Most shippers are aware that the United States government has recently passed a law, The Postal Accountability and Enhancement Act, which allows the United States Postal Service (USPS) the flexibility to negotiate pricing for their package products, such as Priority Mail, Express Mail and Parcel Post. The consensus in the parcel shipping community is that this will be great for the market. Shippers have yearned desperately for additional players in the parcel industry to drive competition, and the new law is one step in the right direction. So what now? If I am a large package shipper, what should I expect from the USPS? Will they be beating down my door to offer me some incredible deal or better service?

The short answer to that question is yes. The USPS has dedicated more than 60 new specialists to grow its package business, and shippers can now negotiate new deals because of the flexibility of the new law. The reality is that passing the law was just the first step towards the USPS becoming a truly competitive player in the package business. A lot is happening within the USPS organization itself to support the legislative changes. The USPS is rapidly moving towards being a larger player in the package industry and has made some strategic organizational changes that are worth noting. But it will take time for many of the organizational changes to take effect.

I recently had the opportunity to speak to a gathering of over 60 of these Packaging Specialists on a variety of shipping topics. The group is knowledgeable of USPS products and eager to learn more about your shipping needs, their competition and the negotiation process. They are steadily building the experience and industry knowledge to productively engage shippers in pricing discussions or participate in a Request-For-Proposal (RFP) process effectively. But small-parcel negotiations are complex and creative endeavors. The USPS will be going up against competition that has mastered it over the past 25 years. Winning deals wont be easy at least not at first.

Part of the new law is that every deal has to cover its costs. The profit and loss equation for each customer has never been part of the USPS thought process in the past; thus, developing the financial models could initially prove challenging. Providing competitive pricing while remaining profitable is a complex equation and a skill that will take time to perfect.

So if you are a shipper looking to test the market, what should you do? The shippers who are successful in the short term will be the ones who take the lead in the relationship with the USPS. Shippers must take the initiative and reach out for their Sales Manager, Package Specialist or other contacts within the USPS team to start having conversations about the opportunities that exist within their business. This includes providing facility tours, sharing potential opportunities and issues and discussing pricing alternatives.

Large shippers have traditionally used the USPS in niche areas of their supply chains or to service a customer base, such as APO/FPO addresses, that may not be supported by their primary carrier.  Going forward, shippers need to take a fresh look at the USPS and become reacquainted with the pricing structure and service capabilities being offered. The USPS is now leveraging pricing advantages, such as no fuel, delivery area or residential surcharges. Services are becoming more robust, including last mile delivery for Parcel Select as well as the Parcel Return Service, both designed for the higher-volume shipper.

So to reap the benefit of this new law, start engaging your USPS contact right now. Educate them on your business. If you are unsure where to start, consider engaging a parcel consulting firm who can assist both you and the USPS in developing solutions that can leverage the USPS services and pricing for optimal results. If you are a package shipper, the new law makes it a great time to start discussions with the U.S. Postal Service.

Mike Williams is Vice President of Consulting Services at Green Mountain Consulting, which helps shippers lower parcel shipping costs and improve service levels. For more info, contact Mike at mike@gmcps.com, 901-507-9331 or visit www.greenmountainconsulting.com.