Saturday, November 1, 2014

Donahoe Signals Change of Heart on Weekend Deliveries

Postmaster General Patrick Donahoe made a statement this week demonstrating that postal executives’ views about weekend delivery of packages have changed significantly in the past four years.

"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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AL said...

As a 28yr employee, after trying to keep up with all tht is going on. Do u thnk the PMG is ,OR what do u thnk he is up to? me personally thnk he is trying to do the right thing to keep us viable..not sure though. what is ur thought

Anonymous said...

When they were SLASHING jobs as far back as 5 years ago I was a LONE voice SCREAMING against the PMG's claims that the internet was hurting our business. It was a "no brainer" that Internet E-Commerce was CREATING new and hugely profitable business for the Post Office in terms of package and parcel delivery. The Postal Service's delivering of FED EX and UPS packages is no "new thing" either. It's something that has been taking place FOREVER,simply because FED EX and UPS don't have the transportation network in place to deliver to EVERY home,EVERY door in the U.S. all week long! So I say to the PMG and all the OTHER Labor destroying entities out there: Stop pretending this is all new and innovative stuff. You have a CONSTITUTIONAL obligation, Mr. PMG, to deliver for the citizens of this nation. Stop reducing Post Office hours of operation. Hire MORE Veterans (That's a WHOLE other subject - they don't want to hire Veterans because Veterans have clout with the Public and Politicians.)

Anonymous said...

PMG DONAHOE has one agenda; that is to privatize the USPS. Then ; as the Washington Examiner reported in 2010; he will get his big bonus.

Anonymous said...

if 7 days works on packages may aswell deliver every thing

Anonymous said...

Get your facts straight. He has never called for eliminating ALL delivery on Saturday--only the first class letters because letter mail is declining. Parcel mail is growing due to the internet, which is why they are talking about expanding to 6 or 7-day delivery for parcels. It all makes good sense in terms of keeping the business viable.

D. Eadward Tree said...

Regarding "get your facts straight": USPS's original 2010 action plan said, "The Postal Service would move to a 5-day
per week schedule if given the legislative changes required to adjust delivery frequency, thus eliminating delivery on Saturday, the lowest volume day." There was originally no exception for parcels; that came later.

Anonymous said...

OK, UPS and Fed Ex are cherry picking the rates and the PMG is calling this a win? Idiot. If the competitor presents a parcel and the USPS charges them say $3; how can the USPS sort and deliver that item for $3? most of the time they can't. It's quite apparent the USPS is violating the Postal Accountability act by subsidizing the parcel business by slowing service to the Market Dominant products. Now if I were a cataloguer or direct mailer I would like to see the P&L on those numbers....just a gentle suggestion to see where the rats are hiding the cheese.

Troy said...

Woooooo, the comment that said he never wanted to stop saturday package delivery is dead wrong. It was about a year ago when he changed his mind and said he would deliver packages on saturday. That reason was to get 5 day mail delivery. It was a stunt to show congress he was willing to bend and it didn't work. So get your facts straight, he intended to kill all saturday delivery, but only relented so he had a better shot to get rid of mail delivery by adopting a saturday package deliver. Very is to check so try it out buddy.

AL said...

Thnx for comments.It does seem tht the do nothing Congress is going to do nothing Again.HEHE(joke)But? if the were to take care of 3 things(I hav in mind) #1 PRE-FUNDING(obligations)#2 Medicre #3Pricing(setting the correct rate so we make n not lose money) any other thoughts would be welcomed!!

Anonymous said...

Pat Donahue here; thank you slugs, for all your input.

Anonymous said...

i was a cca in massachusetts for over a year and a half. as soon as i heard about sunday delivery i immediately started looking for a new job and quit the usps within a month. i did more work than any "regular" carrier in any office that i was sent to. for 15$ an hour and no benefits they basically are forcing the good ccs's to seek other employment. what a mess