Entries Posted in Delivery & Collection

  • The Postal Service and Its Obligation

    on Nov 17th, 2014 in Delivery & Collection | 20 comments

    Most people probably don’t know what a universal service obligation is, much less that the Postal Service is bound by one. But a USO, as it’s commonly called, is essential to ensuring that everyone receives the mail service they need. And the Postal Service’s USO is long overdue for updating and clarification, as you can see in our new white paper, Guiding Principles for a New Universal Service Obligation.

    In general, a USO is a collection of requirements that ensure everyone in the country receives a minimum level of mail service at a reasonable price. The Postal Service’s USO includes a requirement to provide mail services to everyone, regardless of where they live, and for at least one mail product, at a uniform price. Other features of the USO are understood to include frequency of delivery, a range of product offerings, access to mail services, and quality of service. For instance, delivering your mail 6 days a week is part of the USO.

    But frequency of delivery is the only obligation that is clearly articulated in the Postal Service’s current USO. In fact, the USO is based on a hodgepodge of various legal requirements and regulations that, in most cases, provide only broad guidance. For example, while public access to postal services is another important component of the USO, there’s nothing about how many access points, such as collection boxes or post offices, must exist.

    The big question: What exact services do policy makers and the American public (both senders and receivers of the mail) now need the Postal Service to provide? Our paper provides six guidelines the Postal Service and its many stakeholders can use to frame the discussion about the USO and try to answer that basic question. For instance, we say a new USO should be clearly defined while also being flexible enough to adapt to future changes.

    Do you agree the USO should be updated to reflect the changing nature of communications? How have your mail needs changed in the last decade? Do we still need 6-day-a-week delivery? How do you think the American public would benefit from a more clearly defined USO that included, for example, a minimum requirement for the number of access points? 

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  • Ramping Up for the Holiday Shipping Season

    on Nov 3rd, 2014 in Delivery & Collection | 10 comments

    For the major express companies, preparation for the next holiday season started right after the last one ended. If you’re one of the many Americans whose packages arrived after Santa did last year, you are undoubtedly glad to hear this. In 2013, an unexpected surge in online orders, combined with winter storms and sparse airplane capacity, resulted in FedEx and UPS missing deliveries for Christmas.

    While online retailers certainly share some of the blame – they promised more than was reasonable – UPS and FedEx are investing heavily this year to avoid a repeat of last year. For the first time, UPS will operate a full domestic air and ground network on the day after Thanksgiving (not just its air network). It’s also adding 95,000 seasonal workers and 6,000 package delivery cars, plus increasing its available aircraft. FedEx recently announced a sharp increase in its number of seasonal workers.

    Retailers are also making some changes, including in-store pick-up options and better “distributive fulfillment” efforts, which lets them ship from their brick-and-mortar stores rather than distribution centers. These offerings reduce the distances packages travel.

    The U.S. Postal Service came out of last year’s holiday season smelling sweet. A Business Week article called the Postal Service’s performance stellar, noting that it made adjustments throughout December – including adding deliveries on three Sundays in the month – to accommodate package surges. Of course, the Postal Service doesn’t operate its own fleet of airplanes like UPS and FedEx. So it’s not necessarily the carrier of choice for overnight deliveries.

    Still, many pundits believe the Postal Service could win some new customers this holiday season due to its strong performance last year. The Postmaster General recently told USA Today the Postal Service expects an 8 percent increase in packages over last year. Further, the Postal Service’s recent lowering of commercial Priority Mail prices may have already convinced some companies to switch. However, unpredictable weather close to Christmas and increased volume could pose challenges similar to last year. Would a less-than-stellar holiday performance from the Postal Service hurt its potential in the coveted commercial package market? How can the Postal Service prepare for these potential challenges? Will the changes retailers are making help? 

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  • Totes to Your Door

    on Oct 5th, 2014 in Delivery & Collection | 3 comments

    Pretty soon, Americans will have no reason to leave their homes. We can order everything online and have it delivered to our doors – even groceries. That’s good news for package delivery companies, if not for Americans’ Vitamin D intake.

    Attention has centered lately on grocery delivery, with the U.S. Postal Service unveiling its plans to get in the game. The Postal Service recently asked the Postal Regulatory Commission to let it expand its test with Amazon into a broader 2-year test available to other retailers. Under the test, retailers would drop off their grocery orders in color-schemed tote bags at local post offices between 1:30 a.m. and 2:30 a.m. Postal officials would map out the day’s deliveries and then city carrier assistants would load the trucks and deliver the totes between 3 a.m. and 7 a.m., leaving them at front doors. The carriers would use iPhones to scan for tracking purposes.

    Given Americans’ love affair with food, grocery delivery seems like a safe bet. But it’s a fragmented market and some players already have a foothold in certain cities. Peapod, Instacart, and Fresh Direct are fairly well-established in some locations and work with many of the big name grocery stores. Walmart with its Walmart to Go and Safeway are testing delivery of groceries from their own stores in select cities.

    Still the Postal Service, with its local presence and national reach, brings expertise as a delivery company to the table. Its ability to “dynamically route” the deliveries each day based on supply also helps. That is, it can adjust deliveries and routes as needed to achieve the greatest route density, which is critical to success. Further, this service would allow the Postal Service to use delivery vehicles when they normally sit idle, although extra wear and tear on its aging fleet could prove problematic.

    If the Postal Service gets the pricing right, it could entice some retailers to give the service a try. But pricing is a big question: Can the Postal Service price it right? The market test should help answer some other questions: Will bags of groceries left unattended in the early morning hours be susceptible to theft? Has the Postal Service waited too long to enter the market? Or does its delivery expertise and presence in every community give the Postal Service a competitive advantage? 

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