USPS's Cochrane: Soft package marketplace will recover
WASHINGTON - The package marketplace is soft both domestically and internationally, but the US Postal Service is looking forward to recovering during the holiday season, according to Jim Cochrane, manager of package services at the USPS.
Cochrane told the Mailers' Technical Advisory Committee (MTAC) that business-to-consumer shipments are on the rise, with about 30 percent of all packages shipped in 2007 falling into this category.
Business-to-business package shipments remain stagnant.
"There is a noticeable shift from air to ground," Cochrane said. "Accessorial surcharges are a strategy to generate revenue as well as yield. It also allows our competitors to suppress their actual rate increases."
Rate increases have caused the USPS and its competitors to lose a lot of business. Despite the increases, express mail volume has gone up and is a billion-dollar product for the USPS.
"Express mail is a very profitable place for us," Cochrane said. "We see some great opportunities there. We plan to continue to enhance and develop service, convenience, price and visibility."
When asked why they change carriers, 34 percent of shippers claim it's because of price and 19 percent say it's because of service. Surcharges, on-time delivery, in-transit damage and difficulty working with the carrier are other reasons.
"We've made a lot of changes," Cochrane said. Global Express Guaranteed, Express Mail International, Priority Mail International and First-Class Mail International are examples of product enhancements that USPS has recently made.
Significant steps were taken to improve environmental characteristics. The USPS worked with vendors to analyze its packaging composition and USPS has changed inks, chemicals and adhesives used in manufacturing.
In addition, the USPS has redesigned packages for simplicity and to minimize ink.
"We have also reduced label dependence and significantly reduced toxins with no increase in cost," Cochrane said.
Products that have not been doing well were eliminated. These products include economy parcel posts, economy publishers, economy books and sheets and aerogrammes.
USPS rolled out new packaging products to add value. For example, the flat rate box has made $557 million since its launch. Prepaid envelopes made $34 million since their launch. In addition, the priority mail shoebox is a growing mid-market segment.
New parameters are being set for co-branding packaging.
The USPS is looking forward to the IMD barcode that will allow for end-to-end visibility.
"We want barcodes to tell us more about a package and a shipper," Cochrane said. "We will continue to design, enhance, research and educate."