Many of our customers haul US Mail for Highway Contract Routes. If you were at the NSRMCA convention in Baltimore in August, today's news is no surprise. You heard the PMG and surface transportation leadership describe coming changes. Many readers of this blog
contacted us to request a copy of the OIG's report on the new postal network. This report, published by the USPS Office of the Inspector General, outlined the "new" USPS network. There is one fact in this discussion - things must change for the USPS. Change is no longer in doubt. The question is the type of change, and the pace of change.
Your company hauls mail. What do you do and how do you plan? Will you get more or fewer trips on your contracts? What will contracts look like when they renew? Will there be more trips, fewer trips, GPS required, etc?
We know that many of the USPS proposals require Congressional approval, but not all. We can speculate that some, but not all, of these proposals will become reality. We also know that many of these initiatives have already started. Our clients are already reporting combined contracts, cut trips, elimination of mail processing facilities that in turn necessitate new contracts.
We know that the USPS leadership has stated their intention to dramatically change the network, increasing capacity utilization. They wish to issue more area wide contracts - fewer contracts that require more resources from the successful bidder. They wish to increase utilization, including dynamically combining or changing trips to respond to current volumes. This means fewer miles within existing lanes of traffic. However, the story does not end there.
We also know they have already closed 145 processing facilities since 2006. They wish to reduce the current number of mail processing facilities from 528 (FY 2010) to 135. Fewer processing facilities means more miles in new lanes. Further, they wish to shift mail from air to trucks - adding even more miles.
The impact on your company will be determined by three things; your willingness to work with the USPS, your geographic areas of operation, and your ability to rapidly respond to service changes.
You must decide if you wish to remain in the mail business in light of these changes. If so, you must start preparing tomorrow to run your company differently. Drivers must understand that there will be fewer "milk runs" where they execute the same routine for years on end. Mechanics must understand that uptime, appearance, and response to downtime is more important than ever. Dispatchers must understand there there will be fewer static runs, and they must come up with plans to respond to flexible demands for people and equipment.
Finally, owners must drive these changes - plus respond to their own set of challenges. Be flexible yet precise when bidding new contracts. Determine the true cost and benefit of handling extras. Consider other revenue opportunities with your existing capacities - such as dedicated runs that can serve as backhauls for those postal "one-ways".
You would expect a technically-oriented blog to address the role and importance of technology. Yet, it's pretty obvious what you must be able to do. You must be able to instantly communicate with your drivers, and to see how each of your routes are performing in real time. You must be able to perform proforma analyses of contracts you're bidding. You must have the tools to dynamically dispatch equipment and people as needed.
Contact us with any questions or comments. We're in this business to stay, and we're interested in working with you and hearing your comments.
