Louis DeJoy outlined an ambitious 10-year plan about a year ago aimed at turning around the business of the United States Postal Service.
Now, the postmaster general’s most recent effort aimed at overhauling the more than 245-year-old institution was this week’s nearly $3 billion order for 50,000 of what USPS calls its next-generation delivery vehicle (NGDV). A little over 10,000 of those will be battery electric vehicles, with the rollout to begin late next year.
The revived delivery fleet represents a sliver of the $40 billion set to be pumped into the USPS system over the next decade for its package processing facilities, retail locations and new technology as part of its Delivering for America plan. By fiscal 2023, the Postal Service aims to be at the financial point of breaking even, bucking the $160 billion in losses projected for it over the next decade.
The big picture goal is to have the Postal Service be the country’s preferred delivery driver, DeJoy said Thursday during a Reuters supply chain conference in Chicago.
“We’ll be a preferred employer and we’ll be financially self-sustaining and growing,” DeJoy went on to say about where the Postal Service aims to be in five years. “We are and will be the most used organization in the United States of America.”
Network modernization was the key theme in DeJoy’s talk during the conference.
The Postal Service delivers to 161 million addresses, which is supported by a network of nearly 19,000 locations and it’s that infrastructure that is in need of updates.
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“Our plants, every time I go into one it’s like Thunderdome. I expect Tina Turner to come out,” DeJoy said, pointing to the lack of lighting and dated equipment in many facilities.
Plant renovations and more automation equipment are planned as are the consolidation of routes and new delivery products for shippers. The latter will help boost new revenue streams as the Postal Service sees mail volume decline and home deliveries expand in an omnichannel world.
“We’re going to capitalize on our piece of that,” DeJoy said of home delivery.
A big part of that is on-time deliveries. In the first year of the turnaround plan, USPS has seen improved delivery across its product categories, with the end game being a minimum of 95 percent on-time performance.
Mail currently gets delivered in an average of 2.4 days and USPS is continuing to look at new delivery options for shippers.
“Learning how to use us in the package business is real important and we’ve got to teach people,” DeJoy said.
That will be key as the ambitious plan to be the “preferred delivery provider” runs up against organizations such as Amazon, which has been developing its logistics and fulfillment business. There’s also what could be called the heritage parcel carriers in UPS and FedEx.
Pitney Bowes’ 2021 Parcel Shipping Index, a global data tracker, showed Amazon Logistics grew the most among carriers in the U.S. with parcel volume up 127 percent. That was followed by USPS, with growth of 34 percent. FedEx and UPS growth came in at 21.7 percent and 12.6 percent, respectively.
Amazon already surpassed FedEx in the number of parcels it handled, according to Pitney Bowes.
Even with the competitive landscape, there are some tailwinds for USPS.
The Postal Service Reform Act was signed into law in April, mapping out a plan that is expected to lead to a $44.5 billion cut in expenses. New pricing on delivery service has led to $1.9 million in annual revenue. And, then there’s the delivery network infrastructure that, although in need of modernization, is already in place.
“We’re everywhere and we go to your house,” DeJoy said. “It’s worth something.”