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USPS Office of Inspector General reflects on 2015

January 6, 2016

The following has been reposted with permission from the US Postal Service Office of Inspector General’s Pushing the Envelope weekly blog


It was another eventful year in the postal world. We saw 2015 open with mail service problems and a delayed price increase making news, and things never really quietened down from there. Speculation about Amazon’s intentions in the delivery industry reached a fever pitch in the latter part of 2015, and the United States Postal Service (USPS) Board of Governors got more ink in December than the preceding 11 months combined when the board dropped to a single appointed member.

The year had its share of good news, too. Business first-class mail volumes had their first small increase in years, and hard copy found its mojo, experiencing a nice resurgence that should position it well in 2016. And just as the year was closing, the USA and Cuba reached an historic agreement on mail service.

USPS Office of Inspector General (OIG) staff sifted through the news and put together a top 10 list of postal stories, in reverse order of impact.

10. Havana Postmarks – The USA and Cuba reached an agreement to reestablish direct mail service to Cuba, another major step in the historic process of normalizing relations between the two countries.

9. Surcharges don’t follow fuel prices – Despite a decline of about 35% in their fuel costs over the past year, both FedEx and UPS still raised their fuel surcharges in 2015, irking e-commerce retailers and other customers of the shipping giants.

8. Foreign posts shake it up – Foreign posts make changes while the USA waits for the next round of postal reform efforts. Canada Post initiated its plan to eliminate to-the-door delivery (only to later pause it); New Zealand decreased mail delivery from six days to three in urban areas; the Italian government sold a 40% stake in Italian Post while Japan Post is privatized in the world’s biggest IPO of 2015; and high performing posts around the world are diversifying beyond their core mail business.

7. Third time’s a charm on rates – It took three tries before the Postal Regulatory Commission finally approved USPS’s proposed price increases for market-dominant products in 2015, causing a delay in implementation – and needed revenue. The commission sent the case back twice after finding serious problems in the postal service’s proposal around standard mail, periodicals and package services rates.

6. Hard copy lives! – Don’t bury hard copy just yet; it’s enjoying something of a resurgence this year. Among the evidence: JC Penney resurrects its catalog; Netflix recommits to its DVD business; digital books account for only 20% of the market despite predictions that 2015 would be the year e-books outsell print books; and research indicates hard copy ads are remembered better than digital ads.

5. First-class bleeding stops? – For the first time in seven years, pre-sort first-class mail letters showed a small increase, raising hopes that the freefall in first-class mail might finally have ended. Another reason for optimism? The postal service ended fiscal year 2015 with an operating profit of US$1.2bn.

4. Amazonian takeover? – Amazon makes moves that lead to speculation that the e-commerce giant is launching its own shipping network. First was its retaining a top recruitment firm to help it assemble a team of senior executives from the small package industry. Then came the announcement it will add thousands of branded trailer trucks in its delivery fleet that will be driven by third-party carriers. And in December, The Seattle Times reported that Amazon could soon be leasing 20 cargo planes with the goal of building its own air-logistics operations in the USA.

3. End of an Era for LLVs – USPS’s workhorse long-life vehicle (LLV) delivery trucks head to the big garage in the sky as the organization issues requests for proposals for vendors to build new prototypes. After tests, a contract of up to US$6.3bn will be awarded over several years beginning in 2017.

2. Dude, where’s my mail? – Mail service suffers after the first phase of plant consolidations, prompting the USPS to suspend phase two of its network consolidation plan. Service gets so inconsistent in 2015 that members of Congress push riders to return service standards to 2012 levels – the year before consolidations began.

1. And then there was one – The US$69bn, 240-year-old USPS is down to only one appointed member of its Board of Governors to make important decisions about one of the nation’s most valuable infrastructures at one of its most critical times.

To read more from the US Postal Service Office of Inspector General’s Pushing the Envelope weekly blog please click here.

January 6, 2016


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