You may or may not have noticed the U.S. Postal Service delivers a lot of packages that have a UPS or FedEx label on them. And maybe you’ve wondered what’s up with that? Why would the Postal Service deliver its rivals’ packages?
No, the Postal Service isn’t just lending a helping hand to its commercial competitors. Rather, UPS and FedEx take advantage of the Postal Service’s Parcel Select product offerings, available to any bulk shipper that meets preparation and entry requirements. Simply put, the two commercial companies transport parcels that the Postal Service then takes and delivers.
Why? Because sometimes parcels go to remote areas, where it would be unprofitable for companies to establish regular delivery service. The Postal Service, on the other hand, is required by law go to every address in the country. So, as they do normally, the companies handle the long haul – say, from a client in New York to El Paso – but then pay the Postal Service to deliver the package to a final destination beyond city limits. And sometimes, the Postal Service is the least costly option, which is why you see the Postal Service delivering FedEx and UPS packages in urban areas, too.
Competitors collaborating is a relatively new business phenomenon that we call co-opetition, and the benefits it offers to all parties involved are evident. UPS and FedEx, for example, save money by avoiding unprofitable routes, and the Postal Service realizes additional revenues as a result.
But according to a new white paper we are releasing today, there’s another beneficiary of co-opetition: You. The Postal Service’s joint work with private parcel carriers effectively creates a more efficient transportation and delivery chain, thus helping to keep costs down. In fact, our study shows that if efficiency gains are high enough, co-opetition can even lead to lower prices.
The paper’s findings are the work of Dr. John C. Panzar, a professor at the University of Auckland and an expert on postal economics. His analysis shows that co-opetition isn’t anti-competitive or bad for consumers at all. Quite the opposite. Check out all the details in Co-opetition in Parcel Delivery: An Exploratory Analysis .
Does it matter to you which carrier delivers the package to your door?
What do you think of the Postal Service delivering other companies packages?