DeJoy Steps Down, Effective Immediately
Last month, USPS Postmaster General Louis DeJoy announced that he would be leaving his role. However, at the time, he did not provide any specifics regarding when this would happen. On Monday, Mr. DeJoy announced that he was stepping down, effective immediately.
There has been a great deal of speculation in the media regarding why he was stepping down, along with predictions of what might happen when he does. At this point, it’s probably not too important to try to figure out why he has chosen to depart so abruptly.
What Matters Most: USPS’s Future for Shippers
The most important thing for shippers to consider is how things might change at the USPS now and into the future. The USPS is a major player in the small parcel delivery market, so its success or failure could have a major impact on all shippers, whether they ship with them or not.
It is obvious that things need to change at the USPS, given the ongoing losses that the agency has delivered. If this were a private business, the doors would have been shut a long time ago.
DeJoy’s Legacy: Mixed Results and Tough Decisions
One cannot dispute the fact that Louis DeJoy made some serious efforts to help fix the failing USPS. During his five-year tenure, there were many changes made, which led to the projection of declining losses moving forward.
A projected decline in losses is, on the surface, a good thing. But once again, in the private sector, planning for ongoing losses does not contribute to a company’s ability to stay in business.
Some of the changes that Mr. DeJoy made are questionable, especially the recent decision to terminate or adjust contracts with carriers that relied on the USPS for final mile deliveries. Apparently, the goal of this is to try to capture more end-to-end volume directly from shippers in an effort to increase USPS revenues.
There are multiple carriers and companies that have utilized the USPS to complete the last leg of the delivery of their lower-cost/economy products. These include UPS SurePost, UPS Mail Innovations, FedEx SmartPost, DHL SmartMail, and Amazon.
USPS’s Core Strength: Final Mile Delivery Network
However, the USPS still cannot match the service levels and performance that major competitors like UPS and FedEx provide with their end-to-end delivery solutions. The USPS has always struggled with the first and middle mile portions of its network. This has contributed to slower transit times and less consistent performance.
But the major strength that the USPS possesses is the final mile delivery network already in place. No other carrier can come close to the delivery density that the USPS has in the U.S. Think about it…they have a delivery person stopping by every address in the U.S. six days per week!
Missed Opportunity? Shedding Strength Instead of Leveraging It
What puzzles us is that Mr. DeJoy and his leadership team have chosen to shed volume that moves through the most solid portion of their network. Wouldn’t it make more sense to try to figure out how to better leverage this strength?
One would expect that a properly executed plan to put more packages in the hands of letter carriers already making daily deliveries could help boost the profits of the USPS, or at least further reduce losses.
A Smarter Strategy: Partner on First and Middle Mile
Given the weaknesses that the USPS has with its first and middle mile networks, maybe they should consider increasing partnerships with companies like UPS and FedEx to handle this portion of the volume. In return, they could make it more attractive for these carriers to hand over more final mile delivery volume.
UPS already handles air cargo for the USPS (and FedEx has done this in the past). Why not expand this relationship to include some upstream sortation and ground moves?
Wouldn’t UPS and FedEx enjoy having more packages on their pickup vehicles? After all, given the softness in the parcel market, both carriers likely have capacity in their networks to handle this volume, and both could probably do so more effectively and efficiently.
Privatization? A Hot-Button Topic with Legal Barriers
President Trump, as well as his head of the Department of Government Efficiency (DOGE), Elon Musk, have suggested on various occasions that the USPS could benefit through privatization. There are many who oppose this, and laws in place that will make this difficult. So, this might not be a viable or popular option.
A Hybrid Approach: Business-Minded and Practical
Maybe the answer should include a more common-sense approach that utilizes a private sector, business-like mindset to help secure the future of the USPS. Instead of full privatization, the USPS could consider a hybrid approach that plays on their existing strengths and utilizes capacity and resources within the private sector to build a path to profitability.
Besides benefitting the USPS, it could potentially help improve the positions of some private sector carriers.
Want to stay informed on how USPS changes could impact your shipping costs? Explore our latest insights on small parcel strategies and stay one step ahead of industry shifts.
A New Name for a New Era?
If this concept comes to fruition, the carriers will need to come up with a name for the service to differentiate it from the old names like SurePost and SmartPost. Don’t worry, we’ve already come up with one- How about Sure Is SmartPost!
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