Tuesday, January 19, 2016

USPS Backing Down on Saturday Mail Delivery

Postal officials are ready to raise the white flag in their six-year battle to end Saturday delivery of letters and flat mail.

Postal-reform legislation with broad-based support is gradually taking shape in Congress, Deputy Postmaster General Ron Stroman told last week's meeting of the Mailers Technical Advisory Council (MTAC), according to PostCom Bulletin.

"In response to question as to what the USPS has compromised on in the legislative discussions with its stakeholders, Stroman said that 5-day delivery was one of the things the USPS dropped and that other things that used to be on its list are no longer there," said the bulletin, which is only available to members of the multi-industry Association for Postal Commerce (PostCom).

Congress members made it clear that getting approval for five-day delivery was "a politically difficult hurdle to overcome," the Bulletin quoted Stroman as saying. Postal officials dropped their Saturday plan in hopes of getting what they really need from Congress -- reform of so-called "prefunding" of retiree health benefits and of postal pensions.

In March 2010, the U.S. Postal Service released its Action Plan for the Future that called for ending Saturday deliveries, along with several other changes intended to prevent the agency from going bankrupt. Dropping Saturday deliveries would add $2 billion annually to the USPS's bottom line, postal officials claimed, though critics charged it was underestimating potential revenue losses.

Responding to concerns about delivery delays for critical items like mail-order pharmaceuticals, postal officials relented and said package delivery would continue on Saturdays. But Congress still didn't bite and continued to include a six-day delivery requirement in its annual budget.

The boom in e-commerce-related mail, including Sunday delivery of Amazon packages, has made curtailment of Saturday delivery an even harder sell. 

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Thursday, January 7, 2016

Holiday Shipping Boosted USPS Overtime

U.S. Postal Service employees were unusually busy during late December, which apparently confirms projections that the agency's package business experienced dramatic growth during the holidays.

In the pay period from Dec. 13 to Dec. 26, overtime increased 15% over the same period last year, while total workhours were up more than 6%, according to a USPS report released this week.

The typical postal worker put in more than 8 hours of overtime per week during that period. For several groups of employees – notably mailhandlers, vehicle service drivers, and city carrier assistants – the average was more like 12 hours.

Initial reports suggest that U.S. e-commerce-related shipments were up 20% in the busy Black Friday-to-Christmas period versus 2014, with the USPS taking a larger share of the growing pie.

“Shipping and package” services still account for less than one-fourth of the USPS’s revenue. But rapid growth in those labor-intensive offerings, such as Priority Mail and Parcel Select, is shaking up an organization that had become accustomed to shrinking volumes and drastic workforce reductions.

During the last quarter of calendar year 2015, overtime was 9.5% higher than a year earlier, with total workhours up 2.6%. The agency ended December with 652,000 employees – 11,000 more than it had a year ago – with the ranks of clerks and postal support employees (PSEs) seeing the biggest gains.

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Saturday, January 2, 2016

Report Predicts Major USPS Downsizing - But Is It on Target?

Priority Mail boom is keeping letter carriers busy.
Here we go again: Yet another government study has spurred news stories about how the U.S. Postal Service is on the verge of massive downsizing.

“The next decade isn't expected to be kind to postal worker employment,” stated U.S. News & World Report recently, based on a new Bureau of Labor Statistics study. The postal workforce “is expected to contract by 165,000” from 2014 to 2024.

Reports like that don’t help the Postal Service’s efforts to recruit new employees. Many of the agency's 100,000-plus annual new hires work long hours at low pay with no benefits in hopes of snagging a coveted career USPS position. That doesn't sound like a very promising career path -- if the BLS is correct.

But it looks as if the report is based on old data and outdated assumptions.

Contrast BLS’s prediction with a statement this week in USPS’s annual report to Congress: “The Postal Service increased the number of career employees by approximately 4,000 in FY2015, compared to the year before.” The number of non-career employees also rose slightly.

The growth trend is continuing in FY2016, which began Oct. 1. The postal workforce has risen about 2% -- more than 12,000 employees – since a year ago. Postal officials aren’t planning any major job reductions this year and seem to have backed off of earlier plans to implement significant cuts in the coming years.

Still, 2024 is a long way off. And the Postal Service shed more than 280,000 workers from 2000 to 2013, so the kind of cuts predicted by the BLS are not unprecedented. So let’s take a look at why the agency is predicting that the postal workforce is about to shrink again:

After declining 38% from 2000-2013, USPS employment has leveled out.
“Overall employment of postal service workers is projected to decline 28 percent from 2014 to 2024. Automated sorting systems, cluster mailboxes, and tight budgets will adversely affect employment.”

