Friday, November 6, 2009

Mail Strike Suspended In UK Whilst USPS Adopts Freight Rate Style Billing

Strike Action Suspended whilst Rates Reviewed in Both Tough Markets
Shipping News Feature

UK – US – Strike action has been suspended in the UK whilst the union and management deal during an agreed “period of calm” where a series of further stoppages had been threatened in the run up to Christmas in a dispute over modern working practices which has been ongoing for several months. Meanwhile the United States Postal Service have announced their rates review for 2010 including, for them, a revolutionary new tariff to include cubic capacity.

After protracted bickering and backbiting between the two warring parties, strike action has been deferred in the UK whilst negotiations continue. It may however have cost the Royal Mail dearly as doing the dirty laundry in public has it seems lost them large tracts of business already.

Results out today from Twenga, the shopping search engine, amongst the 50 top online retailers, have matched our own survey with parcel carriers, that is to say 80% of the retail group have investigated alternatives to Royal Mail and found them to be a viable, and sometimes cheaper alternative. Twenga also state that only 31% of those surveyed relied on the postal carrier exclusively anyway.

The management position has not been helped by the publishing of the CEO's salary. Adam Crozier, reportedly earns around £1 million per annum, five times the salary of the Prime Minister. The union have now suspended their legal action against Royal Mail for “Illegal” hiring of temporary workers to counter the series of strikes and the two parties will negotiate changes to counter the 10% plus drop in revenue during recent months. Jobs in the company have been made redundant at the rate of over 7500 a year for the past seven years.

In the US the United States Postal Service (USPS), have published a series of rate reforms which will have their competitors scrabbling for their calculators. USPS had already announced that their general products would not be subject to any increase but specialist items will see a review of carriage charges from 4th January next year. The surprise item is the fact that, like traditional freight shipments, large volume commercial Priority Mail shippers will pay on a weight/volume basis, unlike the traditional weight only mail rates.

The company will set standard sizes of rate bands ranging from a tenth of a cubic foot to half a cubic foot, that is, up to 12 x 12 x 6 inches. Unlike the traditional freight scenario shippers get to choose whether they want a weight or cube rate dependant on product. This will mean small, dense cargoes can opt for a cube rate and significantly reduce shipping costs. Traditional shippers reading this will scratch their heads and envision trucks running everywhere horribly overweight caused by failure to add up weights but apparently USPS feel this will work in the small package market and will force their main competitors, FedEx, UPS, DHL, TNT Express et al, to reconsider their tariffs or risk losing out.

So what the shipping industry would call cube cutting will now be a legal cost reduction for US commercial mail customers. Meanwhile rates for Priority, Express and International Express services are set to rise between 3 and 4.7% across the board with a minimal increase on some products.