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USPS Shipping Insurance: What Shippers Need to Know

By | News, Shipping Knowledge, USPS

There are many questions that come up when deciding which carrier to use for your company’s shipping needs. Which is the most cost-effective? How quickly will the customer receive their package? And how dependable is the carrier? USPS is a popular option, with the carrier shipping 5.7 billion packages in 2017. The carrier has also become a popular option for other leading carriers, such as FedEx and UPS, to handle their “last leg” of delivery with greater efficiency.

One important consideration when shipping, however, is insurance. Should you purchase insurance, and if so, how much will it cost? Most packages that ship will arrive at their destination as expected, but when a package doesn’t arrive or arrives damaged, it’s helpful to have insurance in place. Here is a guide to understanding USPS shipping insurance, what you need to know, and what to expect if a package goes missing.

Why Purchase Shipping Insurance?

Shipping mishaps occur, even with the best carriers. According to one study, up to 11 percent of major-carrier packages are damaged in transit, with USPS having a damage rate of 10 percent.

Shipping is a key component of the customer experience, and if something goes awry, such as a missing package or damaged item, the first priority is always to take care of the customer. Doing this well positively affects reputation, ratings, and repeat orders. But after the dust settles, it’s critical to recover some of those costs. Shipping insurance is a tool that helps you accomplish this task.

Every carrier has a set of rules, processes and procedures, and by understanding those factors before purchasing insurance, you can better plan for these situations. A good starting point is understanding what type of insurance comes with your package and what you may need to pay extra for when shipping.

Understanding Shipping Insurance

USPS allows you to purchase shipping insurance up to $5,000 to protect against potential loss. The fee for purchasing insurance varies, based on the declared value of the package (more on this shortly). Some USPS services already have insurance included in the product pricing, so you don’t need to pay extra.

For example, USPS Priority Mail Express offers up to $100 of insurance, and priority mail shipments include up to $50. If the value exceeds this amount, you may want to purchase additional insurance. An insurance comparison guide is available at USPS’s site to help guide that decision.

Insurance is also available on some items sent internationally. For example, Global Express Guaranteed Insurance automatically covers up to $100 in loss or damage. If the value of the package exceeds this amount, USPS will allow you to purchase up to $2,499 in additional insurance.

The carrier also offers Priority Express International insurance, which includes up to $200 for merchandise at no cost for lost, damaged, or missing contents. Additional coverage may be available, but there may be restrictions for some countries.

When purchasing insurance, there are a few additional safeguards available that provide added protection, such as the following:

  • Signature confirmation. Adding signature confirmation allows you to track when an item was delivered and when an attempt was made to deliver it. This delivery method is available via USPS electronically or by email upon request.
  • Collect on delivery. COD allows customers to pay for the package upon receiving it. You also get insurance coverage up to $1,000 with this option based on the amount collected or the selected insurance coverage (whichever is higher).
  • Return receipt. This option allows you to get an electronic or hardcopy delivery record that shows the recipient’s signature.

Some USPS services do not offer insurance in the label price, including first-class mail, media mail, and parcel select. Additionally, when using a service that does include insurance, there are some limitations on what is covered.

Pricing for USPS Insurance

Pricing is an important consideration for purchasing insurance. The fee to purchase additional insurance is minimal; however, it’s important to consider the risks and costs when shipping large volumes of packages.

Pricing is based on the “declared value” of the package. This is basically what you state the contents are worth; if you need to file a claim, USPS will require proof of that value. Here is a quick summary of what to expect for pricing based on the stated value of the package. The pricing below is for service options that don’t offer no-cost insurance, so you’re footing the entire bill.

  • Value up to $50 is $1.65
  • $50.01 to $100 is $2.05
  • $100.01 to $200 is $2.45
  • $200.01 to $300 is $4.60
  • The price per additional $100 of insurance, valued over $300 up to $5,000, is $4.60 plus $0.90 per each $100 or fraction thereof

Some of USPS’s services, such as Express Mail, include the first $100 of coverage at no cost. Pricing for additional insurance includes the following:

  • The first $100 of value is included
  • Value over $100 up to $200 is $0.75
  • $200.01 to $500 is $2.10
  • $500.01 to $5,000 is $2.10 plus $1.35 per each $100 or fraction thereof

Purchasing insurance is a step in the right direction to protect your company from loss, and in most cases, you won’t need to use it. But in the rare case that you do need to use the insurance, it’s important to know what to expect and what documentation is required.

