• on May 11th, 2015 in Ideas Worth Exploring | 3 comments

    The story goes that Alibaba founder Jack Ma chose his company’s name for two reasons: He wanted to be ahead of Amazon alphabetically and he wanted a global-sounding name. It didn’t hurt that some people also associated the word Alibaba with “hidden treasure” – recalling the most famous story from The Arabian Nights.

    Alibaba is China’s giant ecommerce platform that is now taking on the globe. Its September 2014 initial public offering in the United States was the largest ever, and Ma has signaled his interest in expanding here.

    Unlike Amazon, Alibaba doesn’t actually sell any goods; rather, it connects buyers and sellers. Its three main websites are Alibaba.com, which links Chinese exporters with companies around the world; Taobao.com, China’s biggest shopping site; and Tmall.com, a website of select branded goods targeted primarily to China’s middle class. Alibaba also offers a Paypal-like service called alipay.com.

    Some experts predict Alibaba could soon be the largest retail platform in the world. With 330 million active buyers, it is the fastest-growing ecommerce company in the fastest growing market in the world.

    So, what does all of this mean for the logistics and delivery markets? Well, a lot. Postal operators and private carriers are all trying to get in on Alibaba’s action. Last year, Alibaba bought a minority interest in Singapore Post and it signed an agreement with China Post to share facilities and resources to beef up delivery in China, especially in remote areas. Royal Mail recently announced it was joining Tmall.com to boost trade for its overseas parcels business.

    And Amazon, not one to reject any opportunity to expand its reach, is also joining the party. It just opened a store on Tmall.com.

    So, where might the U.S Postal Service fit in here? Do you see an opportunity for the Postal Service to partner with Alibaba? And what if Alibaba expands aggressively in the United States? How could the Postal Service position itself to be a player in that expansion?

     

  • on Jul 28th, 2014 in Mail Processing & Transportation | 97 comments

    What should the postal vehicle of the future look like? The U.S. Postal Service recently put that question to its carriers and vehicle maintenance personnel and is currently reviewing the feedback. It’s an important question because the delivery fleet is aging and the Postal Service needs to quickly replace it. In fact, our recent audit on the topic found the current fleet can only meet delivery needs through fiscal year 2017 – and that assumes no unexpected decrease in vehicle inventory or increase in the number of motorized routes.

    About 142,000 long-life vehicles (LLVs) out of the 190,000-vehicle total delivery fleet are near or have exceeded their expected service life. Replacing these aging vehicles is daunting, particularly given the Postal Service’s financial constraints.

    But fleet replacement isn’t just a major challenge; it’s also a big opportunity. Because the LLVs are up to 27 years old, they aren’t as fuel efficient as newer models. They also lack many of the safety features now considered standard for vehicle fleets, such as back-up cameras, front airbags, and anti-lock brakes. The next generation of vehicles can incorporate the latest safety and environmental bells and whistles, which will protect employees, cut down on fuel costs, and help the Postal Service meet its sustainability goals. Also, given the growth in packages, new vehicle designs could address the challenges of larger and irregularly shaped items.

    The Postal Service has a short- and long-term vehicle fleet acquisition strategy, but we found the plan lacks details such as vehicle specifications and green technology features. Also, despite 3 years of effort, the plan has not been approved or fully funded due primarily to the Postal Service’s lack of capital. Given the urgent need to upgrade the fleet, we are encouraging the Postal Service to make some incremental purchases while formalizing a more specific long-term plan for the next generation of LLVs.

    What are your thoughts on future postal vehicles? What should they look like? What safety and environmental features or other technologies would you like the Postal Service to add? 

  • on Jul 21st, 2014 in Delivery & Collection | 12 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?

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