Sorry, BLS, automated sorting is old news and seems unlikely to yield much in the way of future productivity gains. Opposition from many corners means that a shift to cluster mailboxes will proceed at a snail’s pace. And tight USPS budgets are nothing new.

“Employment of postal service clerks is projected to decline 26 percent from 2014 to 2024. Employment may be adversely affected by the decline in First-Class Mail volume due to increasing use of automated bill pay and email.” Wrong again. The number of postal clerks actually rose more than 5% in FY2015, as the dramatic outflow of First-Class Mail volumes slowed to a trickle. How much more impact can email have when it’s already made the personal letter nearly obsolete?

More BS from the BLS
“Employment of postal service mail carriers is projected to decline 26 percent [from 297,000 to 219,000] from 2014 to 2024. Employment may be adversely affected by the use of automated “delivery point sequencing” systems that sort letter mail directly. This reduces the amount of time that carriers spend sorting, allowing them to spend more time on the streets delivering mail.”

Again, old news: Delivery-point sequencing of virtually all letters has been in place for several years, so it’s not likely to cause any more job cuts. And DPS for flat mail, in the form of the Flats Sequencing System, has been a major disappointment. The numbers of both career letter carriers and non-career city carrier assistants inched up during FY2015, the USPS told Congress this week.

The BLS wisely hedged its prediction about letter carriers: “The post office is playing a greater role in the delivery of goods purchased online. An increase in the number of deliverable packages as a result of e-commerce may slow the rate of employment decline for carriers.”

That’s an understatement: Largely because of a 14% increase in the USPS’s “shipping and packages services,” the numbers of both career and non-career letter carriers actually inched up during FY2015.

USPS’s strong growth for labor-intensive products like Parcel Select and Priority Mail shows no signs of abating. That, coupled with only minimal decreases in traditional letter mail, means that the Postal Service is unlikely to do much downsizing during the next few years.

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Tuesday, December 15, 2015

USPS Is Gaining on FedEx and UPS in E-commerce Shipping



UPS chart shows commercial Priority Mail growth after rate cut.


The U.S. Postal Service is using low rates to muscle aside its private competitors and grab nearly all the growth in e-commerce-related shipments, according to a UPS analysis.

A round of steep, unfair price cuts in September 2014 has enabled the USPS to grab market share from UPS and FedEx, UPS charged in a recent filing with the Postal Regulatory Commission.

“The Postal Service reduced rates as much as 58% for packages shipping to zones 1-5 and weighing between six and twenty pounds, the rate cells most popular for the burgeoning e-commerce market. These deep discounts brought Priority Mail rates for the largest customers substantially below rates set by private competitors in the market.”

“Before the price cuts, the Postal Service’s market growth rate had stalled, barely registering above 0%, while UPS and FedEx were exhibiting healthy growth rates. After the Postal Service’s price cuts, the growth of UPS and FedEx Ground slowed, and the Postal Service’s commercial growth rates quickly became 10 to 20 times that of its private competitors.”

USPS’s price increases for Priority Mail next month won’t solve the problem, UPS says: “Despite an announced average increase of 9.4% for Commercial Base prices in 2016, for example, discounts ranging from 7% to 53% below pre-September 2014 rates remain for packages weighing between six and twenty pounds.”

“The Postal Service’s ability to set artificially low rates,” says UPS, also shows up in the Parcel Select rates the USPS charges the likes of Amazon, UPS, and FedEx for “last-mile delivery.”

“The Postal Service is leveraging its network to such a degree that UPS and other carriers use Parcel Select to compete because they are not able to deliver at or below the prices the Postal Service charges for this service,” UPS wrote. “Over the last year, Parcel Select experienced 26.5% volume growth, compared to 2.8% and 2.1% growth for UPS Ground and FedEx Ground, respectively.”

UPS claims that the Postal Service’s commercial parcel rates are priced too low to cover its costs, which means USPS’s e-commerce growth is being built “on the backs” of traditional mail customers: “The Postal Service is charging higher prices to captive mailers, while reducing service standards, in order to help fund its aggressive expansion into competitive product markets.”

The Postal Service counters that its methods are fair, legal, and backed by research, while UPS’s proposal is “based upon a set of ad hoc, loosely-constructed, cost measures.”

eCommerce Bytes recently provided an in-depth look at the UPS-USPS debate and what it could mean for parcel shippers.

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