On May 14, the U.S. Postal Service (USPS) increased the cost of shipping packages. No one likes to pay more, and I have heard many complaints from shippers everywhere. I do not work for the USPS, although I did some consulting for them five years ago, but I would like to put this increase into context and discover what bargains may still be available. While the prices increased last year because of a law mandating an escrow payment, this is the first time since 2001 that the USPS has restructured its prices. In defense of the USPS, the other parcel carriers have been able to increase their rates every January. According to the USPS website, the reason for the increase is that the costs of doing business for things like fuel, transportation, utilities and health care benefits have continued to increase. Without an increase to keep up with rising costs, we face significant losses. Many people do not know that postal operations are not subsidized by tax dollars. We rely on the sale of postal products and services to cover our operating costs. We have seen prices rise significantly, especially on fuel, over the past six years, and the impact on the USPS has been tremendous.
The new postal rates contain some bargains and therein lies the opportunity for parcel shippers. Some of you may have taken advantage of the Priority Mail Flat Rate Box for domestic packages; now, you can use it to ship internationally. The corrugated Flat Rate Box is similar to a shoe box (11 x 8-1/2 x 5-1/2), and you can ship up to 20 pounds internationally for a fixed price. Priority Mail International Flat Rate Boxes cost $23 when shipped to Canada and Mexico and $37 for all other countries.
In addition to receiving the box itself free, another benefit is that you can use the same packaging for both domestic and international shipping. Additionally, if you buy the postage online at usps.com or through authorized PC postage vendors, there are discounts of up to 10%.
To provide you with an example of this bargain, I went to the carrier websites to see how much it would cost to send a 20-pound box from my home in New York City to my nephew in Brazil. To make it simple, I selected documents valued at $1 as my contents. I found I could send my parcel Global Express Guaranteed with an estimated delivery time of one to three days for $308.10. In addition, because of a partnership that the USPS has with FedEx, FedEx would fly my package to Brazil. If I chose to process my package online, the cost would be $277.29, a savings of $31. Therefore, you should not go to the post office to buy your international postage do it online. You can give the package to your mail carrier when he or she shows up and go out to dinner with the money you just saved. Better yet, if you are not in a hurry and can wait six to 10 days for the package to arrive at its destination (and you can fit it in the box), you can use the Priority Mail Flat Rate Box for $37 or $35.15 online! What a bargain.
At this point, my curiosity was piqued. If FedEx ships the box for the USPS, I wondered how much I could save if I went directly to the source and cut out the intermediary. If I selected that option, I would drop off and pay for the package at the FedEx Authorized Ship Center that is one block away, and the cost would be $423.74. If I did not select that option, my cost would be $395.75, a savings of $28 or seven percent. I have concluded that it is not a good idea to pay for your parcels at the buildings where your carrier resides. Compared to USPS though, FedEx costs more an additional $115.64. With this amount, you could go out to dinner in New York City! To be fair, there was one more option on the FedEx website to ship the package with my own account number. I cannot tell you what my rates are because I have signed a confidentiality agreement. I will say this, however if you ship a large enough volume, FedEx might be able to make you an offer that you cannot refuse.
One of the best deals the USPS offers is Media Mail. Contents are limited to books, sound recordings, recorded videotapes and computer-readable media (not blank). Media Mail cannot contain advertising, with the exception of eligible books that may include incidental book announcements. Rates are still based on weight, and they are not zoned. A one-pound package being shipped from New York to Beverly Hills costs $2.13. The package may take up to seven days to arrive, but at that price, the delay may not matter. If you want confirmation that the package was delivered, you can purchase Delivery Confirmation for 75if you pay at the USPS, but for only 18 if you do it online. That is a savings of 76%. However, I noticed a catch you do not have an option for Media Mail at usps.com. You will have to check out the other authorized PC postage vendors for this savings.
Yes, postal rates went up, but there are still some great opportunities to save money in comparison to the other choices available in the marketplace.
Mark Taylor is the founder and president of TAYLOR Systems Engineering Corporation. He was named a Distinguished Logistics Professional by the American Society of Transportation & Logistics. Contact him at MTaylor@TAYLORSystemsEngineering.com.
