The loss-making US postal operator USPS has requested the US Postal Regulatory Commission (PRC)to add its International First Class Package International Service (FCPIS) to its competitive
product portfolio to compete better with key players on the US parcels market such as UPS andFedEx.With this request, USPS is seeking more freedom to set prices itself and offer businesscustomers discounts for large volumes or similar. Promoting its parcel products fits into theoverall company strategy to generate new revenues in view of declining mail volumes and financiallosses.
Last week, USPS filed an official request to the US regulator to remove its delivery service forsmall parcels called Outbound Single-Piece First-Class Mail International Packages and Rolls fromthe market-dominant product list. Instead, the nearly identical FCPIS service would be added to thecompetitive product list. However, the product category Outbound Single-Piece First-Class MailInternational Letters, Postcards, and Large Envelopes (flats) would remain on the market-dominantlist.
USPS explained that Outbound Single-Piece First-Class Mail International Packages and Rollscompete with the private parcel operators including FedEx, DHL and UPS and should be treated assuch. “Though First-Class Mail International Packages and Rolls are currently classified on themarket-dominant product list, they fulfill all of the criteria for competitive products undersection 3642,” the company stated in its filing.
The US postal operator referred to an earlier PRC statement in its filing: “The parcel deliverymarket is competitive. UPS and FedEx are the dominant market carriers, precluding the PostalService from exercising sufficient market power to effectively set prices above costs or raiseprices significantly.”
The postal operator also referred to market research data showing that First-Class MailInternational customers consider it as part of a broader international product portfolio confirmingits competitive potential.
“As such, granting this transfer request would further be consistent with the Commission’sruling which recognised that since most shippers, including small businesses, are already usingother shipper alternatives, a price increase for Parcel Post should not have a material impact onsmall business shippers. The same can be said for FCPIS.”
USPS has urged the Commission to take action by September 10, 2012, adding that this deadlineprovides enough time for public comments and information gathering and for USPS to adjust prices.The price changes would then be implemented by mid-September.
In response to the request, PRC has started reviewing the document with any comments to besubmitted by August 24.
