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Shipping News UPS, FedEx Turn to U.S. Post Agency to Test Services
November 6, 2003
America's delivery giants are turning to their oldest competitor to test stripped-down, cheaper services in which mail carriers would drop off UPS and FedEx packages at millions of homes they visit daily. United Parcel Service and FedEx Corp want to fill low-end gaps in their widening array of services with help from the U.S. Postal Service. Some packages picked up at warehouses and other businesses by UPS and FedEx would still spend most of their journeys within their respective companies' huge transport systems, and then would be handed to the U.S. government's postal arm. These deliveries would be pale versions of the fast, time-guaranteed signature services offered by UPS and FedEx, executives said. Packages weighing between 1 and 5 pounds would be common. UPS, for instance, said its Basic service would be cheaper than its standard services but would typically take longer, involve one delivery attempt, instead of the usual three, and require return fees for undeliverable items. FedEx is in the middle of a test with the postal service with an eye to adding a low-end delivery offering. No decision has been made on a full roll-out of the new service, an executive said. "It is a new category for us," said Bill Margaritis, senior vice president at FedEx. "If you look at our offerings as a spectrum, this is a new color for us." Executives said home deliveries, especially those in rural areas, were much more costly to carry out than deliveries to businesses, which are often clustered. FedEx has a seven-year, $7 billion contract to carry mail and postal service overnight packages on its fleet of jets. Its FedEx Express drop boxes are in thousands of U.S. post offices. Gerry McKiernan, spokesman for the U.S. Postal Service, said the agency was working with both UPS and FedEx under the Parcel Select discount program and expects the business to be profitable for the agency. |
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