My intention for this column is to provide industry news I believe is impacting you and render my thoughts regarding its implications. My aim is to both give you awareness and hopefully make a difference. Take it as advice, an action plan or just something to think about as you read.
USPS Introduces Priority Mail Flat Rate Box
There's something new in shipping, and it's coming from the U.S. Postal Service. They ve introduced a new service, Priority Mail Flat Rate Box. Like the name implies, you pay a flat fee only $7.70 regardless of weight or destination. Similar to the flat rate envelopes (which have been around since 1991), postage for shipments tendered in these new boxes is fixed regardless of weight. The big difference is these flat rate boxes are considerably larger and sturdier than the envelopes. The cost for postage, however, is $7.70 (versus $3.85 for the envelope). Another feature, Delivery Confirmation, is available at no additional cost when printing a shipping label online or with USPS PC-approved technology, amounting to a savings of 45. Packages are delivered in an average of two to three days to any destination with delivery to all US addresses, including PO boxes and military addresses. Saturday and residential delivery are available at no additional charge. Pickup at your location can be provided for free in most areas. Check https://carrierpickup.usps.com for more information.
The boxes come in two shapes that accommodate a variety of items. One box is shaped like a garment box (117/8 inches by 33/8 inches by 135/8 inches) and the other is similar to a shoe box (11 inches by 81/2 inches by 51/2 inches). Both boxes are available free of charge and can be ordered online at shop.usps.com.
Just for fun, I tried to pack as many books into a box as I could, and it weighed 13 pounds. Of course with something denser, you could get a heavier weight but I thought this would be a fair test. I compared the standard daily pickup UPS rates against the flat rate and found that UPS was cheaper for zones two through six for a commercial shipment and zones two through four for a residential destination.
However, if I was sending the box to a Delivery Area Surcharge (DAS) destination, I could save money for all zones whether it was commercial or residential, the largest difference being 83% for a zone eight parcel. The DAS surcharge is $2 for a residential destination and $1.25 for a commercial one. Since these DAS points amount to over 55% of ZIP Codes in the US, it makes sense to compare rates before selecting a carrier. Now to be fair, USPS Priority Mail does not include the $100 of insurance coverage that UPS does at no charge. If you were to add that coverage you would have to pay the post office an additional $2.20.
So the bottom line is that you have to examine your shipping characteristics and see if this new service can benefit your organization. I suspect if you are shipping residential packages in this weight bracket across the country, this could be a significant cost-saving opportunity.
USPS Reports Surplus
The U.S. Postal Service reported it achieved a surplus for a second consecutive fiscal year. We achieved our business goals in 2004 to improve service, reduce costs and continue to build our business, said Postmaster General John E. Potter at the Postal Service's Board of Governors year-end meeting. Expenses were $900 million better than forecasted and debt was reduced to $1.8 billion, down from a high of $11 billion two years ago. These results, Potter said, underscore our promise to the American people to keep rates stable until 2006.
In this year of base price increases and boosted accessorial charges for residential deliveries, rural areas and fuel surcharges, I suggest that if you have not given the U.S. Postal Service a chance to ship, you should reconsider. The savings could be significant.
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 mtaylor@taylorsystemsEngineering.com or 734-420-7447.
