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USPS Changes to Ground Services Could Lead to Disruptions and Higher Costs

USPS
USPS Changes to Ground Could Lead to Disruptions and Higher Costs

The USPS is making a change to two services that are slower and cheaper alternatives to Priority Mail, and the Postal Regulatory Commission (PRC) is concerned the changes could lead to disruptions and higher costs.

On March 21, 2022, the USPS filed its intentions with the PRC to make a change to Retail Ground (RG) and Parcel Select Ground (PSG), which are both “competitive” products over which the PRC has limited oversight.

The USPS said the fundamental rationale for the planned change was to enhance service to customers sending larger packages:

“The opportunity to offer this enhanced service arose as a consequence of the planned change to the FCPS service standard and the concomitant improvement and optimization of the Postal Service’s package processing and surface network. By consolidating RG and PSG volume with FCPS volume, the Postal Service can offer faster service for packages that exceed the weight and size limitations of FCPS.”

The USPS is referring to changes that went into effect on May 1, 2022, in which it now transports all First Class Package Service (FCPS) packages by ground; previously it had sent packages that traveled longer distances by air – it estimated 32% of volume would see the service standard increase by one or two days.

The March USPS filing with the PRC also stated:

“The Postal Service submits that customers would benefit from for the provision of a low-cost, medium-speed, shipping service for packages in excess of one pound. The market for a faster, economical ground shipping product has seen significant recent growth and is expected to continue to grow as new shippers enter the market and business-to-customer shipments continue to increase.

“Shifting RG and PSG volume to follow FCPS volume would also enable the further optimization of the Postal Service’s package processing and surface transportation networks. This added volume would fill existing unused capacity, maximizing surface transportation utility and value. In addition, by eliminating the current interim processing stops, the Postal Service can reduce the overall processing burden while at the same time improving speed and reliability by reducing touch points. And, by combining multiple sorts, the change would improve volume and capacity in surface lanes.”

The PRC issued its advisory opinion today (which is nonbinding). In addition to finding the change could lead to “disruptions in processing and transportation operations and cost increases,” the regulator also took issue with the market research conducted by the Postal Service to bolster its assertions.

Crucially, the PRC also found that the projected transportation efficiencies to reduce reliance on air transportation and operate a more efficient surface transportation network were not evident in the near term. (“The Postal Service is unable to predict when these efficiencies might materialize. The Commission notes that the calculated transportation cost changes are based on numerous assumptions, several of which might be unrealistic.”)

We’re not sure what types of shippers use the two services – here’s how the USPS defined them in its March 21st filing:

Retail Ground: “RG service is an economical ground shipping solution for retail (single-piece) customers for packages, thick envelopes, and tubes weighing less than 70 pounds and up to 130 inches combined length and girth that are not required to be sent as First Class Mail. RG service is available at Post Offices and other postal retail facilities. Pricing depends on package weight, size, and the distance to be shipped.”

Parcel Select Ground: “PSG is similar to RG but targeted at commercial shippers. Like RG, PSG is limited by weight and overall size and priced by weight, size, and the distance to be shipped. Unlike RG, PSG allows for initial entry of packages into the mail flow both at Post Offices and at originating downstream processing and distribution centers.”

We didn’t see any mention in the filings about whether speeding up those ground services would have any impact on Priority Mail services.

After outlining its concerns, the PRC issued 5 recommendations and said it “encourages the Postal Service to review these recommendations with serious consideration.”

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.

10 thoughts on “USPS Changes to Ground Services Could Lead to Disruptions and Higher Costs”

  1. apparently the USPS is getting less mail so have empty trucks and need to fill up space. Bad enough they’ve raise prices and hurt sales, now with record gas prices and inflation sales have done a major drop.

  2. USPS ….
    What a LOSER.
    All they have to do is put cameras in the buildings to catch the saboteurs,
    then prosecute the bstrds with a 40 year prison sentence.
    High fuel prices aside, problem solved.

  3. “apparently the USPS is getting less mail so have empty trucks”
    ^^ Agree. But didn’t the USPS decide not to convert to electric vehicles and continue using gas vehicles for transport? I wonder what the rationale was, since it seems that EV is the way to go.
    “oh boy, higher costs slower service”
    ^^ As I read this, the slower service only applies to first class mail. If it’s priority mail it gets there in 2-3 days.

    1. EV’s wouldn’t work on rural routes, My mail lady just got one of the new vans about a month before gas went thru the roof, she’s so happy not having to fill her jeep each day

      1. EV’s have become very powerful, even for rural roads.

        Ford F150 now has an all electric vehicle with 426 horsepower that can tow 7000 lbs. It’s up to the car manufacturer to determine how much battery power they want for their vehicles.

  4. We ship lightweight flats, items like small photographs and printouts by USPS because they can still go first class mail. Anything over 13oz and anything that must be ship rolled – in a tube or cube, must go UPS or FedEx as they can be $15 or more less expensive than the US Post Office. The Post Office has made it clear to shops like mine that use tubes or cubes to ship long items like artwork, engineering plans, posters, and technical drawings- they do not want our business. So we took the hint and took our business elsewhere. I spend about $500 a week shipping with UPS. Not sure what the Post Office was thinking.

  5. With recent changes, USPS is no longer bleeding money as before. I wish them luck. And what does any saboteur have to do with this article?

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