"The future will be a seven-day package world and a five-day mail world," a USA Today article quoted Donahoe as saying.
In 2010, the U.S. Postal Service released its “action plan for the future” that called for elimination of Saturday delivery, with no exceptions. But, responding to concerns about delayed deliveries of prescriptions and other vital parcels, postal officials acquiesced and changed their plan to include Saturday delivery of packages.
No one – not even the most ardent advocates of postal service or even the postal unions – was talking about adding Sunday delivery of any kind.
But in recent months, weekend delivery of parcels has gone from obligation to opportunity. The Postal Service is delivering Amazon packages in a growing number of urban markets. In San Francisco, it is testing same-day, seven-days-a-week delivery for multiple retailers and today added early-morning grocery deliveries to its test offerings in that city.
Donahoe’s comment to the newspaper suggests that the long-term plan is for Sunday to become just another day of delivery as far as parcels are concerned.
Why the change of heart?
Why are postal executives who wanted to eliminate a day of parcel delivery barely four years ago now trying to add a day?
They are seeing huge potential in the e-commerce boom, which is fueling rapid growth in business-to-residence deliveries. And they are recognizing where the much-maligned USPS has competitive advantages over its private competitors.
United Parcel Service, for example, is seeing 60+% annual growth in UPS SurePost, its low-priced option that turns packages over to the Postal Service for final delivery. FedEx’s SmartPost similarly relies on the Postal Service to for “the last mile” delivery to residential customers. Neither company can deliver to residential customers as efficiently as USPS can.
In a move to cut out those middlemen and grab more of the e-commerce dollars, the Postal Service recently reduced Priority Mail parcel rates for big mailers by as much as 55%.
Changes in its workforce have also enabled USPS to reduce its delivery costs. The average hourly rate for the city-carrier force, for example, dropped 5% in the past year as the Postal Service increasingly relied on city carrier assistants (CCAs) and other non-career employees. The agency plans to have only CCAs delivering groceries in the San Francisco test.
What’s also changing is the Postal Service’s strategic focus. The same electronic media that are cutting into USPS’s traditional bread and butter – delivering letters – are also creating profitable growth opportunities in the package business. That’s why it wants to give short shrift to traditional mail while expanding service in the package realm.
Unlike letter delivery, USPS doesn’t have a monopoly in the parcel world. But its massive delivery network and unique ability to reach every address in the country every day of the week may give it a virtual monopoly in certain types of package delivery.
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