Zoneskipping is a clever, and perfectly legal, way for companies to save money by utilizing the US Postal Service for the final delivery of their goods. But how much you’ll be able to skip may depend on how much you ship.

In a nutshell, zoneskipping is the practice of shipping parcels most of the way to their destination by truck, or by air, and then inserting them into the US Postal System (USPS) for the last leg of their journey. By circumventing postal zones, the companies that employ this practice avoid the higher shipping costs that are accumulated with each zone the goods pass through. The reason these companies rely on the USPS to complete the shipping is because the efficiency of the postal service’s vast delivery network almost ensures the speedy arrival of their goods.

The practice of zoneskipping has blossomed in popularity with the recent restructuring of USPS policies. Prior to January 1999, companies could hand over cargo for the USPS to deliver only at bulk mail centers (BMCs). The advantage of this approach was limited, due to the fact that only 21 BMCs serve the entire nation, covering delivery to 2 to 4 states each. The BMC might not be anywhere near the intended destination. Hence, it made little sense to utilize the USPS in this regard. Since the enactment of the “Parcel Select” program, however, cargo can now be dropped off at one of the 467 sectional center facilities (SCFs) or even at one of the 40,000 destination delivery units (DDUs). Being able to pass off the shipping goods at deeper levels of the postal system significantly improves the delivery time of the parcels and reduces the costs.

The money a company can save by zoneskipping is considerable. There are a total of 8 postal zones from coast to coast. If a 6-pound package were to travel through only five of these zones, the shipping cost would come to $5.22. Circumventing just one of these zones would mean a drop to $4.05. If the package needed only to travel through a single zone and was inserted into the postal system at a BMC, then this cost would drop to $2.84. Dropping off the package a SCF would bring the price down even further to $2.12. Finally, if the same 6-pound package is taken to a DDU, the total USPS shipping cost is a mere $1.41. It’s not hard to understand zoneskipping’s appeal. (A table of postal service shipping costs can be found at http://www.usps.com.)

The hitch in the lower-rate zoneskipping plan is that the postal service only accepts zoneskipping packages at SCFs and DDUs if they are part of a very large volume of packages. If your company is a mail order giant, then you might not have to worry about meeting these requirements. But, for virtually everyone else, reaching the enormous volumes required by the USPS may be a problem. That’s where the consolidators come in.

Consolidators are shipping companies that combine mailed packages of many different companies to achieve the volumes specified by USPS guidelines, thus saving the source companies money and providing quicker service to the recipient. Consolidator companies handle almost all of the 800,000 parcels that are shipped in this country on a daily basis. The majority of this bulk has typically been shipped by a handful of consolidators based on the west and east coasts but recently a new crop of consolidators has sprung up in the Midwest. The growth of the consolidation industry is most likely due to a boom in mail order sales, TV marketing such as infomercials and the advent of online commerce.

Many consolidators also offer the advantage of order tracking that pinpoints the parcel until it is inserted into the postal system. And, for shippers that can afford to pay the price, door-to-door tracking of the item can be arranged as well. This is because most consolidators have integrated the postal service’s tracking system into their own. Some consolidators even offer call-center capabilities as well as electronic order processing, return management and custom packaging services.

For all the advantages they can offer; consolidators may have a rocky time in the near future. The economy’s possible continued decline, as well as the difficulties dotcoms are having establishing themselves as permanent fixtures in commerce, does not bode well for a service that is dependent on exceedingly large volumes of shipped goods. Because of this possible shrinking of the pie, some analysts predict only a few consolidators will remain on the scene to provide nationwide shipping and take advantage of the postal system’s eased up regulations. But one thing is for certain, as long as zoneskipping is allowed, it makes sense to take advantage of its benefits.

Source: Why Shippers Like Zoneskipping
Toby B. Gooley
Logistics Online, Feb. 2001
http://www.manufacturing.net/magazine/logistic/