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Postal Service revamps priority mail program

  • In this Tuesday, Aug. 13, 2013, photo, traders work on the floor of the New York Stock Exchange.  Good news from two of Europe's biggest economies failed to shake global stock markets out of their lethargy Wednesday Aug. 14, 2013. (AP Photo/Richard Drew)

    In this Tuesday, Aug. 13, 2013, photo, traders work on the floor of the New York Stock Exchange. Good news from two of Europe's biggest economies failed to shake global stock markets out of their lethargy Wednesday Aug. 14, 2013. (AP Photo/Richard Drew)

  • FILE - In this Thursday, Feb. 7, 2013, file photo, packages wait to be sorted in a Post Office as U.S. Postal Service letter carrier  Michael McDonald, gathers mail to load into his truck before making his delivery run, in Atlanta.  The financially struggling U.S. Postal Service said Wednesday, Aug. 14, 2013 it is revamping its priority mail program as part of its efforts to raise revenue and drive new growth in its package delivery business. (AP Photo/David Goldman, File)

    FILE - In this Thursday, Feb. 7, 2013, file photo, packages wait to be sorted in a Post Office as U.S. Postal Service letter carrier Michael McDonald, gathers mail to load into his truck before making his delivery run, in Atlanta. The financially struggling U.S. Postal Service said Wednesday, Aug. 14, 2013 it is revamping its priority mail program as part of its efforts to raise revenue and drive new growth in its package delivery business. (AP Photo/David Goldman, File)

  • In this Tuesday, Aug. 13, 2013, photo, traders work on the floor of the New York Stock Exchange.  Good news from two of Europe's biggest economies failed to shake global stock markets out of their lethargy Wednesday Aug. 14, 2013. (AP Photo/Richard Drew)
  • FILE - In this Thursday, Feb. 7, 2013, file photo, packages wait to be sorted in a Post Office as U.S. Postal Service letter carrier  Michael McDonald, gathers mail to load into his truck before making his delivery run, in Atlanta.  The financially struggling U.S. Postal Service said Wednesday, Aug. 14, 2013 it is revamping its priority mail program as part of its efforts to raise revenue and drive new growth in its package delivery business. (AP Photo/David Goldman, File)

The financially struggling U.S. Postal Service is revamping its priority mail program to raise revenue and drive new growth in its package delivery business.

The agency is now offering free online tracking for priority mail shipments, free insurance and date-specific delivery so customers know whether a package will arrive in one, two or three days.

Postal officials said yesterday they expect the changes to generate more than $500 million in new annual revenue. The changes – including redesigned boxes and envelopes – are effective immediately.

The improvements come as the Postal Service is reeling from losses this year totaling $3.9 billion. The agency has been trying to restructure its retail, delivery and mail-processing operations, but says its financial woes will worsen without help from Congress.

The changes to priority mail will help the Postal Service better compete with rivals FedEx and UPS in the increasingly lucrative area of shipping products purchased from online retailers, said Nagisa Manabe, the service’s chief marketing and sales officer.

“We’re looking at strong underlying growth as Americans increasingly shop online,” Manabe said in a conference call with reporters. She estimated the sharp pace of growth would continue “well past 2020.”

Until now, priority mail has been advertised as a two- to three-day delivery service, with customers unable to know exactly how long it would take for a parcel to reach its destination. That left too much uncertainty, Manabe said, especially for small businesses. Now, they will know the specific date on which a package will be delivered.

Demand from small-business customers also helped convince the agency to offer free insurance, $50 coverage for most priority mail shipments and $100 coverage for priority mail bulk orders shippers.

As part of the changes, the service has rebranded its overnight express mail service as priority mail express. That service will still offer $100 of free insurance.

The Postal Service is launching a major advertising campaign to make customers aware of the new changes.

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