Shipping Updates: USPS Finalizes First-Class Slowdown Plan, UPS Braces for Peak-Season Volume Surge
The U.S. Postal Service finalized a plan last week that will result in delays for some first-class mail in order to cut expenses. The plan will take effect on Oct. 1.
According to Reuters, the plan first introduced by Postmaster General Louis DeJoy in March would shift first class mail one- to three-day standards to one- to five-day standards for 39% of all first-class mail.
The USPS said in a statement that current standards rely heavily on air transportation, which it deems less reliable than ground transportation and more expensive due to unpredictable weather patterns, “network congestion and air traffic control ground stops.”
DeJoy and the USPS hope that this change will help the agency climb out of financial distress, after posting a $3 billion quarterly net loss on Friday paired with a 1.1% rise in first-class mail deliveries (though still below pre-pandemic numbers). DeJoy’s plan is designed to cut $160 billion in anticipated losses over the next 10 years through changes like this.
While the USPS is facing lower-than-usual mail volume, UPS is expecting delivery demand during its peak season to exceed capacity by approximately 5 million pieces per day.
To keep up with the projected demand, UPS said in an earnings call that it will add 2 million square feet of storage space and more cargo aircraft capabilities, running counter to the USPS’s shift away from it.
“Our peak planning is well under way,” UPS CEO Carol Tomé said on the sales call, according to Supply Chain Dive. “We are lining up the aircraft we need to lease to manage the volume, we’re lining up all the rental equipment that we need to have in place to handle the volume and, of course, the people side.”
The 2020 holiday season was a bear for shippers like UPS and FedEx, as consumers overwhelmingly chose e-commerce options rather than in-person shopping. As a result, some companies that work with UPS are shifting their peak season timelines ahead a few months to try to beat the traffic this year.
One way UPS is trying to implement a “better, not bigger” strategy is by expanding its Saturday Ground delivery, which grew in volume by 13% year-over-year. Tomé said UPS is on pace to cover “about 90% of the U.S. population on Saturday by October.”
“These improvements benefit all of our customers, large and small, by enabling faster time in transit and expanding capacity,” Tomé said, according to Supply Chain Dive.