Tag Archives: USPS

USPS Delivery Standard Changes? What EXACTLY is Dejoy Proposing?

USPMG, Louis DeJoy, outlined his vision and 10-year plan for the USPS in March. He calls it, “Delivering for America.” His plan has caused a lot of controversy surrounding delayed delivery standards. What exactly did he propose? Read on.

The Postal Service sets standards for mail delivery so that customers and mailers can expect consistent and predictable delivery. However, the USPS has not met current targets for First-Class Mail service standards (3-5 days) in the past eight years. DeJoy says that the current standards don’t reflect the declining letter volumes and require the USPS to use complex and expensive transportation networks. He claims that today’s delivery standards are unsuitable for setting realistic expectations for timely and reliable mail delivery.

It was pointed out that the cost to maintain the current,  and unattained service standards, will continue to increase if mail volume continues to decrease as projected. The need to ensure reliable service, while improving operational efficiency and precision, requires that old standards get updated.

His plan is to modify existing service standards for First-Class Mail Letters and Flats from a 3-day service standard within the continental United States to a 1-5 day service standard.

The proposal would enable 43% of that portion of First-Class Mail which is currently transported via air to shift to getting transported via ground. It would also require adjustments to the service standards for full network Periodicals which travel with First-Class Mail.

The Postal Service will seek public comment through the formal rulemaking process and will request an advisory opinion from the PRC concerning this proposed change before it is implemented.

Below is a summary of the impacts of the new service standards:

  • Service standards for Commercial First-Class Mail entered at a local facility will not change.
  • First-Class Mail traveling within a local area (up to a three-hour drive time) will not experience a service standard change and would still be delivered within two days
  • 61% of current First-Class Mail volume and 93% of current Periodicals volume will stay at its current standard.
  • 81% of current First-Class 2-day volume will retain its two-day standard.
  • Overall, 70% of First-Class Mail volume would receive a standard of one to three days.
  • Current First-Class 3-day volume will be subject to a 3, 4, or 5 day service standard, depending on the distance between origin processing facility and destination processing facility.
  • Of the current First-Class 3 day volume:
    • 47% will remain three-day
    • 37%will move to 4 day
    • 17% percent will move to 5-day.

In addition,  DeJoy proposes to adjust the service standards for First-Class Packages to enable a greater percentage of that volume to be moved by surface transportation. The Postal Service will also request an advisory opinion from the PRC concerning this proposed change before
it is implemented.

Parcel Market Grows Bigger and Faster

The package market has experienced unprecedented growth and is projected to continue for years to come. It is estimated that the U.S. parcel market to grow 6% to 11% annually from 2020 to 2025. Consumers demand shorter shipping windows as online sales are surging. It was reported that during 2020, shipping customers selected 1-2 day delivery service 72% of the time. Some estimates show that number could go as high as 90% by 2025. Another notable trend is that online shoppers want to buy local.

HOW COVID-19 AFFECTED DELIVERY

The COVID-19 pandemic exacerbated the financial, operational, and service performances of the USPS. Here’s how:

Employee Availability
The cumulative number of employees quarantined reached 19.1%, while  non-career employee turnover rate hit 40%.

Transportation
Lack of airplane and truck capacity, and industry competition for both, disrupted the supply chain and transportation resources particularly during the holiday season

Shift in Mail/Package Composition
A dramatic decline in First Class Mail combined with an unprecedented package volume increase of 40%

The postal service continued to deliver to its 160 million address client base throughout 2020. However, constraints in processing and transportation networks prevented timely and consistent arrival of product.

Package delivery is expected to continue to rise in the coming decade.  While this dynamic will create strong opportunities for the Postal Service and may leverage it to be even
more relevant, it also requires significant changes to its operating model. In the coming months we are anxious to learn what USPMG Louis DeJoy’s 10-year vision for the postal will be.

USPS Gets a Boost From COVID Bill

After passing a series of multi-trillion dollar COVID-relief measures, Congress has finally provided some financial support for the Postal Service with the Consolidated Appropriations Act of 2021.

The bill changes the $10 billion loan to the Postal Service authorized by the CARES Act (enacted March 27, 2020) into a grant.

Also, the STOP Act from October 2018, requires the Postal Service to receive from foreign postal administrations electronic information about the sender, recipient, and contents of 100% of inbound parcels, and transmit to Customs and Border Protection, by December 31, 2020.  Most foreign posts aren’t able to provide that data yet, and the USPS and Customs and Border Protection have encountered other challenges in meeting the deadline. This extends the cut-off date to March 15, 2021.

Pillory of the Postmaster

Earlier this year, newly appointed Postmaster General Louis DeJoy testified in front of a Senate Homeland Security and Governmental Affairs Committee. He was brought to the pillory to answer for changes made to the USPS that included cutting overtime and limiting post office hours, which caused politicians and postal workers across the country to hit a panic button. These very reasonable directives are necessary as DeJoy will attempt to turn-around the, often-misunderstood, health of the US Postal Service.

