USPS Unveils 10-Year Plan

March 24, 2021


The United States Parcel Service (USPS) unveiled its long-awaited 10-year plan, dubbed "Delivering for America," on Tuesday, March 23. According to the press release, the plan aims to return the organization to financial sustainability and achieve service excellence while maintaining universal six-day mail delivery and expanding seven-day package delivery.

The goal is viewed as a tall order for the organization that has struggled for years with mounting debt and service level delays. The biggest goal facing the USPS will actually be getting buy into this ambitious plan.

The focus areas are:
  • Network – facility upgrades and processing equipment
  • Retail and transportation – Upgrades in USPS' retail lobbies and investments in delivery vehicles
  • Technology upgrades

The postal operator plans to spend $40 billion over the next ten years on these areas while forecasting profitability of $1.7 billion by the fiscal year 2024 (12 month period ending September 30, 2024).

There will be a significant emphasis on parcels throughout this plan. According to the plan, domestic mail revenue declined from $60.6 billion in FY2007 to $38.7 in FY2020, a 36% decline or an average annual decline of 2.8%, including a drop of more than 8% during the COVID-19 pandemic in 2020.

In terms of volumes, mail volumes have declined by 42% since FY2007, a decline of about 3% per year. During the FY2020 pandemic year alone, mail volume declined by 11%.

Meanwhile, package volumes have grown since 2007. However, in the last three years, the USPS notes that it has not been able to keep up with the market's overall rate of growth for package delivery services. As a result, according to the report, volume flattened in 2019 "due to increased competition and customer insourcing, and lack of investment, innovation, and performance."

Package revenues increased from $9.9 billion in FY2007 to $28.5 billion in FY2020. Package volume grew from FY2007 to FY2018 and flattened in FY2019. In FY2020, package volume jumped by 19%, which was ten points lower than the 29% market growth rate estimated by the research group, The Colography Group.

But is it too little too late for the USPS? Even though the postal operator has taken a massive PR hit due to delivery delays and politics, it may not be too late.

A big lesson learned throughout COVID-19 has been the need for shippers to diversify their last-mile carriers due to rising shipping costs and capacity constraints and limits set by the two largest carriers, FedEx and UPS, that allowed them to focus more on growing their profits versus increasing volumes.

However, USPS's plan is estimated to take ten years to implement, and operating during such an extensive overhaul will likely see the operator experience blips and delays along the way. Will shippers be forgiving during this period, or will they look elsewhere?

 


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Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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USPS Unveils 10-Year Plan

March 24, 2021


The United States Parcel Service (USPS) unveiled its long-awaited 10-year plan, dubbed "Delivering for America," on Tuesday, March 23. According to the press release, the plan aims to return the organization to financial sustainability and achieve service excellence while maintaining universal six-day mail delivery and expanding seven-day package delivery. The goal is viewed as a tall order for the organization that has struggled for years with mounting debt and service level delays. The biggest goal facing the USPS will actually be getting buy into this ambitious plan.

The focus areas are:
  • Network – facility upgrades and processing equipment
  • Retail and transportation – Upgrades in USPS' retail lobbies and investments in delivery vehicles
  • Technology upgrades
The postal operator plans to spend $40 billion over the next ten years on these areas while forecasting profitability of $1.7 billion by the fiscal year 2024 (12 month period ending September 30, 2024). There will be a significant emphasis on parcels throughout this plan. According to the plan, domestic mail revenue declined from $60.6 billion in FY2007 to $38.7 in FY2020, a 36% decline or an average annual decline of 2.8%, including a drop of more than 8% during the COVID-19 pandemic in 2020. In terms of volumes, mail volumes have declined by 42% since FY2007, a decline of about 3% per year. During the FY2020 pandemic year alone, mail volume declined by 11%. Meanwhile, package volumes have grown since 2007. However, in the last three years, the USPS notes that it has not been able to keep up with the market's overall rate of growth for package delivery services. As a result, according to the report, volume flattened in 2019 "due to increased competition and customer insourcing, and lack of investment, innovation, and performance." Package revenues increased from $9.9 billion in FY2007 to $28.5 billion in FY2020. Package volume grew from FY2007 to FY2018 and flattened in FY2019. In FY2020, package volume jumped by 19%, which was ten points lower than the 29% market growth rate estimated by the research group, The Colography Group. But is it too little too late for the USPS? Even though the postal operator has taken a massive PR hit due to delivery delays and politics, it may not be too late. A big lesson learned throughout COVID-19 has been the need for shippers to diversify their last-mile carriers due to rising shipping costs and capacity constraints and limits set by the two largest carriers, FedEx and UPS, that allowed them to focus more on growing their profits versus increasing volumes. However, USPS's plan is estimated to take ten years to implement, and operating during such an extensive overhaul will likely see the operator experience blips and delays along the way. Will shippers be forgiving during this period, or will they look elsewhere?  
ABOUT SPEND MANAGEMENT EXPERTS Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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