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Despite anger from progressives, President Biden’s three nominees to the United States Postal Service Board of Governors had no harsh words for the controversial Postmaster General Louis DeJoy Thursday as they testified before Congress.
This indicates that if they’re confirmed, DeJoy is likely keep his seat at the head of the post office — and get his chance to try and save it from financial ruin. DeJoy rolled out his grand plan to revive the flailing USPS last month. Along with Board of Governors Chairman Ron Bloom, DeJoy said the plan would put the agency on sounder financial ground — it projects $160 billion in losses over the next ten years without action — and attract e-commerce shippers, while building a more reliable service.
Improved financial footing is good for the e-commerce businesses that depend on USPS. But according to three experts in e-commerce package logistics, the 58-page “Delivering for America” plan could actually drive e-commerce packages away from the service by making it harder to compete with Amazon.
DeJoy has always held that the agency wasn’t meeting standards even before the pandemic, which stressed the USPS to the point that packages piled up in the system and deliveries took days longer than usual. USPS estimates total US package volume will increase between 6% and 11% every year through 2025.
The new plan is to handle that growth both by improving operations and by taking more time to ship for some packages.
USPS will spend $20 billion of the more than $40 billion in planned capital investments over 10 years on opening and upgrading processing facilities and an additional $2 billion on technology upgrades. The remaining $19 billion will go toward a new vehicle fleet and retail upgrades.
These investments will help USPS adapt to large swings in the number of packages coming into the system, according to the plan. It will also shift some distribution centers currently processing mail and packages to handle only packages and add more automated equipment.
“Proposed changes to dedicate facilities to package processing makes sense, but there is no indication of expected velocity improvements,” Nate Skiver, founder of LPF Spend Management and former logistics manager at Gap and Abercrombie and Fitch, said.
The Amazon effect is still in effect
DeJoy’s other major strategy to increase reliability is to shift away from airfreight and move more mail and packages exclusively on trucks.
“It’s about service,” DeJoy …read more
Source:: Business Insider