The USPS is an independent agency of the executive branch of the federal government and is not funded by appropriations. However, it is not independent of rule from the government. Back in 2006, Congress passed a law that guaranteed the entity would continually face a financial battle by passing the Postal Accountability and Enhancement Act. The PAEA requires the Postal Service to pre-fund its post-retirement health care costs, 75 years into the future. This extraordinary financial burden applies to no other federal agency or private corporation.

If the costs of the retiree health care mandate were removed from the USPS financial statements, the Post Office would have reported operating profits in each of the last six years. Many people may be surprised to learn that in the third quarter of fiscal 2020, the Postal Service reported an increase in total revenue of 3.2% compared to the same period last year. Credit goes to the increase of shipping and package delivery due to the COVID-19 pandemic, and we anticipate the trend to continue given the surge in e-commerce. The PAEA retirement mandate created a financial “crisis” that has been used to skew public perception of the postal service and allows politicians to “throw rocks” at those who do understand the real challenges facing the USPS today.

Moving the mail is all about logistics. Making the entity that delivers the mail more efficient and streamlined will decrease delivery time, keep product pricing down, and just might allow the largest transportation fleet in the world to grow into an amazing success story.

For over 30-years USPS leaders have been searching for ways to sort and process mail using more automation and increase the amount of time carriers spend delivering mail. It is simply ludicrous when politicians claim that the closure of a rural post office will delay delivery of prescriptions or imply that five-day delivery is somehow denying citizens their right to receive mail. As with any organization that needs to become current and profitable, we must all keep an open mind on ways the USPS can successfully operate throughout the 2020’s.

After sitting on the Washington DC hot seat, DeJoy suspended many of his controversial changes and promised not to make any more until after the November elections. Rest assured that mail is being delivered and marketing via direct mail remains a viable and money-making way to market. We will keep you abreast of the latest happenings as they unfold.

Louis DeJoy, US Postmaster General. Daylight or Dark for the USPS?

On June 16, 2020, Louis DeJoy, a successful businessman from the private sector and Republican Party fundraiser, was sworn in to serve as the USPS CEO and our nation’s 75th US Postmaster General. DeJoy was appointed in May by a unanimous selection of the USPS Board of Governors.

DeJoy represents a new era of Postmaster General because he is not a career postal employee unlike his predecessors dating back over 19-years. John Potter served from 2001-2011. He was a second generation postal person, and his career spanned over 30-years. Up next was Patrick Donahoe, USPMG from 2011-2015. Donahoe worked at the US Postal service for over 35-years before retirement. And finally, there is Megan Brennan, the first female USPMG. Megan started as a letter carrier in 1986 and grew through the ranks during her 29-year career.

75th USPMG Lois DeJoy

75th USPMG Lois DeJoy

DeJoy’s career prior to the USPS was serving as chairman and CEO of New Breed Logistics. He spent decades in collaboration with the U.S. Postal Service, Boeing, Verizon, other public and private companies to provide supply chain logistics, program management and transportation support. New Breed Logistics was a contractor to the U.S. Postal Service for more than 25 years, supplying logistics support for multiple processing facilities.

In 2014, New Breed merged with XPO Logistics, with DeJoy serving as CEO of XPO Logistics’ supply chain business in the Americas before his retirement in December 2015. He then joined the company’s board of directors where he served until 2018.

To some, Mr DeJoy is expected to be in alignment with the current administration because of his political background and affiliations, but for right now, we don’t know.  The postal unions are likely to be leery of him because of his political background and because he’s an outsider. The unions are unlikely to give him any slack, and will test his ability to deal with organized labor.

His biggest challenge will be dealing with the mailing industry, the businesses who bring the USPS’ lion’s share of revenue, and whose support he needs. Since Amazon is one of the USPS best clients, the tumultuous relationship between Trump and Bezos may have a determining factor on future policy for the USPS. Mr. DeJoy has donated over $300,000 towards the president’s re-election campaign since January of this year.

In the meantime, it is unclear what direction Mr. DeJoy will take the US Postal or what his long-term vision is for the struggling entity. We will keep you abreast of progress as it unfolds which should be unveiled by August.

 

 

USPS Robotic Arm Patent Approved

In August, the USPS was granted a patent for a sorting robot intended to work inside a delivery truck’s freight bay while making deliveries.

The robot will grasp items and move them between storage bins, grouping mail and packages together to be delivered to the same address and shrink wrapping them.

It is suggested that the robotic arm would be able to pass items through a window from the freight bay into the cab of a delivery vehicle to the driver for delivery, and one or more robotic arms could be used in a single vehicle.

The robot outlined in the patent is not complicated. The arm would have some dexterity, commonly seen in today’s manufacturing environment already, but it could replace some of the work generally performed by humans. Most mail and parcels come to a local post office presorted by zip code but must be further grouped by route and address from there. Performing the final phase of this sorting while driving to the delivery point, could cut down on delivery time and labor.

Just because a patent is granted does not mean a technology will ever see the light of day. However, labor has been a source of financial strain for the USPS, so technological solutions are being considered with more weight than in previous times.

The patent states that current methods of delivery are expensive, at least in part due to labor costs. Methods and systems to reduce the human workload along a delivery route are needed to reduce the cost.