How Will The USPS Reform Affect The Supply Chain?

Having delivered the first letter on July 26, 1775, United States Postal Service (USPS), whose principle is based on the fact that every person, no matter who or where, has the right to equal access to secure efficient and affordable mail service, has long been considered a liable option for delivery. It was a made-in the USA brand until Trump believed the otherwise and decided that the majority of the USPS should be privatised. Because USPS was suffering from a broken business model. It has lost money in every quarter of each year since 2009. The recent results were no different. The third quarter of 2021 reports a net loss of approximately $3.0 billion, compared to a net loss of approximately $2.2 billion for the same quarter last year. Trump said in one of his famous Tweets: “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!”

The sustainable plan

Despite allegations and demands, the USPS hasn’t been privatized yet. The congress are still looking for hybrid solutions including raising efficiency by automation. The majority of the congress now believes that Postmaster General of the United States should place a high priority on automating the fuel price adjustment system. Through a painful reform, or better to call a revolution, the USPS is now seeking a way to embrace technology. USPS is a key element in the supply chain because millions of Americans including small business owners, rely on the Postal Service to deliver. For decades, the Postal Service has struggled fight against the tough competition usually caused by tech giants like Amazon. However, the new legislation which was announced by Postmaster General Louis DeJoy would finally help put the Postal Service on a sustainable financial ground making it more transparent and accountable to the community. “While the USPS’ role in American life has changed over the years, the United States Postal Service remains a key part of American life, serving Americans through its delivery of vital medicines, important packages, and other mail,” says DeJoy. Therefore, he adds, a 10-year plan will ensure self-sustaining, high-quality postal service for all Americans. The quick fix is to be made on the use of technology. It is stated that the USPS is now investing in new technology and equipment, such as a very much needed vehicle fleet and new package-sorting machines. 

U.S. Government Accountability Office (U.S. GAO) is recommending that the Postal Service improve implementation of its bulk fuel program. According to GAO, the USPS should immediately consider focusing more attention on small businesses in carrying out supply chain

management initiatives. It seems that, having lost a great market share to Amazon, USPS will now take this advice into consideration and build an approach to ensure accountability and transparency in its small business contracting. “The new approach of the USPS is a good opportunity for supply chain operations,” says the CEO of Makhina, Mehmet Ali Çalışkan and adds, “During pandemic we have seen new startups and initiatives most of which are relatively small. These can come to better agreement with USPS. I also believe that the newly introduced signs of automation and investing in technology will enhance the customer experience.” Çalışkan is right because for the last couple of years, the customers were complaining about lack of punctual delivery and advanced tracking features. Hopefully, they will now be the indispensable part of the USPS arsenal. Because the timely and efficient delivery of mail is essential for keeping the supply chains efficient. Only 64% of first-class mail in America was delivered on time for the week ending Dec. 26, 2020. It was a record at that time and it is not getting better for the time being. 

Not a penny for your letter anymore

One of the main reasons for these delays is the mentality difference between mails and packages. USPS is still the dominant player to deliver letters and such to people. Despite the big volumes, it’s an area which doesn’t make much income. Yet, delivering packages is much more profitable than delivering letters. The pandemic has shifted this trend at USPS. Now, packages account for a large part of its operations. In January, package volume was up 31% compared with January 2020, while mail volume was down 14% in the same period. “I believe USPS will adjust its costing system by prioritizing package deliveries for small businesses. However, if you still want to send a letter, you might need to pay more. In other words, sending letters which is USPS’s strongest hand, will help supply chain operate in a much better fashion,” says Çalışkan.