Postmaster General Louis DeJoy detailed how his team is working to implement an extreme makeover of the U.S. Post Service’s distribution and delivery network, in an effort to “unwind” past mistakes that created inefficiencies and hobbled its ability to execute on its mission.
The U.S. Postal Service reported a net loss that ballooned by $1.8 billion and a 5% decline in parcel volume for the second quarter, as the USPS faces the same ecommerce declines as other major carriers while wrestling with pain from a major network overhaul, union unrest and battles over its up-and-down EV adoption. Parcel revenue was down 2% to $7.6 billion, but first-class mail inched up to $6.3 billion.
The USPS won’t receive EVs from Oshkosh until June 2024, nine months behind schedule, which was revealed in a court document related to lawsuits against the USPS and Postmaster General Louis DeJoy. A raft of attorneys general and environmental groups threaten to seek removal of a litigation stay if any more gas-powered vehicles are purchased before an environmental review is completed.
The USPS said its projected loss by 2030 has been cut from $160 billion to $70 billion, adding it still expects to reach break-even by then, even factoring in $3 billion in inflationary costs. It also touted a number of other milestones two years into its overhaul plan. At the same time, APWU union leadership called for a series of protests across the nation over USPS service issues and increasing workforce turnover.
The Postal Regulatory Commission (PRC) has ordered a public review of various aspects of the U.S. Postal Service’s ten-year overhaul plan, including consolidating sort and delivery operations into regional centers, opening up public input on the impact of the changes. The PRC will issue information requests to the USPS about proposed network changes as part of the Delivering for America plan.
Ryder System Inc. plans to purchase 4,000 light-duty electric vans for its rental, leasing and dedicated fleets from General Motors-owned BrightDrop by 2025, with its first order of 200 vehicles going into service this year, as it looks to meet customer EV demand and keep up with various state mandates.
FedEx saw the biggest U.S. parcel volume falloff in 2022, Pitney Bowes reported, and while overall volume last year was down by 2.2%, the pandemic bump in ecommerce helped it outpace the 2019 projection, hitting the target a year early. The CAGR for parcel volume growth from 2023-2028 is projected to be halved, from 10.8% to 5%.
The U.S. Postal Service has awarded Ford a contract to deliver 9,250 electric delivery vehicles, while ordering an equal number of diesel-powered Dodge Ram vans to fill its immediate needs, plus 14,000 charging stations from three separate firms. Overall, the USPS will purchase at least 66,000 EVs between now and 2028, or 62% of the total fleet.
Pricing increases on parcel delivery helped the U.S. Postal Service in Q1, as parcel volume declined 3.5% to 70 million pieces, while parcel revenue gained 2.4% to $8.84 billion. Overall revenue increased 1% to $21.5 billion, with a net loss of $1.03 billion, an improvement over $1.55 billion a year earlier.
The three major parcel carriers had a decent peak holiday season in terms of on-time performance, with service levels comparable to 2019, according to ShipMatrix, not surprising as volumes were lighter even though holiday sales increased, as many shoppers returned to stores. FedEx saw a significant improvement over its 2021 showing.