May 9, 2008, 12:00 AM

Postal Service looks to expand package returns service with major carriers

The U.S. Postal Service is hoping to expand its package returns service through major carriers UPS, FedEx and DHL, the U.S.P.S. says. Its sole returns partner for now, Newgistics, plans a major expansion of the service.

Looking to cooperate more with its competitors, the U.S. Postal Service is hoping to expand its package returns service through major carriers UPS, FedEx Corp. and DHL, says Jim Cochrane, acting vice president of ground packages at the U.S.P.S. But while none of the three big carriers have yet to publicly express an interest in the service, the Postal Services’ sole returns partner for now, Newgistics Inc., plans a major expansion of the service this year, Newgistics CFO Mike Twomey says.

The Postal Service wants to expand the returns service-through which the U.S.P.S. takes packages from a consumer’s home address to a postal facility, where a private carrier picks it up to complete delivery back to a retailer or manufacturer-as part of a broad effort to expand its delivery business in cooperation with carrier companies. Newgistics specializes in serving apparel and consumer electronics retailers, so extending the U.S.P.S. returns service through other carriers could broaden its reach.

UPS, FedEx and DHL all declined to comment on the Postal Service plan. Cochrane, noting the three carriers were all aware of the Postal Service’s interest in working with them, also declined to say if the U.S.P.S. had entered contract negotiations with any of the carriers.

Newgistics, however, is planning a major expansion this year, expanding by 60-70% the number of postal facilities nationwide where it provides pick-up and delivery services, Twomey says.

Newgistics does not operate its own fleet of delivery vehicles. It contracts shipping services with less-than-truckload carriers and courier companies, using its own shipping management system to choose the most efficient trucking options and the most efficient routes to deliver packages between a Postal Service facility and a retailer.

The Postal Service, in an attempt to run its own operations more efficiently, is providing its shipping partners financial incentives to pick up and deliver packages at direct-delivery units, such as local post offices, instead of at regional bulk mail centers. Newgistics will use its shipping management system to look at a matrix of carrier shipping rates and Postal Service incentives to determine whether it’s more cost-effective to ship to a direct-delivery unit or to a bulk mail center. “This allows us to use our network of less-than-truckload carriers and couriers to figure the most cost-efficient way for us to connect with the Postal Service and keep the prices down for our customers,” Twomey says.

Newgistics provides its clients with return shipping labels that consumers receive with their packages. The label enables a consumer to return a package by handing it to a letter carrier, dropping it off at a local post office, or, if the package fits, by dropping it into a blue mailbox. Newgistics arranges to scan the return shipping labels once one of its carriers takes control of a package, automatically updating its client retailers’ inventory management and customer relationship management systems.

Clients of Newgistics include retailers Lands’ End, Eddie Bauer and J. Crew.

Newgistics, UPS, FedEx and DHL all partner with the U.S.P.S. for local delivery services, under which the Postal Service provides local delivery to consumers’ addresses after packages are shipped to postal facilities.

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