360° Coverage : Can the Package Business Save the U.S. Postal Service?

2 Updates

Can the Package Business Save the U.S. Postal Service?

Feb 19 2014, 12:28pm CST | by

Billions of dollars in the red, the U.S. Postal Service is looking to the package business to make up for a steep decline in revenues from First-Class Mail. The Postal Service lost $5 billion in the...

Filed under: news

 
 
 

34 weeks ago

Can the Package Business Save the U.S. Postal Service?

Feb 19 2014, 12:28pm CST | by

Billions of dollars in the red, the U.S. Postal Service is looking to the package business to make up for a steep decline in revenues from First-Class Mail.

The Postal Service lost $5 billion in the fiscal year ending Sept. 30, 2013, its seventh straight year of losses. First-Class Mail volume, its most profitable product, plummeted by 2.8 billion pieces.

Now the Postal Service is hoping to reverse the trend, in part by stepping up the battle with parcel giants UPS and FedEx.

Package volume was up 8 percent in fiscal 2013, to 210 million pieces. The agency’s Shipping and Package Services currently generate $12.5 billion in revenues, around 19 percent of its total.

The internet might be killing First-Class letters, but it has been a boon to parcels. Two years ago, the Postal Service made a conscious decision to ramp up efforts in that area. “We saw a tremendous shift in consumer behavior to e-commerce,” said chief marketing and sales officer Nagisa Manabe.

“We’re trying to simplify our product and sharpen our pricing to be competitive,” Manabe said. At the same time, the Postal Service is talking to customers around the country in an effort to customize its offering.

The 2013 holiday shopping season was an opportunity to pick up new business. Both UPS and FedEx were criticized for failing to meet some delivery targets in the final days before Christmas. One reason for the service lapse was unrealistic promises by online sellers. Another was severe winter weather. Still, the sheer volume of parcels moving in those few crucial weeks appeared to take the big carriers by surprise.

The Postal Service wasn’t immune. “I would be doing the operations team a great disservice if I didn’t say there were many challenges during the holiday,” said Manabe.

At the same time, she claimed that Postal Service employees “performed beautifully” during the peak. She called the decision to deliver every Sunday in December “a huge deal.”

Targeting the huge post-holiday returns business, the Postal Service pushed its flat-rate service for boxes moving by Priority Mail. In a bid to match the service features of UPS and FedEx, it added free insurance, day-specific delivery and free tracking to the Priority Mail offering.

It was rewarded with a record number of packages during the holiday season, and a 19% jump over the same period of 2012. The Postal Service averaged 10 million packages a day, delivering nearly 90 million in the week before Christmas.

This year, it plans to upgrade the entire tracking network, with 75,000 new handheld devices coming into service by late spring. Even with the use of existing devices, it can provide 11 points of scanning over the course of a delivery, Manabe said.

The Postal Service’s biggest marketing leap over the past year has been the introduction of same-day service, dubbed Metro Post, for urban centers. A pilot program launched in San Francisco in early 2013 failed to generate much interest from e-commerce retailers. In December, it was extended to New York City.

Postal Service officials say they have high hopes of capturing the growing market for same-day delivery of items ordered online or through physical stores. But they’ll have to contend with a growing number of nimble rivals, including eBay, Amazon.com and Google – not to mention the more seasoned networks of UPS and FedEx.

As it plays catch-up with those market leaders, the Postal Service continues to suffer from a public perception of being slow and bureaucratic. Manabe claimed the agency’s image is changing rapidly, as it deploys mobile point-of-sale devices which speed up lines and, in some cases, even serve waiting customers in the parking lot.

“This is the flattest, fastest-moving organization that I’ve ever worked for,” Manabe said.

None of the Postal Service’s rivals suffers from being a quasi-public organization that must fund operations entirely from products and services, yet is required to serve every address in the U.S. The agency contends that it’s further hampered by excessive costs for healthcare, workers’ compensation and retirement. At the same time, it lacks the freedom of private-sector rivals to explore creative new offerings./>/>

Debate continues to rage over a proposal to eliminate Saturday mail delivery (although package service apparently would not be affected). Supporters say the move is essential to reining in costs, while critics argue that it would result in the loss of far more revenue than it would save in overhead.

Perhaps the agency’s biggest immediate challenge is the Postal Reform Act of 2013. Introduced as S. 1486 and H.R.  2478, the proposed legislation would permit the phase-out of Saturday mail delivery, raise workers’ health and life insurance premiums, and possibly eliminate “to-the-door” service in certain rural areas. It would also require the Postmaster General to submit to the Board of Governors a plan for “long-term solvency.” Union leaders are adamantly opposed to the measure.