Filing a Claim With USPS

Filing a claim with USPS is easy and can be accomplished online. The online claim process allows you to upload files with any supporting documentation and includes the following steps:

  1. Visit the USPS website. Once there, sign into the online claims site using your USPS username and password. If you don’t have an account, you can create it online.
  2. Enter details about the package. The site will request details, such as the tracking label, number, shipping date, address information, and other claim details.
  3. Select the reason for filing a claim. For example, is the package missing or stolen, or are the contents of the package missing upon arrival? Clarify what happened to the package and the reason for the claim.
  4. Upload a proof of value. When you purchase insurance, you declare the value, but when you file a claim, you’ll need to show proof, such as a relevant receipt or invoice.
  5. Upload evidence of insurance. Make sure to keep your receipt that shows the purchase of insurance, because you may be required to upload the purchase evidence. It’s also important to note that USPS does not keep a record of who purchases insurance, so they have no way to look this information up.

Additionally, if the item was damaged, it’s important to keep the damaged item, packaging and any other package contents until the claim is resolved. USPS says the following:

“If a claim is filed because some or all of the contents are missing or damaged, the addressees must retain the mailing container, including any damaged articles, all packaging and any contents receipted. Upon written request by the USPS, the addressee must make this proof available to the local post office for inspection, retention and disposition in accordance with the claims decision. Failure to do so will result in denial of the claim.”

Once a decision is made on the claim, getting payment is quick. Typically, payment is sent within seven to 10 business days from a claim decision.

Additional Considerations

On a package basis, the cost of insurance is minimal, but when you’re a company sending a large volume of packages, the costs add up fast. As a result, it’s important to know any special considerations for insurance so you can prepare for those ahead of time. Here are a few factors to consider when deciding if purchasing extra insurance is right for your situation.

The payout may be subject to depreciation. USPS will only pay out on the depreciated value of the item. “If your lost or damaged items were purchased used, or you no longer have the purchase receipt, your claim may be denied.”

Photos of damaged items may be required. If the item was damaged, photos may be required during the claims process. Ask the customer to take photos of the item right away to ensure that you can recover from the loss.

Packing items are important. As highlighted before, packing matters. If USPS determines the item was improperly packed and that contributed to the damage, this may affect payment of the claim. Ask the customer to keep packing materials and take photos until the claim is resolved.

Claims should be made quickly. Unlike UPS, which gives you nine months to make a claim, USPS gives you 60 days. Additionally, you can’t file sooner than a predetermined number of days. For example, for Priority Mail Express, you can’t file sooner than seven days after the item is lost, damaged or stolen. If the customer has a problem, start collecting the required information and documents immediately and file once the claim period opens.

Fragile items may be excluded. According to USPS DMM 609, “Filing Indemnity Claims for Loss or Damage,” USPS is exempt from paying insurance claims if the “fragile nature of the article prevented its safe carriage into the mail, regardless of packaging.” If you’re shipping fragile items, check if they are excluded from coverage.

Once a customer signs for a package, they have officially accepted it as being in satisfactory condition. If the package requires a signature, ask the customer to inspect it carefully for damage before signing. Once the customer has signed for the package, it makes recovery more difficult because the customer is essentially accepting the package in its current condition.

Keep the original insurance slip. USPS doesn’t keep computer records of post-office-purchased insurance, so if the slip is lost, it’s challenging to prove that coverage was purchased.

Shipping multiple items is efficient, but this has implications. A customer might purchase several items from your company, and to maximize efficiency, you might ship those items together. But keep in mind that if you’re getting $100 in coverage, it will include the entire package, so the insurance may not go as far. You may want to purchase additional insurance or break up shipments for insurance purposes.

Moving Forward with Greater Security

The most important consideration in any transaction is the customer experience. How can you keep the customer happy? If an item is lost or stolen, you might have a basic process for getting that item replaced, but on the back end, you must recover a portion of those expenses.

Insurance is a valuable tool for filling the gap. And in many situations, the no-cost USPS insurance is enough to offset any potential losses. But it’s important to have a process in place to handle any issues that come up. For example, do team members know what to request from customers so you have everything that is required to file a claim?

Establishing policies helps create consistency, not only in the customer experience, but also when gathering the proper documentation to ensure maximum recovery. As a result, you’ll leave the customer happy, while ensuring that your company continues to thrive and minimize loss in the future.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our contract negotiation and invoice audit services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption to current operations. Our team of experts has over 200 combined years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts – saving our clients an average of 19 percent of their annual shipping spend.

