USPS Seeks Priority Mail Discount Test

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The U.S. Postal Service has filed a case with the Postal Rate Commission seeking a three-year experimental classification for Priority Mail presort discounts.


The filing includes discounts for three presorting options: area distribution centers, which are mail processing facilities that represent a state or large portion of a state; three-digit prefixes; and five-digit ZIP code sorts.


The discounts proposed are: 12 cents per piece for sortation to the ADC level; 16 cents per piece for sortation to the three-digit level; and 25 cents per piece for sortation to the five-digit level. The proposed discounted rate categories would be additional options offered to mailers; existing Priority Mail classification would remain unchanged.


"We are seeking to make Priority Mail more affordable and offer our customers more options and greater value," said John F. Kelly, president of expedited/package services at the USPS.


In January, the USPS Board of Governors allowed under protest a 16 percent rate increase for Priority Mail. This compares with the recommended average increase of 4.6 percent.


In addition, the postal service reported weak volume and revenue for Priority Mail for the fiscal first quarter, from Sept. 9 to Dec. 1. For the quarter, year-over-year volumes dropped 3.6 percent and revenue fell 2.6 percent.


The USPS thinks the three-year period will give mailers enough time to adjust their practices to use the classification and provide the USPS adequate time to fully analyze data collected under the experiment.


Some mailers question the proposal's viability, saying that even large mailers may have to hold onto mail pieces to get sufficient density required for the sort discounts at each level.


"Being able to sort Priority Mail down to five-digit ZIP codes could be difficult, and might not be worth the effort it takes to get these packages down to this level," said Bill Monk, outbound fulfillment manager at Nordstrom.com, Cedar Rapids, IA. "Perhaps if they would let us bundle by states, that would make more sense." Most of Nordstrom.com's packages are shipped via USPS' Priority Mail and Express Mail.


In other Priority Mail news, the USPS announced this month that it would work with eLogistics Management Solutions, a logistics company that is a wholly owned subsidiary of Fiera Inc., to provide Express Mail, Priority Mail and Standard Mail from South and Central America to the United States.


Under the 40-month agreement, eLogistics will provide shippers in Colombia and Chile with postal service Express Mail, Priority Mail and Standard Mail packaging and labeling material. ELogistics will certify shipment manifests and tracking systems, transport systems to the United States, clear them through commercial customs and then enter the packages into the USPS' domestic delivery network.


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