New rates will allow it to compete better, USPS says

The rate hikes that will go into effect June 30 are allowing the United States Postal Service to compete more effectively with other carriers, Jim Cochran, manager of package services, tells Internet Retailer.

Starting June 30, the Postal Service will change from a flat fee on priority mail package to zone rates based on distance. "We`re following the rest of the industry," Cochran says. "We were losing some business to our competitors who had cheaper rates for zones one, two and three. And we were losing money on packages going to zones seven and eight." The zones are determined in 300 miles increments from the origin point. While some rates, such as those in zone seven and eight, will go up, prices for packages in zones one, two and three will go down. For example, the cost of shipping a three-pound package in zones one, two or three will go down 20% while the cost of a four-pound package in those zones will go down 40%, Cochran says.

The shipping software that clients use will be upgraded by service providers, so retailers wont have to buy new technology to support the rate change, he says.

Cochran also reports that USPS is working on enhancements to its returns offering. "We`re looking to propose some new reverse rates to leverage our returns business," he says, noting that the USPS service customizes labels for retailers and allows them to print out their own labels online.