on Jun 1st, 2009 in Mail Processing & Transportation | 17 comments
While the Postal Service leads the world in processing letter mail, private sector competitors have a higher market share for parcels. And while letter volumes are decreasing, parcel volumes are projected to increase. Although parcels represent less than 2 percent of mail volumes, the Postal Service parcel business makes up 13 percent of the market share in the U.S. The chart on the left depicts the market share for parcels. Just how do parcel industry giants keep their costs down and productivity up, even in today’s economic environment? And, is there anything that the Postal Service can learn from them? After visiting operations of the two parcel industry giants, the OIG learned that although the Postal Service has many things in common with the industry giants, it could also learn a few things. The benchmarked entities and the Postal Service process parcels both manually and use automation. However, the following best practices came to light:
  • Employees are predominantly part-time, often working four-hour shifts with staggered start times to accommodate volume loads.
  • Employees are moved among tasks quickly to meet the needs of changing volumes, including crossing-crafts between unloading, scanning, processing, and even facility maintenance.
  • Parcels move quickly through the facilities, generally on conveyor belts, and are not staged in transport equipment in waiting areas or moved around between pieces of processing equipment manually.

Which of the best practices listed above do you think would most positively impact the cost of handling parcels in our processing centers if the Postal Service implemented them? This blog is hosted by the OIG's Network Optimization directorate.


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Right-size network--take excess facility capacity out of the system, take inefficient transportation out of the system.

Hi, Anonymous. Good observation; right-sizing the network would result in higher volume densities at consolidated facilities, which would in turn increase productivity and save Postal Service dollars. Thank you for your comment

I worked for UPS as an hourly and in management. I've worked for the USPS as an EAS.
Work hour flexibility and having employees perform work across crafts would increase productivity. However, keeping the parcels moving on belts instead of using wheeled containers would exponentially increase productivity and sorting capacity. Let's try installing moving belts in one small sorting facility. Let's not worry for testing about scanners and diverting packages. Our folks can learn sort schemes and be put in positions as human scanners and diverters (instead of pushing APCs. Nuttings, etc.) USPS management would have to be in the operation and manage it actively all the while work is being done. That one test would give us an idea of how much we can increase the speed of the sort and increase the volume of packages through the system. I believe the USPS still has small parcel sorters in use that allow craft to control the productivity by allowing them to stop the belt repeatedly. Let's measure and time study to get the optimum continuous speed, provide an emergency shut off, and manage the system so that stoppages are made for emergencies only. Instead of stopping the belt to face the packages, the mail handler who "dumps" the mail on the belt could face each package and the clerk in the farthest position could come forward and help face. The helper facer position could be rotated.

Thank you, Anonymous.


My view point is from maintenance and on several ocassions while working on a piece of equipment, viewing the inefficiencey of parcel machine clerks, reading magazines or just sitting idle in between keying parcels onto high speed induction units. Many will key 10 packages and then sit idle for up to 2 minutes while their supervisors do absolutely nothing to end this wasteful practice. I would recommend issuing a copy of the one minute manager to every supervisor in mail processing, then hold them accountable when their personnel are caught holding up production in this manner. Of course what do I know, I only was a Production Superintendant in the military for the last 8 years of my 20 years service.

I don't understand why USPS built out the BMC infrastructure in the '70s to handle parcels, only to give up on the parcel business right as the internet and e-commerce were taking off. Someone had the right idea...but we failed to execute. Does anyone know why the USPS let FedEx and UPS take 87% of the market? Is there a legal reason? Lobbies? Political? Imagine having only 25% of that business...we would be scrambling to find bodies to process and deliver rather than offering a VERA.

The short answer would probably be that very few people realized the impact the internet would have on First-Class Mail, even into the late 80's. FCM, although declining, still represents a significant portion of USPS volumes. The only room for the "new guys" to even get a foot hold was in the parcel moving business when they were gearing up in the 1970's and 1980's. Opportunity lies now in on-line shopping and resultant parcel shipping/reverse logistics, ironically also a result of our internet-dependent culture.

None of that is news...so back to "how can we cut costs and increase parcel processing productivity now?" Any ideas?

Unions have won many battles but are at risk of losing the war. The USPS is headed the way of Detroit and the US Auto industry if it cannot get a better handle on labor costs. I've seen automation turned off because "the contract states" x number or % of mail processing employees need to be utilized during a given tour in a plant. How can a business compete like this? The old game of pitting craft against management needs to change and we need a partnership working toward the same goal if the USPS is to survive. By trying to save (or create) as many union members as possible, the Unions run the risk of sending them all to the unemployment line. A dose of perspective and reality is called for IMHO.

although the poster above has it nailed as to why we didnt get a good head start on parcels, when in the world are we going to stop wasting time and have end to end scanning? i think that ALONE would grab 5% or more market share, i can guarantee the one thing that kept people on the fence during the 90/90 blitz was the pure face they had no consistency or visibility as to where their packages are after then send them off. why cant the carriers do a simple scan as picked up when they in face pick them up? as i have said before that would help so many people that ship and receive things from ebay and many others.

also while i understand the need for space for the new fss machines, why in the world dont we have large machines like ups and fedex have that sort and scan packages, at many thousands per hour, requiring very few people, getting a machine say at one bmc like ups has could easily get rid of hundreds of people if implemented correctly, as you would need a dumper and a few to change out the hampers or cages, no keyers, nobody reading magazines, all machine, and this would easily add end to end scanning, also allowing the diversion of outgoing from many p&dcs all into one bmc to scan, sort and dispatch back to each ao or back to the p&dcs. why arent we doing this?

ncjosh, thanks for your comments on visibility and automation.

The Postal Regulatory Commission has approved the Summer Sale, so it looks as though it will happen.

Having Supervisors that actually know the operation as well as the people they are
supervising would help. I like the idea of a working supervisor. Never have liked
the idea they cannot be a part of the operation. I have seen the work ethic decline
because no one is held accountable. The customer is a distant concept to many

I would like to see that while parcels are being moved around on the way to delivery, that someone, somewhere, is checking to be sure postage is correct on these items. I see postage due items everyday, and its a fight in my office to get the clerks to mark them up, and management wont pay the carrier to weigh and rate, so who is responsible? I agree with the poster above too, about scanning at pick-up, and people want to be able to track their package as it moves through the system.

Oh! And we should get a definition on who the "customer" actually is. Is it the person that we are delivering to? John Q Public? Or is it the mass mailers and printing houses? Seems there is a real discrepancy when it comes to the use of the term "Customer"

If everyone stopped smoking at the post office, the
company would save million$ of Greenbacks in health
& welfare alone. Hundreds of thousands of work hours
could be saved. And in my humble estimate, manager
performance would be increased by 22%/per day.
ie. they could help do some work instead of wasting
time smoking. Sick leave could nearly be eliminated
saving more ca$h. And my health would be better because
I wouldn't have to work extra to make up the time
they lose on smoke breaks, and my health would
improve because I won't be breathing 2nd hand & 3rd hand smoke.

USPS would have many more parcels today if Potter had not killed Expedited & Package Services in 2002. They were on a roll and gaining parcel market share for USPS. What a shame. The BMCs could handle many more parcels today with no increase in labor. The machines are efficient and most of the workers are good. It would more efficient just by virtue of the higher volume.

A bump on my Christmas card. A little, next-to-nothing bump makes my card non-machinable. It was returned to me a week later, non-machinable, requires 20 additional cents. For a bump. USPS machinery is not capable of dealing with this nearly imperceivable, no thicker than a dime, bump on the card. Did USPS let the general public know this or just let us all stumble into it. Disgusted. I'll us UPS, no bump problem there.