The Postmaster General and Board of Governors announced their "Delivering for America" plan for putting the USPS on a more sustainable path. They project the cot of doing nothing will result in yearly losses of over $5 billion per year and their goal is grow their e-commerce package business.
Delivering For America: At the core of the USPS
The postal service has always provided a critical connection throughout American history. First to facilitate communications (i.e. letters and correspondence) and now as a way to make the physical connection (i.e. parcels and online orders) in our increasingly virtual world.
"The Plans strategic initiatives are designed to reverse a projected $160 billion in losses over the next ten years by achieving break-even operating performance."
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Jet Worldwide helps international online sellers connect directly to the USA via ECCF, CFS, Cross Border and Type 86 entries. In all cases, The USPS is the preferred carrier via Global Direct Entry, parcel select partner or other resellers. Cross Border direct to USPS
USPS Rate Increases?
The plan for price increases were not specially addressed in the plan but it seems a virtual certainty that USPS parcel shipping will be subject to price adjustments. Expect package rate increase requests to the Postal Regulatory Commission. (However, the same can be said for private carriers who are focused on greater margins more than growing volumes).
The plan includes the "effective use of newly acquired and existing pricing authorities..." to help drive revenue growth.
While there is no doubt the changes will be difficult, it is critically important for the USPS to remain as the default option to support all American online businesses and consumers.
Slower USPS Package Delivery?
A key part of the plan is to move a higher percentage of first class mail and packages via truck versus air. While the cost benefit is clear, so too is the certainty of longer transits
"A fully optimized surface and air transportation network – in which a higher percentage of First-Class Mail and FirstClass Package Service are carried on surface transportation, third party long-haul truckers are more integrated and better managed, and integrated logistics systems drive greater performance and efficiency."
Ground transport is certainly the most cost effective way to add capacity needed for the expected average of around 10% growth per year over the next 4 years. USPS plans to invest $19 billion on new vehicles and retail upgrades.
Balancing the need for speed versus lowest cost.
By moving "cubic volume off of aircraft" to trucks, the USPS seeks greater reliability and predictability. But e-commerce specialists are worried about velocity as much as reliability and predicability. But, according to Delivering for America Report, the quality of the air network itself is the cause for much of the recent service disruptions (see chart below).
USPS Goods Transited by Air
- 43 percent of Priority Mail
- 42 percent of First-Class Packages,
- +21 percent of First-Class Mail
A bit slower but with greater reliability and predictability
Cutting costs and increasing reliability is needed. But a key differentiator for e-commerce sellers is speed. Slower delivery will make it harder for "non amazon" e-commerce sellers to compete on speed.
Millions of small and medium online businesses - including eBay sellers -will likely see their transit time increase by 1 to 2 days. The service standards for existing one- and two-day Priority services are expected to stay the same with continued use of airfreight. Over 70% of USPS parcel shippers 1-2 day shipping options and the expectation is that this percentage will grow
The challenge versus Amazon is having not just a low cost but a low cost for faster delivery. The USPS plan seems to involve new faster services but slower standard shipping services.
International Multiple Points of Entry = Faster Delivery
Many expect that the market may shift away from the USPS over time but we feel they will - and should remain - the default option. American business and consumers rely on the USPS to help them connect locally, nationally and internationally.
E-Commerce businesses selling and shipping orders to the USA may be impacted by the new ruling that requires the USPS to transmit advance electronic data to USCBP for parcels.
Faster Clearance = Faster Delivery
If you import goods into the US, contact Jet for help on transmitting advanced data, multiple entry points, and section 321 types of entries (ECCF, CFS, Type 86) to avoid service delays associated with the STOP Act.
Jet Worldwide provides efficient high volume parcel import processes at multiple ports of entry for fast delivery by USPS.
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USPS Delivering for America Report
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