FedEx Tests Use of USPS Parcel Select

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FedEx Corp. looks to expand testing of a new package delivery service that combines its ground delivery service with the U.S. Postal Service's Parcel Select, the company said yesterday.

FedEx spokesman Jess Bunn said that testing of the unnamed service will continue with two corporate customers, a clothing company and a gift company, but that "tests are going well enough that we are talking to additional customers about it."

Pricing for the service has not been set, Bunn said, but customers might prefer it to other FedEx ground services "because of the pricing option." Bunn would not comment on reports that the service will be rolled out in May or June.

Parcel Select is the postal service's wholesale ground package pricing program used by package consolidators and others. Consolidators enter packages deep into the mail stream, receiving reduced rates because delivery zones are skipped.

While consolidators such as American Package Express, Smart Mail, DDU Express, R.R. Donnelley Logistics and Parcel Direct are the main users of Parcel Select, United Parcel Service began using it last year for a service it calls UPS Basic.

UPS uses Parcel Select for deliveries up to five pounds, mainly to rural or super-rural areas. Customers give their packages to UPS, which moves them through its ground network until it turns them over to the local post office for final delivery.

UPS has won the business of Altria Group Inc.'s Gevalia Kaffe unit and apparel retailers Chadwick's of Boston Inc. and Brylane LP, both units of Pinault-Printemps-Redoute SA.

Though postal officials have not publicly stated any concern that UPS is using the service -- and have said that any outside company meeting the rules for using Parcel Select is entitled to the discounts -- insiders said the agency is concerned that its competitors are using Parcel Select to steal some of its biggest customers


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