USPS vs UPS? Postal Bulletin Takes Indirect Swipe As Expired Contract Fallout Continues
UPDATE 1-15-25
It would appear UPS is finally buckling under shareholder pressure, posting a statement on the Investors section of their website confirming that SurePost volume has been moved in-house in wake of USPS contract expiration.
Statement from UPS on Peak Season Service and SurePost Changes
For the seventh year in a row, we have been an industry leader during the critical peak season – including an impressive 98.9% on-time delivery rate during Cyber Week in 2024.
As we continue to leverage our track record of industry-leading service and reliability, we are insourcing our SurePost product, effective January 1. This product is an important part of the broad portfolio of end-to-end services available to UPS customers.
By leveraging the strength and flexibility of our integrated network, insourcing will allow us to control the SurePost volume from point-to-point, provide reliable service and meet our customers’ needs more efficiently.
We will discuss our fourth quarter and full-year 2024 financial results, including peak season performance, and our outlook for 2025, during our fourth-quarter financial results investor conference call.
While the statement references January 1st as the effective date of this decision, it conveniently does not provide a date for when this section was added to the page.
However, the Internet Archive Wayback Machine shows it was not present on January 2nd, which means no matter how UPS wants to try to hide it - they did not communicate the change in advance or in a timely manner.
UPDATE 1-8-25
As we wait for official answers from UPS about the future of SurePost, product page updates indicate the company is working to move volume in-house as part of Network Of The Future initiative after USPS contract expired last week.
Liz Morton
USPS is hitting back at attempts to place blame for sudden changes impacting consolidators and hybrid services, with a "no names mentioned" Postal Bulletin clearly aimed at UPS.
Today's informational notice confirms the Postal Services "commitment to open communication amid strategic realignments", clarifies that their Parcel Select product has not been discontinued and businesses which have not negotiated new agreements are still free to use it at existing published rates.
Throughout the past year, the Postal Service has been implementing a new strategic approach with respect to its contracts with package consolidator companies -ones that consolidate large package volumes at local delivery units and use our Parcel Select offering —including negotiating new agreements.
Prior agreements failed to reflect operational and financial realities, the evolving postal network, or the enhancements to our portfolio of product offerings.
As a result of our new approach, some businesses negotiated new agreements with us, and some have not. We concluded our negotiations in December 2024. Our Parcel Select product still exists and any business can use it now at our published rates.
Throughout this process we have been transparent –both publicly and privately –with business partners, customers and the shipping industry about our intent to either negotiate new agreements or to let prior disadvantageous agreements expire.
Communications to affected businesses began in the Spring of 2024 with multiple, follow-on public announcements made through the end of the year. How these aggregating businesses have communicated about these developments to their stakeholders is beyond the control or responsibility of the Postal Service.
As the Postal Service continues its strategic evolution, we remain committed to fostering productive relationships across the shipping industry creating a framework that works not just for us but for our customers. We will continue to communicate openly and transparently as we move forward.
While USPS refrained from naming names, anyone who has been paying attention the last few weeks will guess the statement is obviously aimed at UPS.
Relations between USPS and UPS have been tense for several months, with USPS cutting rate discounts for consolidators, discontinuing Dual Labels for hybrid shipping services and cracking down on shippers who incorrectly drop UPS Surepost or FedEx Smartpost/Ground Economy packages off at the post office.
The situation came to a head last month as USPS announced a new streamlined process for shippers to obtain Negotiated Service Agreements tailored specifically for lightweight shipments just days after UPS was forced to institute a ~25% increase to Mail Innovations rates, with lighter weight shipments most heavily impacted.
Liz Morton
UPS put the blame for the increase directly on USPS, saying Parcel Select increases, eliminating discounts for DDU-entry and other Postal Service actions have put the company in an untenable position.
On November 15, the United States Postal Service (USPS) announced that it intends to raise its Parcel Select rates by 9.2%, effective January 19, 2025.
This comes after the Postal Service first raised its Parcel Select rates 5.9% on average in January 2024 and then implemented a further Parcel Select rate increase of 25% in July. In addition, the Postal Service has eliminated the Parcel Select Lightweight product and discounts for DDU-entry.
UPS Mail Innovations has taken and will continue to take steps to minimize the impact of the Postal Service’s product changes and rate increases on our customers. However, as a result of recent Postal Service actions, UPS Mail Innovations has to adjust the 2025 rates.
We do not take this increase lightly, and we have done diligence to minimize the impact on our customers. Please see the following page(s) for your new 2025 rates, which will be effective January 1, 2025.
And things have only gotten worse since then, with shippers left scrambling for answers when UPS suddenly dropped PO boxes, AK, HI, PR and more from Surepost delivery service when their existing contract with USPS for final mile delivery ended on January 2nd.
Liz Morton
Postmaster General Louis Dejoy has said the previous negotiated service agreements with consolidators that enabled these hybrid services were no longer in the best interest of the Postal Service, so changes are necessary to bring NSAs into alignment with the Delivering for America plan to create an efficient network and grow USPS' own end-to-end ground package product.
So what happens now? As shippers wait for more detailed information from UPS, logistics professionals and analysts suggest Surepost and Mail Innovations will be brought in network with UPS handling the last mile, which will increase prices and may eventually lead to phasing out those services all together if they no longer offer significant cost advantages over UPS Ground.
Stay tuned for updates in this developing story!
TaiapanPenguin
