New ShipMatrix USPS parcel offering provides retail and e-commerce options with peak season options

ShipMatrix, a parcel consultancy and technology services provider and subsidiary of Pittsburgh-based SJ Consulting, announced today that it is throwing its hat into the parcel shipping ring, with a new offering it is calling a first for the parcel sector.

Entitled the ShipMatrix 1st Class Parcel Service, the firm said that this offering is geared towards retail and e-commerce shippers that have been “capped” by the parcel duopoly of FedEx and UPS for the 2020 peak season. Some of the key aspects of this offering, according to ShipMatrix, include: no limit on parcel volume; no peak season surcharges; and an automatic money-back guarantee on packages that are not delivered within five days.

ShipMatrix said that this offering will leverage the United States Postal Service (USPS), which it said delivers to 159 million addresses on a daily basis, with 290,000 drivers, tallies which more than double the cumulative output of FedEx and UPS. What’s more, ShipMatrix said that with lightweight and low-cube parcels that comprise more than 50% of all residential deliveries able to be delivered to mailboxes, the USPS can subsequently can handle more parcels through the same network over the course of the holiday peak season.   

In an interview, ShipMatrix President Satish Jindel told LM that ShipMatrix 1st Class Parcel Service is a door-to-door service, which came to the fruition when ShipMatrix began to look at how COVID-19 was impacting the parcel sector, most notably the capacity shortage.

“A while back, in December 2018, we got to thinking the future of the parcel is in the mail box,” he said. “What that means is that there is a monopoly and if they [USPS] can get the lighter-weight smaller packages that fit in a mail box, they can handle twice the number of packages that they handle today. They have not done anything to promote that and go after it…so we are taking this nice Christmas gift of the USPS First-Class service and put a beautiful wrapping paper around it with all the value-added capabilities of ShipMatrix through its technology and other things that are guaranteed. We will monitor it proactively and issue customer credit [if a package is late], and they won’t have to file for failure. They will not be charged for it. At Christmas time, people don’t care if they get a package in one day or five days; they just need to know they will have it before Christmas Eve.”

This new offering comes at a time when the ongoing COVID-19 pandemic continues to impact parcel networks, with volumes up significantly, as more consumers ordered goods online, due to stay-at-home and shelter-in-place orders. That situation forced both FedEx and UPS to implement caps on weekly pickups and volumes, with volumes running as high as typical peak season levels as early as May of this year. And the duopoly each also postponed their respective service guarantees, too, while also implementing steep peak season surcharges.

Global e-commerce giant Amazon also has felt some pain, too, as it had previously placed restrictions on the amount of inventory its suppliers can send to Amazon warehouses and is shortening delivery times—which had stretched for weeks for some products since the outbreak began—back to days, noted a Bloomberg report published in March.

And Jindel added that this offering is tailor made for those retail and e-commerce shippers that are feeling the limit, or caps, on capacity from FedEx and UPS, adding that they are eager to start using this new service.

“We are actually going to help FedEx and UPS with this service, for two reasons,” he said. “First, UPS and FedEx are telling customers ‘if you ship so many packages, I cannot send any more.’ That pressure comes off then. Second, we help those shippers by taking those packages. So, if I was shipping 50,000 packages by FedEx, I am going to take off the 1,000 or 2,000 packages that are a pound or less and I can give them the heavier packages. UPS and FedEx can make more money on a 5-to-8-pound package than on those that are 5 or 6 ounces. We are matching the network of the three carriers [UPS, FedEx, and USPS] to the packages that provide the best opportunities for each one. It is a beautiful marriage of the right packages to the right network.”   

With capacity at peak levels and holiday season demand at 7.2 million packages per day, based on ShipMatrix analysis, for those packages, among that 7.2 million, that weigh less than one pound, that are given to the USPS, Jindel said USPS can handle those without feeling the pain of one extra package.

“The reason for that is that as long as a package can fit in a mail box, it is almost like handling a First-Class letter for them,” said Jindel. “That is the beauty of it. And it is secure and does not stick out in the rain and snow or damaged.”  

Recent data, for the month of October, from ShipMatrix, highlighted the USPS’s strong service levels, with First-Class on-time performance, at 96.6%, in line with the 94.8% and 97.9% readings for FedEx and UPS, respectively.  

And at a time when FedEx and UPS have each suspended their service guarantees, Jindel reiterated that this new offering provides free shipping for parcels not delivered within five days.

“[This] will provide predictability to customers about getting their online orders in time for the holidays,” he said. “This is a first for the parcel industry.”