Meanwhile, the Postal Service continues to vie with private-sector rivals, especially for commercial business. “We want our customers to help us to innovate, to come up with new ways that we can improve the package-delivery market,” said Manabe.

Source: Forbes Business

 
Update
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company ( ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Ebola fears loom over Ghana hosting AFCON
Accra (Ghana), Oct 18 (IANS) The Ghana Medical Association (GMA) cautioned the government Saturday against hosting the 2015 African Cup of Nations (AFCON), despite a request by the Confederation of African Football (CAF), for fear of the dreaded Ebola virus entering the country.
 
 
NASA captures rocket's Mars descent data
Washington, Oct 18 (IANS) NASA has successfully captured thermal images of a commercial rocket on its descent, a development that may provide engineering inputs for future missions to Mars, the US space agency said in a statement.
 
 
New polio case reported in Pakistan
Islamabad, Oct 18 (IANS) A new polio case has been reported in Pakistan's Khyber Agency, bringing the total number of cases detected this year to 200.
 
 
Ebola screening counter set up at Pakistan airport
Islamabad, Oct 18 (IANS) The Pakistan government has set up a facility at Islamabad airport to scan passengers coming from African countries for Ebola, media reported Saturday.
 
 
 

Latest from the Network

Bush shoe-tossing painting hits record at Doha auction
Doha, Oct 15 (IANS/EFE) A controversial painting by Iranian artist Mahmud Obaidi, depicting an Iraqi journalist throwing shoe in 2008 at then US president George W. Bush, was sold for $62,500 at a Sotheby's auction in...
Read more on Celebrity Balla
 
US offers $45 mn bounty for eight terror leaders
Washington, Oct 15 (IANS) The US said Tuesday it is offering rewards totalling up to 45 million dollars for information on eight key leaders of the Al Qaeda in the Arabian Peninsula (AQAP) terrorist organisation. The...
Read more on Politics Balla
 
UNSC extends peacekeeping mission's term in Abyei
United Nations, Oct 15 (IANS) The UN Security Council (UNSC) has renewed the mandate of the UN peacekeeping mission in the Abyei border region between Sudan and South Sudan. In an unanimously adopted resolution, the...
Read more on Politics Balla
 
Ebola cases in West Africa could reach 10,000 per week: WHO
Geneva, Oct 15 (IANS) The World Health Organisation (WHO) has warned that the Ebola epidemic in West Africa could reach 5,000 to 10,000 cases per week by the first week of December. "Quite frankly, ladies and...
Read more on Business Balla
 
Turkey, Singapore sign strategic partnership agreement
Ankara, Oct 15 (IANS) Turkey and Singapore have signed a strategic partnership agreement to boost economic, political and cultural cooperation, as well as security collaboration, during the official visit of...
Read more on Politics Balla
 
Christina Aguilera is returning to 'The Voice' USA
Christina Aguilera will return to 'The Voice' USA next year. The 'Your Body' hitmaker, who previously shared a rotating spot on the judging panel with Shakira, has been replaced by Gwen Stefani this season as she is...
Read more on Celebrity Balla
 
Kesha's music producer hits back
Kesha is being countersued by her record company boss, Dr. Luke. The 41-year-old music producer, who runs Kemosabe Records, claims the 27-year-old 'Tik Tok' singer is a liar and is trying to extort him after she accused...
Read more on Celebrity Balla
 
Jason Derulo won't get back together with Jordin Sparks
Jason Derulo insists his split from Jordin Sparks is permanent. The 'Talk Dirty' hitmaker, who recently ended his relationship with the 'No Air' singer after three years of dating, has ruled out getting back together...
Read more on Celebrity Balla
 
Josh Groban feels 'very lucky' to be dating Kat Dennings
Josh Groban feels ''very lucky'' to be dating Kat Dennings. The 'Brave' hitmaker was very nervous before singing in front of the '2 Broke Girls' actress for the first time at the Carousel of Hope Ball in Beverly Hills,...
Read more on Celebrity Balla
 
Australian Richard Flanagan wins 2014 Man Booker prize
London, Oct 15 (IANS) The first Man Booker prize to allow American nominees was Tuesday night won by an Australian, with Richard Flanagan triumphing for a novel of love and war that tells the harrowing stories of...
Read more on Celebrity Balla