Bloomberg News

U.S. Postal Sees $500 Million From Priority Mail Changes (1)

August 14, 2013

The U.S. Postal Service says it’s improving its express shipping options to become more competitive with FedEx Corp. (FDX:US) and United Parcel Service Inc. (UPS:US)

The service, which competes and collaborates with the private sector for package delivery, will offer for free $50 of insurance for Priority Mail shipments and day-specific delivery, which will let customers know the day a shipment will arrive, postal officials said today on a conference call with reporters.

Day-specific delivery “will be a very compelling feature and attract new business for USPS, which means it could draw volume away from FedEx and UPS from their two-day and three-day deferred air express services and ground service,” said Satish Jindel, president of SJ Consulting Group in Sewickley, Pennsylvania.

The Postal Service expects the changes to generate an $500 million in added annual revenue, Nagisa Manabe, chief marketing and sales officer, said on the call.

“A lot of customers have told us insurance is a necessity,” she said. “We are closing this competitive gap.”

The insurance offer compares with $100 from UPS and FedEx, Jindel said.

The service, which is supposed to support itself mostly through postage sales, has been shedding employees and closing and consolidating facilities. It reported Aug. 9 a $740 million loss in its most recent quarter.

The expected revenue boost would be less than a 1 percent increase in the service’s fiscal 2012 operating revenue of $65.2 billion.

Delivery by a particular date won’t be guaranteed, meaning customers won’t recoup their money if the package doesn’t arrive on time.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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Companies Mentioned

  • FDX
    (FedEx Corp)
    • $147.14 USD
    • -2.39
    • -1.62%
  • UPS
    (United Parcel Service Inc)
    • $98.86 USD
    • -3.80
    • -3.84%
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