Parcel - April 2008 - (Page 9)

“I love my job,” shares Postmaster General John E. Potter. And how could he not? He’s at the head of the United States Postal Service during a time of innovative changes, exciting new laws and ground-breaking initiatives. The package aspect of the Postal Service is growing rapidly, successful partnerships with FedEx, UPS and DHL continue to be proﬁtable and the New Law enables the Postal Service to have greater ﬂexibility than ever before. Plus, the USPS is going full steam ahead when it comes to making its products and its organization as environmentally friendly as possible. Yes, it’s no wonder that PMG Potter is pleased with his job and his organization. And if the feedback he’s been getting is any indication, millions of USPS customers — and the Board of Governors — are pleased as well. get a discount or rebate. And in the future, we’ll have contract pricing for larger customers.” For USPS salespeople, that means they’re going to have to be even more knowledgeable and well-informed when it comes to the various service levels. “The whole negotiating piece is a skill set we’re going to have to develop. Up until now, if someone had packages, we could take out a calculator and do some simple math to determine the price. So we’re going to move into an area from one that was strict computation to one that is more of an art. Our people are excited about it, and I think they’re going to adapt well to this new way of doing business.” From an operational standpoint, the goal is to make the sorting and organization of packages and mail more streamlined. “The best way to become efﬁcient is to make sure mail is properly addressed and has good quality barcodes on it, so when it comes into our system, it only has to be handled once through the process,” he comments. “For example, if we were sending mail from DC to someone in California, but the person had moved to Montana, we would send it to California ﬁrst, then it would be forwarded to Montana. Today as we read addresses, our systems have the latest information on people moving, so we can actually readdress the piece in DC, putting on the new Montana address. Ideally, we’d like all customers to use similar address update information on a more frequent basis so we don’t have to forward mail, and we eliminate mis-addressed mail as much as possible.” At Last, an Opportunity to Be More Competitive The Postal Accountability and Enhancement Act, the ﬁrst major legislative change to the Postal Service since 1971, will have a major impact on the parcel sector. In addition to establishing two separate product categories — Market-Dominant products (such as First Class Mail) and Competitive products (such as parcel shipments, Priority Mail and Express Mail) — it also prescribes a new process for setting prices. Increases for Market-Dominant products will be capped at the Consumer Price Index, by class, while pricing competitive products is more ﬂexible under the New Law. While the words “setting prices” often send shippers into a panic, PMG Potter is quick to assure us that those worries are completely unfounded. If anything, it’s a plus for customers, as the pricing ﬂexibility will allow the USPS to offer people discounts and rebates for using the Postal Service. The New Law offers other beneﬁts, as well. “We can now conduct tests with our pricing on a regional basis or even on a more isolated basis so that we can truly test market conditions,” Potter explains. “The pricing ﬂexibility will also let us react quickly to changes in the marketplace. We saw an example in March when we introduced a new Priority Mail Flat Rate Box in a size larger than we had. We wouldn’t be able to get to market as quickly if we had been living under the old rules. It used to be about an 18-month process to get a price change, so we were unable to react to anything that occurred in the marketplace. We’re looking forward to [being able to] quickly respond to meet changing customer needs.” The Last Mile… and Now the First Mile The changes allowed under the New Law, combined with the increasing popularity of online shopping, underscore the ever-growing importance of packages to the Postal Service. “Packages are a good source of revenue,” Potter explains. “It’s an area we think will continue to grow as more and more people shop online and have what they buy delivered. Everyone looks forward to getting their mail, especially packages. It’s an important segment for us, and I think we’re well positioned to provide convenience, choice and make people’s experience with online shopping one that’s pleasurable and works for them.” With the package market growing rapidly, it makes sense that the USPS will continue to strengthen and maintain its partnerships with UPS, FedEx and DHL. For big shippers, the USPS offers a Parcel Select rate for consolidators, who drop packages into the USPS stream for the last mile of delivery. It also offers shippers the chance to drop mail further upstream from a delivery unit and avail themselves of reasonable rates. “Our partners are probably considered unusual in the sense that they are our biggest competitors when it comes to ground package delivery,” Potter says with a laugh. “They’re the ones who use the Postal Service, largely in rural and suburban areas, to deliver their packages the last mile, and it makes a lot of sense. Our folks are there every day, and we’re driving our vehicles out to that home already. It’s a competitive advantage in the marketplace to use the Postal Service for the last mile, and I think it’s something that will continue to grow.” Not only Spring 2008 9 Changing the Status Quo Of course, with any major change in law comes a change in the organizational structure. The USPS recognizes that there are going to be modiﬁcations, both from a personnel view and an operational view. “Basically, we’re going to have multiple offerings, so when it comes to retail products [like parcels], we’ll have a published rate that anyone can take advantage of. And then we’ll have a rate for people who want to use other channels, so if you buy online, you can pay a lower price than you would at a retail counter. Then we’ll be able to offer some volume discounts to folks, and we’ll create some thresholds and publish those rates; beyond a certain level, you’ll either www.PARCELindustry.com http://www.PARCELindustry.com

Table of Contents Feed for the Digital Edition of Parcel - April 2008

PARCEL - April 2008 Contents Editor's Note Moving Forward Recycling for Safety’s Sake Want Some Good News? Negotiations Have No Finish Line... Lowering your Parcel Shipping Costs Meeting Industry Challenges New Pricing, New Opportunities Time to Track It’s Scan-tastic! 10 Recycling Facts The New USPS Law Changes New Law, New Opportunities for Package Shippers A Diamond in the Rough Seven Shipping Trends for 2010 ...and Beyond The Move Update Changes A Simple Shipping Solution A Case Study in Efficiency New Products and Services Industry News Advertiser Index

Parcel - April 2008

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