DC Velocity - April 2012

In the case of the regional service for Parcel Select, USPS is trying to attract low- to medium-volume shippers tendering shipments moving within 300 miles.

The product is an effort to capture a larger share of lightweight ground parcel traffic traveling across shorter distances. About 45 percent of all ground shipments handled by private parcel carriers weigh five pounds or less, according to data from SJ Consulting, a Pittsburgh-based consultancy. Of those, one-third move less than 300 miles, according to the firm.

FedEx and UPS are heavy users of the service because it enables them to pursue more e-commerce transactions without the cost of dispatching a truck and driver to low-density residential areas.

Postal executives said Parcel Select’s low costs give merchants the financial latitude to offer free shipping to online customers at a relatively small expense to them. According to data from consultancy IMS Worldwide Inc., three out of every four online orders are canceled if customers are not promised free shipping.

Vogel acknowledges the need of online retailers to provide free shipping in order to stay competitive. However, he said it puts additional pressure on USPS to drive down costs on what is already a low-margin product.

“The term I’ve learned to hate is ‘free shipping,’” he joked.

CUTTING OUT LAG TIME

From an operations standpoint, postal observers said, the agency needs to improve in the areas of online tracking and in ensuring that parcels parked at the facility where they are scheduled to be given to the letter carrier leave the unit the day they arrive—and if they don’t, that shippers see exception reports almost in real time to find out why it didn’t happen.

Currently, letter carriers scan packages at delivery but must wait until they return to the delivery unit to upload the data into the postal computers. That time lag, which could sometimes be several hours depending on the carrier’s schedule and road conditions, is considered unacceptable in today’s time-compressed, data-driven world. It also drives up a shipper’s customer service costs, observers contend.

USPS is working on the issue, and even its detractors said it is making strides to add technology that enables real-time tracking.

In the case of moving parcels quickly out the delivery door, Rifai of Dymo Endicia said USPS has developed a system where officials at its Washington, D.C., headquarters get daily data feeds from delivery units that enable the agency to monitor its performance. “They now have the visibility at HQ to see which [delivery units] are performing and which aren’t,” he said. ;