Runyan: The situation speaks to the need for carrier diversification for customers and opportunities available for new providers. I think that more carriers are going to pop up and create more competition. So, it’s basically: Are you going to pay to play? Businesses are looking at an industry where performance and serve levels are dropping while the price is increasing. And they’ll need to figure out how to respond. The whole supply chain is the same way. What used to cost roughly $6,000 for a container to go to China to Los Angeles is now costing over $20,000, hitting a new record. It also follows major carriers not accepting increased business from some customers or simply pricing people out of the market. People are trying to cram as many packages as possible into these networks. This is based on current supply and demand. Major, national brands aren’t meeting on-time metrics, but their pricing is at an all-time high. We’re at a point where carriers are struggling to perform well. Watching for price and service changes will help companies understand what could happen next. Runyan: This change comes at a wild time. Businesses should think of it like the Postal Service is updating its SLA to be more accurate. They’re admitting the fact that mail is taking longer. So, they’ve basically just adjusted the guarantee to what they could deliver and afford. USPS had guaranteed service and delivery times, but because of COVID-19 and other things, they weren’t meeting it. They’re not making enough money, and this is an attempt to address that. So, they’re cutting back on air transportation and using more ground, which will change the current one-day to three-day service standards to one to five days for first-class mail. Unfortunately, the Postal Service is in trouble because of that (among other things). That makes it great for many lightweight shippers. Right now, that’s roughly $4 from other carriers. Generally, USPS offered better rates than carriers like FedEx and UPS because, in addition to their base rates being lower, the Postal Service didn’t charge a residential delivery fee. Runyan: USPS has always been the cheaper option for small packages, typically under 5 pounds. Read more about the peak rate increases here. It’s also important to note that this change is separate from the USPS’ temporary rate increase for the holiday season. We don’t expect larger first-class packages to be affected, but that could change.Įditor’s note: The Postal Service has delayed the implementation of its revised service standards until after the holiday shopping season. The new service standards will see it take a few days longer for first-class mail to travel long distances. Runyan: The United States Postal Service announced plans to slow some of its mail delivery. The USPS service changes will primarily impact first-class mail - generally, anything sent out that’s under 16 ounces. Tony Runyan, Red Stag Fulfillment Vice President of Client Relations Q: What USPS service changes are happening?
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