May 17, 2020

Is the U.S. postal service still a major player in shipping?

usps
Shipping
Supply Chain
Logistics
Freddie Pierce
3 min
USPS 2-ton delivery truck
By Angie Mansfield There's been speculation in the past few years that the U.S. Postal Service (USPS), a more than 200-year-old institution, will b...

By Angie Mansfield

There's been speculation in the past few years that the U.S. Postal Service (USPS), a more than 200-year-old institution, will be closing its doors any day now.

And it's true that the Service has faltered a bit, having to compete with the likes of UPS, FedEx, and online communication.

But while it's tempting to speculate on the Postal Service's demise after another rate hike or news of possible cancelled Saturday deliveries, all signs actually point to your postman or woman keeping their job for the foreseeable future.

Healthy numbers

Mail (of the paper kind) is still big business. In 2012, the USPS posted revenues of $65 billion, with 160 billion mail pieces processed. Despite talks of cutbacks and financial ruin, the USPS still handles 40 percent of the world's mail volume, and still employed 522,144 employees as of January 2013.

According to a Mailing Industry Job Study conducted in March, 2011, the postal industry provides more than eight million jobs and $1 trillion in total revenue.

Email, texting, and social media may be all but ubiquitous these days, but traditional mail service is still going strong.

Unique service

The USPS makes regular deliveries to remote islands and secluded areas; places that wouldn't be worth it to private mailing businesses.

And in rural or low-income areas where high-speed broadband isn't widely available, the Postal Service is still a much-needed form of communication.

Further, companies that would normally be competitors for the Postal Service frequently partner with it to help get their mail volume delivered on time.

In 2011, FedEx used the USPS to deliver more than 30 percent of its ground shipments.

UPS, DHL, FedEx, and other shipping companies simply don't have the domestic infrastructure the USPS has, making it vital to all of them that the service stays in business.

Politics affecting financial health

Many of the financial difficulties experienced by the USPS in recent years have had much more to do with politics than with a business model.

For example, in 2006, Congress informed the Postal Service that it would now be required to pre-fund its future retirees' health benefits, at a cost of more than $5 billion a year. This requirement was not placed on any other government agency, and has been a major contributing factor to the USPS's financial struggles for the past few years.

Another problem is that 80 percent of post offices lose money. The USPS could cut its losses by closing low-performing offices deep in rural areas. But legislators, unwilling to field angry phone calls from constituents wondering why their local post office closed, won't allow the cuts.

Even with those challenges, the USPS isn't going anywhere just yet. In fact, amid news that the Postal Service was restructuring after its years of losses, FedEx won a new seven-year, $10.5 billion contract with them to carry mail between U.S. airports.

With a huge volume of mail still traveling every day, and other shipping companies paying the USPS to handle some of their volume, it's a safe bet that the US’s local postal carrier will still be paying daily visits for years to come.

 

About the Author: Angie Mansfield is a freelance blogger and copywriter covering a range of topics for small business owners and consumers, including physician reviews.

Image Copyright (C): USPS image gallery

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Jun 19, 2021

Driver shortages: Why the industry needs to be worried

Logistics
SCALA
supplychain
Brexit
Rob Wright, Executive Director...
4 min
Logistics professionals need urgent solutions to a shortage in drivers caused by a perfect storm of Brexit, COVID-19 and compounding economic factors

While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks. 

A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so. 

What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.

"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"


That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.

But where has this skills shortage stemmed from? 

Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.

COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.

It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing. 

So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done? 

Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change. 

Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.

Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line. 

On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains. 

Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months. 
 

Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector

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