Source: https://www.freightwaves.com/

The United States Postal Service’s “Priority Mail Cubic” product isn’t top of mind among those engaged in a broad-based discussion of the agency’s parcel shipping portfolio. The product is only available to the Postal Service’s Commercial Plus users who have tendered 50,000 or more Priority Mail shipments during the prior calendar year. It is one of four Priority Mail subproducts. Besides the volume requirements, eligibility depends on a shipper achieving the right mix of parcel configuration. The general public has no clue about it, and many Postal Service employees aren’t aware that it exists.

For the agency’s parcel salespeople, however, Priority Mail Cubic is front and center. In existence since 2004, the product is one of the post office’s secret parcel sauces that sales folk love delivering and large e-commerce merchants enjoy devouring. That’s because for a lot of the e-commerce traffic going out the door these days, Priority Mail Cubic could be the best deal going. 

The product is targeted at small, heavier items that would cost much more to ship through other delivery methods. Priority Mail Cubic is the “cheapest, fastest way to ship small packages” weighing more than 1 pound, said Pirate Ship, a provider of multicarrier shipping software. 

The product is zone-based, meaning that rates vary depending on the origin and destination points within the eight zones that make up the U.S. parcel shipping map. Delivery is within a one- to three-day window, which is standard for Priority Mail traffic. Customers can use their own packaging, and there is $100 of insurance thrown in. Padded envelopes qualify for the discounted pricing. Tube and roll packaging are ineligible. 

Pricing is determined by package size and the distance traveled, not by weight, which explains the product’s appeal. No shipment can weigh more than 20 pounds, measure more than 0.5 cubic feet or exceed 18 inches for any dimension. There are five pricing tiers that range from packages measuring 0.1 cubic feet to the 0.5-cubic-foot maximum.

For example, take a package whose dimensions are 8 by 5 by 6.6 inches and whose sides come in below the 18-inch limit on each side. The dimensions would be multiplied to arrive at the sum of 260. That figure would be divided by 1,728, the number of cubic inches equal to one cubic foot. The calculation yields a cubic foot value of 0.15, meaning that the package would be eligible for Priority Mail Cubic’s pricing.

For shippers who meet the threshold, the savings could be significant. Based on 2020 rate tables, it would cost $9.56 to ship a 10-pound package with a 0.2-cubic-foot value from San Francisco to Miami, according to August data from Shippo, a multicarrier software platform. A 20-pound package can be shipped for as low as $7 depending on the cube characteristics and the distance traveled, according to Rockwell Sands, editor-in-chief of Shipping School, a free educational resource designed to help small businesses save money on their shipping processes. 

The Postal Service has proposed a 2021 Priority Mail rate increase of 3% to 4%. The adjustment is expected to take effect Jan. 24 pending approval by the Postal Regulatory Commission. Postal Service officials did not respond to requests for comment.

Most smaller shippers don’t have the volumes to qualify on their own for the product. However, an increasing number of multishipper platforms commingle all of their customers’ volumes, which effectively allows users to gain access to the savings without meeting the traditional volume requirements. The caveat is that, through markups, fees and other requirements, most platforms end up skimming off a large portion of the savings, said Gordon Glazer, who heads the postal practice at Shipware LLC, a consultancy. The one exception, according to Sands of Shipping School, is Pirate Ship.

Priority Mail Cubic’s relevance may increase in 2021. In 2013, FedEx Corp. (NYSE:FDX) rolled out a similar product called One Rate to recapture traffic it had lost to Priority Mail Cubic. According to Glazer, the FedEx product has gained tangible traction. However, in December FedEx raised its 2021 prices for One Rate. Those rate hikes have made One Rate more expensive than Priority Mail Cubic on 16 of 28 high-traffic lanes for shipments that fall below the 0.3-cubic-foot threshold, Glazer said. 

Data provided to FreightWaves by Shippo appears to confirm that supposition. From cubic tiers 0.2 to 0.5, Priority Mail Cubic is priced lower than comparable One Rate products almost across the board. The exception is on the longer zones for packages in the 0.3 tier, based on Shippo’s analysis. There, the FedEx offering is cheaper.

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