The U.S. Postal Service is seeking freedom to price its parcel services outside existing rate regulation, saying it needs the flexibility to operate in "a highly competitive marketplace."
The USPS, which is trying to restructure operations and services amid billions of dollars in losses, asked the Postal Regulatory Commission this week to classify First-Class Mail Parcels as a competitive product. That would allow the Postal Service to price the service based on the market and on USPS needs.
The move would cover parcels weighing 13 ounces or less, a segment filled largely by online retail companies, catalog vendors and other fulfillment houses.
That category gave the USPS 574.6 million shipments in 2010, according to the SJ Consulting research group, with some $1.134 billion in revenue.
SJ Consulting President Satish Jindel said pricing freedom in that parcel business would help the USPS compete for lightweight packages with UPS and FedEx but also allow them more freely to price services to UPS and FedEx as wholesale customers.
"What the USPS does well is last-mile delivery," said Jindel. "But they don't do linehaul well, so this will allow them to retain the business they want while not keeping the business that is less attractive. They can lower their cost and end up with a higher margin."
The Postal Service lost $329 million in its most recent financial quarter, the latest in a string of losses the USPS says will leave the operation out of cash by Sept. 30, the end of the fiscal year.