As we go to press, the newly renamed Postal Regulatory Commission has made its final recommendations for the 2007 rates, which are expected to go into effect in early May. In December, the sweeping Postal Reform Act was signed into law. Combine this with the Postal Services multi-year Transformation Plan, and package shippers are in for some major changes in the months and years ahead. Understanding how these changes will impact your business will save you time and money. For example:

• Getting closer to your customers can save you big time. Although the other carriers actively discourage drop shipping, the Postal Service encourages it and will help you find a qualified partner.
• E-VS (Electronic Verification System) is one of the best kept secrets in the Postal Service and will revolutionize how shippers tender, verify and pay for your packages no more plant loads, no more 8125 postal forms (its a completely paperless system!) and you can even combine shipments from multiple DCs into a single shipment.
• Shape-based packaging is here to stay. If you can reconfigure your lightweight (under one pound) packages so that they can be sorted on the Postal Service new automated systems, you could save 30% or more.
• The balloon rate for parcels over 84 in length + girth increases from the current 15 lbs to 20 lbs. Many shippers have a 28 X 14 X 14 box that is exactly 84 in length + girth, which just avoids the balloon charge. As a bonus, this box holds 14% more than a completely square box (16.8 X 16.8 X 16.8) with the same 84 length + girth.
• Rate shopping can save you big time. A good rate shopping program will take into account scale weight, package dimensions (not just cube), destination ZIP Code and residential/commercial flag.

Priority Mail Highlights

• Flat Rate Envelope the proposed rate of $4.60 is regardless of weight or zone. This envelope will typically will hold a pound or more of printed materials. Important: you must use the Postal Service supplied envelope to get the flat rate!
• Many of the heavier weights (18 lbs and over) are actually going down, by as much as 20%.
• The new 194 dimensional weight will apply to Priority Mail to zones 5-8, but only if the package is over one cubic foot. The 20 lb balloon rate will apply to zones 1-4, so you will never pay both a balloon charge and a dimensional charge. For irregularly shaped items, the Postal Service method of calculating the dimensional weight is more forgiving than the method the other carriers employ. For instance, an 8 X 48 tube would have a dimensional weight of 13 lbs with the Postal Service, vs. 16 lbs with the commercial carriers. And none of the USPS provided free packaging qualifies for a dimensional charge.

Express Mail Highlights

• Express Mail continues to be a flat rate regardless of the zone, so the higher the zone, the better the deal.
• The one pound rate is up $0.70 to $19.50, a modest four percent increase.
• The dimensional charge will not apply to Express Mail, so some shipments could actually be shipped at a lower rate with Express Mail. For example, a 13 X 13 X 13 Priority box with a scale weight of 2 lbs will cost $21.40 for overnight Express vs. $26.35 for 2-3 day Priority.

Package Services

• Parcel Post is going up 16.6% overall, but the closer you drop to the local Post Office (DDU), the better off youll be. For instance, a one pound package dropped at the DDU for last mile delivery with Delivery Confirmation is currently $1.30 and will be up ten cents to $1.4 a terrific bargain. In fact, that same package in 1999 was $1.25. Parcel Select remains a great option!
• Delivery Confirmation for Parcel Select remains a no cost option, so be sure to use it.

International Shipping

·         Watch for a flurry of new shipping options from the Postal Service, including a new International Priority Mail option.

·         Some destinations qualify for low domestic rates with the Postal service rather than much higher international rates with their competitors. Examples include Puerto Rico, USVirgin Islands and Guam.

Doug Caldwell is president of ParcelPool.com. He can be reached at doug.caldwell@parcelpool.com