Proposed Postal Service changes to impact final mile performance

The United States Postmaster General Louis DeJoy has testified before Congress several times in the past few months as he tries to make a case for his ten-year plan to reform the Postal Service. DeJoy, whose roots hail from the private sector and with a background in logistics, most recently at XPO in senior leadership, sees the agency’s need to pivot to parcel from the declining number of letters. The Washington Post reports that Americans sent nearly 40 billion fewer pieces of first-class mail in 2020 than they did in 2008.

In our fulfillment operations, we are traditionally platform agnostic for our clients who have already selected their preferred carriers. We follow their direction for final mile choice and receive shipping instructions and generate labels based on their requirements.

The Postal Service was, let’s just say, in the news quite a bit throughout 2020. The on-time delivery rate for first-class mail dropped from 92% in April to a low of nearly 60% during the holidays and in early 2021 has struggled to get back to 80% on time. 

One of his proposals is to lengthen the delivery commitment for first class mail and packages based on distance. In 2020, the agency spent $457 million to fly first class mail, the bulk of which was spent with FedEx ($230 million). For the same time period, the agency spent $314 million on ground. Reliability for air transport plummeted in Q4 of 2020, DeJoy told Congress, and the pivot to more ground is meant to enhance reliability.

For e-Commerce shippers, the concern will be the agency’s plans to increase rates as a source of revenue to offset losses in first-class mail. The Postal Service projects that package volumes will increase 6 – 11% per year through 2025. The combination of products and services offered by both the Post Office and the use of “Smart Post” final mile delivery products by integrators could mean that e-Commerce shippers are paying more to reach mailboxes and porches in this new environment.

Argents’ network of locations is already engineered to be close to where our customers need to ship. From strategic locations in Charleston, Chicago, Tacoma and coming soon to Houston, our clients are within a two-day delivery territory of the overwhelming majority of their recipients. This proximity, coupled with owning and operating our own facilities that connect seamlessly to our international and domestic transportation networks mean that e-Commerce shippers turn to Argents to both utilize and compete with large platform operators and marketplaces.

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