Opinion: Parcel Competition Backfire?
USPS is focusing on making the Service a leader in the parcel delivery market, and with declining mail volumes I’m glad the Service is investing so hard in diversifying how we can earn our bread by making parcels a priority. I mean, we could gut the non-essentials in the Service, and there’s lots of that, but that won’t help us get ahead it will only keep them from weighing us down.
Everyone is quick to point out how we kept the economy going in lock-down times. The delivery business fundamentally changed how business is done! Work from home created more personal orders for recreational and essential packages. Our work redefined security for the nation: if we have another lock-down for some reason we already know what to do, how to do it, and what to expect from those situations.
Bookmark that train of thought, would you?
Prices are rising on postage.
Not only that, but USPS is currently making it harder for shipping consolidators like DHL to do business with us. The Service is considering consolidation options that keep those business partners from dropping parcels off closer to the last mile. Shipping consolidators have been able to drop nearest to the last mile because it gives them the biggest price breaks, incentivizing them to trust USPS to get that last mile done on budget and on time. No one does last mile like USPS because we deliver to every address, and that’s what makes us special.
But now the service’s Delivering for America plan is “streamlining” the process, so the Service wants these consolidators to drop parcels further upstream in the network. This will get rid of those price breaks, increase their logistical load to drive further to proposed S&DCs (Shipping and Delivery Centers), and get shipping partners further away from the point of delivery and their customers. Moreover, contracts are nefariously hard to make with USPS based on expert opinions, and other delivery services are much quicker to act and create equitable, sustainable contracts.
The Post Office wants these shipping consolidators to input parcels further upstream in the network to make the process smoother for us. Consolidators want to push it further downstream for the aforementioned incentives, which puts more stress on the offices. How many times are we waiting on Amazon trucks, huh?
Don’t take my word for the setup on this article, read it from folks whose job it is to report on this stuff right here.
Let’s get that train of thought moving again, fueled with some new insight, shall we?
Who benefits?
USPS gets smoother operation and more money. Good, we need that and should celebrate that because when our employer wins we win too. This is a long term solution to growing our platform and providing security for the company.
Let’s get critical (and maybe cynical) for a minute: what’s the cost?
Trust in our brand. Let’s look at a few aspects of why.
1. There are just too many short-term solutions for customers out there! The gig-economy is still very strong, and with “Spark” coming out of Wal-Mart we are going to have serious competition already. Local pickups and delivery in the same day from these kinds of services is incredible; it’s fast, is the closest delivery companies can get to their customers, and is the cheapest way for companies to operate. Those are all things that USPS is going to hamper for partner delivery companies by forcing parcel drop-off upstream in the network. This is the newest and greatest threat to our model of parcel business! How many gig delivery services can you think of in your area right now? How many more will crop up as demand for last mile delivery partnerships goes up because USPS refuses to do it? Geez, we haven’t even gotten into working conditions and pay for those gig non-Union jobs and the damage that might make to organizing efforts and our contract negotiations… but I digress.
2. We have fierce competition already established, not theoretical, so we know where our work can get diverted quickly if shipping consolidators decide to drop USPS. If you read the article in the link above you’ll see that it’s easier for companies to set up contracts with other last mile delivery companies like UPS. Take into consideration that FedEx’s latest financial plan includes taking UPS business, so they want to get real competitive. How about Amazon drivers and their parcel consolidation plan that’s reduced cost and improved efficiency? Think they might have more operational power to handle more parcels now that they’ve got their sea legs?
3. Small businesses will be hurt with increased shipping costs. In the lock-down times USPS got so much support from customers because we were in the public eye! Did you see a bunch of “Thank you!” stickers in mailboxes before COVID? I didn’t, but now I see them regularly. When people lost their jobs, had reduced work hours, or struggled in other ways they still needed things, and low shipping costs helped make that possible. Not only that, but a ton of small businesses cropped up to sell things on Etsy to make a few dollars to feed their families, and that injected a bunch of life into the economy and our business.
USPS’ considered “streamlining” plan increases the price of shipping for our customers, increases the price of shipping for our delivery partners and shipping consolidators, and creates instability and uncertainty for companies looking to do business with us. Is this really the policy we want USPS to enact to make things a little smoother for our operations? We’re working to overhaul our whole company to increase and handle the increase of parcels, but this plan will undercut those efforts and open up a lot of uncertainty. I can’t begin to speculate how this will look in the end, but experts in the field are already pointing to the potential ramifications.
To me, putting the customer first and our delivery partners first will make us a more viable and flexible friend for companies and people to trust. We do stuff no other company can, like delivery to every single address. We should be leaning into that strength, that security, and that flexibility that no other company can do.