USPS to Add Priority Mail Plants, Expand Sunday Delivery
Initiatives announced by the U.S. Postal Service will give direct marketers more parcel-delivery options and may step up the competition between it, Federal Express and United Parcel Service.
The initiatives, which come under the newly formed 30-person Expedited and Package Services (EPS) Division, include the addition of Priority Mail processing service plants in a contract with delivery service company Emery Worldwide and the expansion of Sunday Express Mail small-parcel and letter delivery.
EPS also plans to launch a delivery confirmation service by year's end, which will allow mail carriers to use hand-held scanners to send date and time of delivery information into a postal network.
"This system will confirm delivery for mailers who are concerned about fraud, especially when a customer says that their package did not arrive when it has," said Gerry McKiernan, communications specialist at USPS.
Other EPS projects include a quality test system using radio frequency indicators that will let the postal service tell customers where and if a package is sitting idle. Customers also will be able to use the Internet to find out the dock size or entry capabilities of the different USPS facilities. EPS intends to offer zone configuration consultation programs on the most cost-efficient routing system available.
Another postal initiative is expected to reduce rates for customers who drop off packages at sectional center facilities and destination delivery units. These rates are a refinement of destination bulk mail delivery service, in which gives customers lower rates for sorting parcels by region within the 29 destination bulk mail centers.
"This zone-ZIPping concept -- where you get the mail more deeply into the USPS' network by delivering it to even larger destination entry points, such as sectional center facilities -- will give customers bigger discounts and better rates," said EPS manager Dave Shinnebarger.
The postal service is encouraging smaller customers to use consolidator partners such as CTC Distribution Direct in Minneapolis, which combines mail from smaller companies to take advantage of bulk drop-shipment rates.
The contract with Emery for 10 dedicated Priority Mail processing service plants should improve two- to three-day service because it will allow separate processing. There are six Emery plants in operation, and the rest will be running by the end of the year.
According to McKiernan, USPS decided on Emery instead of building its own plants because, "We are still government, and so you can imagine how long it would take to buy 10 buildings -- about 10 years. In addition, Emery brings a dedicated air fleet of about 24 planes into the equation that could move this mail quickly and separately from all of the rest."
The plan is eventually to secure 22 plants from Emery.
"[These plants] will support our Priority Mail product and provide much more consistent service," said Al Brown, EPS operations manager. "Within the next year or two, we want to be able to say in our advertising that we have a Priority Mail product that is a two-day service," not a two- and three-day service.
Express Mail, which delivers overnight in 80 percent of the ZIP codes, also has been upgraded. It has been offering Sunday delivery of packages and letters in New York for a year. The USPS plans to expand their service into other major metropolitan markets but couldn't provide details on when this will happen.
The USPS is hoping Sunday delivery will bring down warehousing costs.
"When we were trying to deliver in the five-day week, we were bringing more packages back than we were delivering," McKiernan said. "And, frankly, once we warehoused them, we sometimes lost them. Our warehousing is almost down to nothing now because we can deliver the packages, which by extension means less losses."
The Sunday service is similar to those offered by FedEx and UPS. However, unlike FedEx, which focuses more on business markets such as healthcare service providers, automobile makers and garment manufacturers, the postal service focuses on residents. USPS' weight limit is 70 pounds; FedEx's is 150 pounds. USPS' Sunday service costs the same as its Express Mail Service at $10.75, while FedEx adds a $20 surcharge to its higher priority overnight service rates. UPS adds a $45 surcharge for Sunday delivery.
So far, the postal service's Sunday upgrade seems to be working.
"The percentage of first-time deliveries on packages in the New York area has increased by 30 percent," Brown said. "I think you'll see an expansion of Sunday deliveries for package services across the board on Express Mail, Priority Mail and, in some instances, Parcel Post."
Jim Jellison, executive vice president of the Parcel Shippers Association, Washington, said it's an idea whose time has come.
"The USPS has come up with a cost-effective way to deliver parcels when a package can't be left or there is no one there to accept it," Jellison said. "The USPS benefits because they don't have to spend time taking parcels out and bringing them back and going through the whole notification process, and our members' customers get more convenient service."
However, postal competitors said they aren't worried.
"We've never considered the post office to be a direct competitor of ours because we are in the express business, "said FedEx spokeswoman Darlene Faquin. "We have time-sensitive, highly reliable, trackable, information-intensive features that make us an express transportation company."
But McKiernan said they should be worried.
"We invented Parcel Post, we invented Express Mail, and we invented Priority Mail delivery," he said. "These are fundamental delivery services of the postal service that has existed since Ben Franklin walked a package across the street in Philadelphia. We didn't take very good care of it with a seriousness of purpose. But now postal management is saying that we should be doing it right and putting more resources into it, and we are following through."