Holiday Shipping With USPS: What to Know

By | News, Shipping Knowledge, USPS

With the holidays approaching, many retailers are making plans on what items to feature during sales and how to get those products to their destination before the holidays. However, the holiday season is the busiest time of year for all carriers, including USPS.

In fact, last year the postal service shipped an estimated 850 million packages between Thanksgiving and New Year’s Day. With the popularity of online shopping growing and USPS being a cost-effective option for retailers mailing packages, the carrier is under intense pressure to get packages delivered fast and on time. Spikes in demand resulted in USPS hiring an estimated 35,000 to 40,000 additional employees to handle volume increases during the holidays. But what does this mean for retailers?

Retailers who want to deliver on their promises during the holiday season and plan to use USPS should understand shipping requirements and dates to watch, and they should track any new changes to ensure a seamless process for their customers and to secure more business in the new year.

Understanding USPS Holiday Shipping Dates

One of the most important things to know when shipping with USPS during the holiday season is cutoff dates. With these dates in hand, you can start communicating with your customers and setting expectations. For example, some retailers post clear messages on their website, such as “Get it before Christmas by ordering before XYZ date.” Not only does this message help customers understand the amount of time they have to get packages in time for the holidays, but it also creates a sense of urgency in ordering.

The 2018 USPS cutoff dates are as follows:

USPS Retail Ground: Dec. 14

First-Class Package Service® (up to 15.99 ounces): Dec 14

First-Class Mail® (including greeting cards): Dec. 20

Priority Mail®: Dec. 20

Alaska to Mainland Priority Mail® and First-Class Mail®: Dec 20

Hawaii to Mainland Priority Mail® and First-Class Mail®: Dec 20

Priority Mail Express®: Dec. 22 (Same for Hawaii and Alaska to Mainland)

Are you shipping to a different part of the world? If so, check out more information on shipping at USPS’ holiday shipping section.

Services Available During the Holidays

When using USPS during the holidays, it helps to understand what the different services are best used for and expected dates of delivery so you can select the most cost-effective one while still meeting customer expectations. Check out a few of the more popular options.

USPS Ground

USPS Ground Retail service is Primarily used when the items being sent are not allowed to fly.  Pricing is similar to Priority Mail (PM) so unless the items contain Hazardous materials, it would be better to choose the premium PM service.  There are also other ground services specifically for Media, Books, Bound Printed Matter and when sending to or from a Library. Pricing is based on the distance the parcel must travel and the weight of the parcel.

First-Class Mail

First-Class Mail is the most popular service, and it’s an inexpensive way to send items through USPS. You can send large envelopes and small packages up to 15.99 ounces using this service.  Currently First Class Package Service (FCPS) is based only upon the weight in ounces and not the distance. The USPS has proposed to change this to zoned pricing on January 27, 2019.

Priority Mail

Priority Mail is the most popular option for items weighing over a pound.   Commercial and E-Commerce shippers who purchase the postage online are eligible for discounted rates.  It is a non guaranteed service with defined delivery windows of 1, 2 or 3 days depending on origin and destination pairings.  Insurance of either $50 or $100 per flat package is included (CPP, high volume contract users get $100). Free premium packaging is available.  There are 4 ways to use PM, including Flat Rate (If it fits it ships), Regional Flat Rate and Cubic for CPP Customers.

If you wish to see how much of the country is served in 2 days from your location, check out this interactive delivery map.

Priority Mail Express (PME)

Priority Mail Express is a good option for retailers who need items to arrive fast. USPS offers overnight delivery guarantees, and the service is available 365 days a year with a money-back guarantee and delivery to most U.S. addresses, including P.O. boxes. The cost starts at $24.70 and increases based on package size and specifications. PME also offers Flat Rate Envelope options, and no longer includes a flat rate package option.

Does USPS Charge Holiday Surcharges?

Some carriers, such as UPS, charge a holiday surcharge during the busiest season of the year. This adds up to extra expenses for retailers. For example, UPS announced its plans for peak surcharges that are applicable during defined periods during the holiday season, which includes packages shipped after Nov. 19. Although these fees are small, with retailers shipping so many packages, they add up.

One benefit of shipping with USPS is they do not charge holiday surcharges. Additionally, they do not use dimensional weight pricing for packages under a cubic foot, and they don’t tack on additional charges for residential delivery, address correction or for fuel. This translates into a cost-effective shipping solution during the holiday season.

