Recently, the USPS publicly announced a number of anticipated changes, upgrades, and investments as part of its new 10-year plan, which ultimately aims to bring more financial stability to the Postal Service while also improving upon its service excellence.
Why make these changes, and why now?
It’s no secret that the USPS’s vast delivery network is trusted by e-commerce businesses of all sizes. The organization reaches every home and business in the nation, and in 2020 alone, they delivered mail and packages to 160 million delivery destinations over the course of 6+ days a week, traveling 1.34 billion miles over 238 thousand routes and powered by 255,000 delivery vehicles to do so. And they’ve continuously managed to do all of this while offering their services at an affordable rate for small businesses. That’s no small feat!
Despite its massive reach and popularity, however, the organization has faced certain challenges as consumer expectations and behaviors have shifted and evolved in the e-commerce age, and these were only exacerbated during the COVID-19 pandemic when package volumes soared to record highs. As a result, the Postal Service recently developed a series of strategies that would help it a) grow financially and b) make investments to improve service and performance even more, a robust and ambitious plan aptly coined Delivering for America.
In his own words, here’s what USPS Postmaster General and CEO Louis DeJoy has to say about the rhyme and reason behind the forward-thinking undertaking: “Our plan calls for growth and investments, as well as targeted cost reductions and other strategies that will enable us to operate in a precise and efficient manner to meet future challenges, as we put the Postal Service on a path for financial stability and service excellence.”
All that being said, there are of course important implications for e-commerce merchants who rely on USPS’s cost-effective services to ship their products to consumers around the country, and even the world. To help you better understand how these immediate and upcoming changes will impact you and your business, we’ve filtered the 50+-page plan down to a more easily digestible list of the top takeaways:
1. Expect updated package delivery services, including delivery 7 days/week
E-commerce sales have skyrocketed over the past year, while the amount of time it takes for a package to get from Point A to Point B has decreased. In 2020, USPS customers selected 1 or 2-day service in 72% of parcel shipping instances, and the organization estimates this could grow to be as high as 90% by 2025.
By updating delivery schedules to increase frequency to 6-7 days/week for core package products, the USPS plans to generate $24B in net revenue, in part from enhanced package delivery services for business customers via same-day, 1-day & 2-day deliveries.
It is however important to keep in mind that the USPS does plan to increase some delivery service standards for mail delivery as well as for certain classes of package services.
2. Expect the USPS to level up with broader investments in people, tech, and infrastructure
Over the next ten years, the USPS plans to invest a whopping $40B into its infrastructure, people, and technology. One important investment area is its delivery fleet, which it plans to modernize, with the first new vehicles expected to appear in 2023. The new-and-improved fleet will include advanced safety and comfort features, be environmentally sustainable, and provide additional loading and cargo space to, well, carry more packages, of course!
USPS also plans to equip all carriers with mobile tech that will improve service and tracking capabilities, and enable network improvements to allow the organization to to meet or exceed 95% on-time delivery. It also plans to improve delivery efficiencies by investing in more automated package sorting equipment.
3. Expect USPS to give consumers more control over their deliveries
USPS also plans to continue enhancing its Enhanced Informed Delivery platform, giving merchants and consumers more control over their deliveries by allowing them to dictate pick-up/drop-off instructions, hold or reschedule packages, and more.
4. Expect new offerings to expand your reach and drive more value for your e-commerce business
With its USPS Connect offering — made up of a suite of scalable, customizable solutions — USPS plans to connect businesses of all sizes to urban and rural communities across the nation.
Through USPS Connect, the USPS will soon offer:
- Expanded core package products, namely Priority Mail, Priority Mail Express, First Class Package Service, and Parcel Select, to offer a wide diversity of business solutions for micro to large businesses with same-day, next-day and 2- to 3-day options.
- More access to local drop points and local services for same day or next day delivery, benefiting neighborhood businesses.
- Access to an unparalleled network of distribution centers for 1- to 2-day delivery to benefit high-volume shippers.
- Access to an extensive network of distribution centers while offering a diverse suite of same day, next day, and 2- to 5-day delivery services to benefit national shippers.
- An effortless returns experience with convenient label printing, pickup and packaging options.
5. Expect logistical updates to improve performance
USPS’s performance improvement strategy is straight-forward — adopt best-in-class logistics practices across delivery and transportation operations, shift volume from air to more reliable ground transportation, and use processing facilities differently to reflect increase in package volume (plus the simultaneous decline in mail volume).
The USPS plans to fully utilize its extensive logistics network and infrastructure to better connect businesses, consumers, and communities across the country. The organization also plans to transition its 21 Network Distribution Centers (NDCs) into new Regional Distribution Centers (RDCs) focused on regional package acceptance and processing.
In addition, you can expect to see a new and improved surface and air transportation network, in which a higher percentage of First-Class Mail and First-Class Package Service will be carried on surface transportation, third party long-haul truckers will be more integrated and better managed, and integrated logistics systems will drive greater performance and efficiency.
With these changes, USPS expects to improve on-time delivery across mail and shipping product classes by 95 percent. In addition, the organization plans to implement more disciplined operating principles, align operations and infrastructure with volume demand, accelerate investments in package and material handling equipment, and provide greater resiliency and adaptability to volume spikes and marketplace needs.
By implementing the above strategies and updates, the USPS projects it will see a positive net income by 2024 at the latest, and break-even operationally over the course of the next 10 years. It’s no secret that we at Shippo are huge fans of the USPS, and we can’t wait to see what comes next!
If you’d like to learn more about shipping with USPS, be sure to read through our Shipping with USPS: Online Merchant’s Holy Grail, which covers everything you need to know about service offerings, pricing, and more.
You can also sign up for a free Shippo account to start leveraging USPS shipping services while saving your business money.