Dive Brief:
- Multi-carrier shipping platforms sometimes advertised higher-than-required U.S. Postal Service rates to merchants over the course of 15 months, which may have lost the agency business, according to an OIG report published July 2.
- The report assessed the Merchant Rate Card program's postage accuracy for packages from November 2023 to January 2025. The program facilitates discounted Postal Service rates to shippers, often small and medium-sized businesses, through third-party platforms where businesses can choose from multiple delivery providers.
- Issues such as one platform's software incorrectly rounding package weight led to instances of users being overcharged for USPS shipping, "which could have swayed merchants to choose competitors and caused the Postal Service to lose revenue," the OIG said.
Dive Insight:
Multi-carrier shipping platforms like Shippo, ProShip, Auctane's ShipStation and Pitney Bowes' ShipAccel often attract smaller e-commerce merchants looking for lower delivery rates than what they could secure on their own.
As such, major carriers are partnering with these companies in order to tap into a large pool of potential customers. Delivery providers that don't offer competitive rates for users risk losing out to other options on the platforms.
Platforms paid the USPS accurate postage rates for more than 99% of packages evaluated by the OIG. However, some packages for which platforms submitted incorrect postage still slipped through, per the report.
"Specifically, staff did not validate the platforms charged accurate postage during quarterly reviews and did not identify technical programming issues," the OIG said. "As a result, we estimate the Postal Service lost $1 million in revenue during the review period. At the same time, its platforms also overpaid the Postal Service $2.6 million."
Beyond improper weight rounding, other postage accuracy hiccups during the evaluation period included instances of cubic rates being used instead of weight-based rates and rural ZIP code rates being applied instead of non-rural rates.
USPS management said it is moving platforms to use agency-hosted software that supports appropriate rounding rules, per the OIG. The carrier also aims to lean on its automated package verification system to collect accurate postage payments from all shipments. Additionally, the Postal Service said issues related to non-rural ZIP codes were resolved on May 1.
"By adopting proactive quarterly rate monitoring, the Postal Service can strengthen its revenue collection to maintain a successful program that drives growth," the OIG's report said.