Comparing USPS with Other Carriers During the Holidays

Retailers have many options during the holidays, including FedEx, UPS, Parcel Consolidators (ie: PB Negistics and DHL E-Commerce), Regional Carriers and the USPS. Each carrier offers several different levels of service, which can make it difficult to know which option is best. When considering USPS for packages during the holidays, it helps to understand the benefits and the disadvantages.

USPS is less expensive for lightweight holiday packages. Retailers often want to know which option is cheapest – USPS, FedEx or UPS. Retailers who want a lower-cost shipping option should consider USPS, especially for smaller items going to the home.  Comparing Flat-rate shipping options, along with free packaging and no “Accessorial” charges make using the USPS easy and affordable. In 2016, USPS delivered 62% of all residential deliveries.

Reliability and Tracking greatly improved. In the past, some retailers complained about USPS’ reliability and lack of complete tracking, which is critical during the holiday season. However, Tracking is now on par with the national carriers and performance has improved.

USPS delivers to mailboxes and P.O. boxes. Another benefit of using USPS for holiday shipping is that unlike FedEx and UPS, it delivers to P.O. Boxes, US Territories and the Military . In fact, they are the only major shipping service that delivers to P.O. boxes and there is no extra charge for far away US territories like Guam and Puerto Rico.

USPS may not be the perfect solution for every situation, but it does excel at keeping costs low and delivering with reasonable reliability during the holiday season. Weighing the pros and cons can help you manage expectations during this busy time.

Understanding USPS Mailing Regulations

Every carrier has rules about what can and can’t be mailed, and USPS is no exception. For example, some types of aerosols may be restricted, in addition to other malleable gases. The USPS will not mail cigarettes or other tobacco products, some types of glues, nail polishes, perfumes containing alcohol, lithium batteries, perishable items, and many others.

Fragile items are accepted but should be packed with good cushioning and marked clearly with the word “fragile” on all sides of the box. Additionally, Registered Mail can be added to the delivery to ensure that valuable items have additional protection in case of loss or breakage. View a complete list of USPS mailing regulations here.

Tips for Using USPS with Greater Success

Preparing for peak holiday season is a large task, one that involves carefully evaluating your existing routing policies. What carrier/service should you use?  At what point is the decision made on routing: point of sale or at time of shipping? Does your existing shipping methods allow you rate shop based upon your specific carrier programs including known weight, size and destination?  If you are using a “Free” carrier provided shipping solution it may be limiting your choices.

Evaluate box sizes. Many packages are shipped during the holiday season, and preventing damage is key. However, extra packaging may cost you more in freight. The best practice is to use the smallest amount needed to protect the product.  Using boxes that are in pristine condition can also drastically reduce the risk of damage. The postal service estimates that a single crease in a box can reduce a box’s strength by as much as 70 percent.

Use flat-rate boxes to minimize shipping costs. If the product you are sending is dense and under ½ cubic foot, consider Cubic or one of the other Flat Rate PM options.

Understand USPS’ insurance guidelines. The worst-case scenario during the holiday season is a package that disappears and doesn’t arrive at its final destination. USPS includes $50 – $100 of insurance free for PM and PME, with additional insurance available at an extra fee based upon value.

Know the risk for damage. Packages that arrive damaged aren’t always considered the fault of USPS. If the postal service determines that the package wasn’t packed properly, they may deny your claim. As a result, it’s critical to fine-tune packing procedures.  As a rule of thumb, the box should be able to sustain a 4’ drop on its corner and not sustain product damage.

Moving Forward with Greater Efficiency

Online shopping hit record-breaking levels in 2017. Sales jumped to $108 billion, a sharp 14 percent spike over the previous year. Total sales from November and December were $691 billion, which is a 5.5 percent jump from the previous year. This shows that online retailers and brick-and-mortar stores are seeing gains in sales. For shippers, however, this means that more packages are on the road, and they must keep up with the demands of online shopping. The stakes for meeting expectations have never been higher for shippers and retailers alike.

USPS is usually the least cost method for shipping to residential customers, which is why they are the hands down leader here.  Delivery to every door 6 days a week. The key to optimizing your Carrier and Service mix, including the USPS, is to continually measure progress and work around any inefficiencies.

For example, innovative technology such as invoice audit software that includes detailed reporting allows you to see where you’re overspending in areas such as shipping and figure out more effective ways to maximize efficiency and save during the holiday season. Generating healthy revenue in the future starts with striking the right balance between meeting customer expectations and generating sales. Accomplish this and your retail business will continually thrive in the future.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our invoice audit and negotiation services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has more than 200 years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts – saving our clients an average of 19 percent.

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