• on Jul 21st, 2014 in Delivery & Collection | 2 comments

    The Internet may have eaten into the U.S. Postal Service’s First-Class Mail volume and revenue, but digital devotion does bring good news, too. Package shipping is on the rise, due in large part to the ever-increasing popularity of online shopping. The Postal Service’s future could brighten considerably because of this expanding market, but is the Postal Service prepared to compete effectively in it?

    Our new white paper, Package Services: Get Ready, Set, Grow! , essentially probes that question and comes up with several intriguing findings. As our auditors have noted, the Postal Service has done a good job of managing package growth in terms of mail volume and workhours. But it could do more. And it will have to, not only because UPS and FedEx are offering modernized, end-to-end products and services in response to customer demand, but also because some e-tailers, like Amazon, are expanding to offer their own shipping and delivery options.

    Last year American businesses and consumers spent more than $68 billion to ship packages domestically; the Postal Service accounted for almost two-fifths of the total volume but less than one-fifth of the total revenue. That worked out to an average $3.37 of revenue per package for the Postal Service. UPS’s and FedEx’s average revenue per piece for their domestic packages were $9.39 and $9.70, respectively. The main reasons for the disparity? The Postal Service excels in lightweight and last-mile package delivery, which generate comparatively lower revenues.

    The white paper says the Postal Service could increase its revenue-per-package average by adding new services that customers want. For example:

    • Improving tracking service and package-return service
    • Offering email and text alerts to parcel senders and recipients
    • Specifying time-windows for delivery

    What do you think? How could the Postal Service expand its dominance in lightweight packages to higher-revenue packages? What package services would make you use the Postal Service more than you do now? How much online shopping do you do compared to in-store shopping? 

  • on Dec 30th, 2013 in Delivery & Collection | 23 comments

    The 2013 holiday season turned out to be a particularly eventful one for e-tailers and the shippers that deliver all those packages to your door.

    Factors like fewer than average shopping days between Thanksgiving and Christmas and an increasing comfort level with online buying helped push holiday e-commerce up significantly. In fact, demand exceeded expectations and stressed shippers’ capacity, causing some late deliveries of their goods.  

    Package delivery is clearly a growth industry and the Postal Service expects its piece of that business to rise 6 to 7 percent annually through fiscal year 2017. But is the Postal Service ready for all these packages? Can it meet the growing demand, or is it hampered by a delivery infrastructure that is largely geared toward letters and flats? We recently took a look at the issue and the results were mixed.

    Our audit report, Readiness for Package Growth – Delivery Operations, found the Postal Service has done a good job of managing package growth in terms of mail volume and workhours. But it could make some changes to better handle future increases. For example, to-the-door delivery works well but curbside mailboxes were primarily designed for letters, flats, and small parcels, and they can’t easily accommodate multiple or large packages. We suggested the Postal Service look at modifying cluster boxes to accommodate more packages.

    We also encouraged the Postal Service to explore investing in shelving space on delivery vehicles to accommodate packages and to continue to develop an advanced dynamic routing system. Dynamic routing analyzes individual addresses to tell the carrier how to get to them more quickly. The tool takes into consideration things like traffic congestion and left-hand turns, both of which can eat up time and fuel. These and other steps outlined in the report should help the Postal Service expand services and increase revenue to meet growing customer demand.

    So, what was your experience over the holidays? Were you among the many Americans who bought more gifts online than in previous years? Were your delivery services reliable or did any part of the experience discourage you from future online buying? What changes would you like to see in delivery and returns?

  • on Dec 9th, 2013 in Ideas Worth Exploring | 4 comments

    Today’s consumers are a demanding bunch – expecting to get what they want precisely when and where they want it.

    These changing expectations are putting the pressure on both brick and mortar retailers as well as online retailers. Pressure grows to deliver goods faster, cheaper, and with more flexibility. Now, customers expect free shipping and overnight delivery or, in some cities, same-day delivery.

    It seems same-day delivery might not be fast enough for some. Amazon.com is toying with the idea of delivering packages within 30 minutes – via drone.

    In an interview on a recent CBS “60 Minutes” news program, Amazon.com CEO Jeff Bezos discussed his Prime Air unmanned aircrafts, which he claims carry packages up to 5 pounds – the weight of most parcels Amazon.com delivers – and have a range of about 10 miles. This could make them viable in more densely populated areas. Bezos thinks he could get this service up and running in about 5 years.

    So is all this drone delivery talk just pie in the sky or a potential delivery path worth considering?

    The technology is getting there. It’s already being tested in other parts of the world. In Australia, a textbook rental company, Zookal, plans to use drones to deliver textbooks to students as early as March 2014. Meanwhile, Silicon Valley startup Matternet is testing drone delivery in Haiti and the Dominican Republic and sees the potential for using these small, electric crafts to deliver goods in populated areas where they can make multiple deliveries within their limited range of a few miles.

    But it’s likely to be some time before U.S. skies look like something out of “Star Wars,” with thousands of small, autonomous aircrafts zipping around and dropping packages at our doorsteps. The Federal Aviation Administration (FAA) isn’t moving too quickly to open the skies for commercial drone purposes, and understandably so. The thought of unmanned vehicles flying in areas with lots of air traffic raises significant safety concerns.

    Still, innovation is all about experimenting. Many people in the late 19th century thought the light bulb would never catch on. What are your thoughts on these delivery drones? Is driver-free, aerial delivery the answer to the growing demands of consumers? Is this a feasible option for the Postal Service in the coming years? Or could it be more like the Postal Service’s ill-fated test of “rocket mail” from the late 1950s where a cruise missile loaded with mail launched from a submarine? That experiment didn’t gain traction. 

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