S. Postal Service reached a 95% on-time performance score for overnight delivery of First-Class Mail. The Postal Service commits to a two- to three-day delivery time for this service.
The second place where the Postal Service is competitive is for residential shipments. For one-pound packages shipped Priority Mail, the flat rate in 2006 will be $4.05. This beats the other carriers� residential rates by 20% to 30% in urban areas, and in places where they charge a Delivery Area Surcharge, savings could be 40% to 50%. Over 50% of the ZIP Codes in the US are considered Delivery Area Surcharge points. In fact, if you compare residential rural area rates of the other carriers, the U.S. Postal Service beats them up to four pounds.
The third area where there is a great opportunity for shippers to save is Media Mail. The new rate is $1.64 for a one-pound package with Delivery Confirmation. If you ship out DVDs, books or CDs, this is a real deal.
The fourth place is Priority Mail Flat Rate Boxes. Like the name implies, you pay a flat fee, regardless of weight or destination. The new rate is $8.10, and this can save you up to 40% compared to the other carriers!
My fifth and final tip is for international shipping. Global Express Mail reaches most destinations in three to five days for 50% of the cost of other carriers. And if you really need it there in a hurry, the Postal Service has a service called Global Express Guaranteed that can get it there in two to three days guaranteed. This service is in partnership with FedEx, and the rates are very competitive. In comparing a five-pound package shipped to Bristol, England, I found it to be 20% less than other carriers.
Mark Taylor, MBA, is the CEO of TAYLOR Systems Engineering Corporation, a technology and consulting firm that helps organizations save money in their shipping operations. In addition, Taylor is a professor at Rushmore University, a professional business speaker and a business coach. He is the author of Computerized Shipping Systems: Increasing Profit & Productivity Through Technology. He can be reached at 734-420-7447 or mtaylor@TAYLORSystemsEngineering.com.
