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USPS Proposes Overhaul of Shipping Partner Agreements: What You Need to Know

Updated: May 10

USPS Proposes Overhaul of Shipping Partner Agreements: What You Need to Know

USPS Proposes Overhaul of Shipping Partner Agreements: What You Need to Know

In a bid to streamline operations and revitalize its network, the U.S. Postal Service (USPS) is initiating discussions with key shipping partners to implement significant changes to existing agreements. The proposed alterations, outlined by Postmaster General Louis DeJoy, could have far-reaching implications for shippers and consolidators alike.

Under the proposed plan, consolidators such as Pitney Bowes, OSM Worldwide, and DHL eCommerce would see the elimination of valuable discounts linked to the injection points of parcel volumes into the USPS network. Instead, the focus would shift towards incentivizing volume injection at upstream locations within the Postal Service's network.

While these discussions are underway, industry observers caution that any resulting changes would require time for approval and implementation. Adjustments to network configurations and business models by consolidators would be necessary to accommodate the transition effectively.

Despite the urgency expressed by DeJoy, concerns have been raised about the potential impact on delivery reliability, particularly if changes are implemented ahead of the peak holiday shipping season. Jim Cochrane, CEO of the Package Shippers Association, emphasized the importance of maintaining service levels during critical periods.

Central to the proposed overhaul is the alignment with the Postal Service's broader transformation initiative known as the "Delivering for America" plan. This strategic endeavor aims to enhance the efficiency and cost-effectiveness of package and mail delivery operations.

Specifically, the USPS intends to amend service agreements for its Parcel Select product, discontinuing discounts for volume dropped off at delivery units. Instead, consolidators would be encouraged to inject volume at designated upstream locations within the USPS network.

Additionally, the agency plans to revise pricing structures for Parcel Select packages under one pound, transitioning to a uniform rate for all such packages.

Throughout this process, the USPS emphasizes its commitment to engaging in constructive dialogue with consolidators to develop a transition plan that benefits all parties involved. However, details regarding the specifics of these discussions remain undisclosed, as the agency refrains from commenting on contractual matters.

As the USPS continues to navigate these proposed changes, stakeholders across the shipping industry will closely monitor developments, preparing to adapt to a potential shift in the landscape of shipping partner agreements.

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