FedEx to slap dimensional pricing on packages handled in concert with USPS

last-mile

photo credit: USPS OIG

9/20/2017 The companies say dimensional pricing is necessary to properly compensate them for handling lightweight and bulky packages that occupy disproportionate amounts of space aboard an aircraft or ground vehicle. As e-commerce volumes continue to grow, the companies have said they handle a larger proportion of packages with those characteristics, and can no longer price all of them at their actual weight.

The FedEx and UPS last-mile services operate in conjunction with USPS’ “Parcel Select” program, which connects local post offices to residential and commercial addresses for local package deliveries. USPS, which is required by law to serve every U.S. address, picks up and delivers at 156 million addresses.

USPS prices the Parcel Select service incrementally, and its low prices have made it very popular with shippers. FedEx and UPS have migrated to it because it enables them to broaden their delivery coverage without the expense of deploying drivers and delivery vehicles to stop at countless residential addresses. However, FedEx, UPS, and Seattle-based Amazon.com Inc., the three largest users of the service, have been mapping plans to more efficiently handle their own last-mile shipments because of the segment’s rapid growth. USPS acknowledged in a regulatory filing earlier this year that such measures could divert business from Parcel Select.

USPS, for its part, does not impose dimensional pricing under Parcel Select. Read more