USPS Pushing Away Shipping Partners

Although the Postal Service has always offered package services, Postmaster General Louis DeJoy is fixated on transforming the agency from one focused on paper mail into one built around the package business.  Accordingly, the new delivery vehicles on order are bigger – to hold more boxes – and the facilities in the USPS processing and delivery network are getting more package sorting equipment.

At the same time, as he elbows his way into the very competitive package shipping marketplace, DeJoy wants to end partnerships with other carriers so that, presumably, he can get all of the now-shared business for himself.

One element of his going-solo approach was the September 11 announcement that negotiated service agreements with consolidators were being terminated.  In the press release notifying the public, DeJoy was quoted as stating:

“… to more effectively utilize our network and realize enhanced economies, we no longer intend to provide discounted rates through NSAs that incent parties to aggregate mail volume from multiple shippers and to bring such volume directly to our delivery units. … It’s challenging for us to justify entering into NSAs that incentivize bypassing our transportation and processing network, while leaving us responsible for managing the final mile.

The Postal Service’s truly unique feature is its delivery to every address six-days a week, so it’s hard to understand why having other carriers pay to have the USPS deliver packages to places it’s visiting anyway isn’t a good idea.

DeJoy dislikes worksharing, is obsessed with “full trucks,” and needs to find volume to keep his growing career workforce (and package sorting equipment) busy.  Therefore, it’s a short leap to conclude that he assumes the volume that consolidators would be dropping at post offices for the USPS to deliver will simply be entered into the postal system at origin by the same shippers – maybe a risky assumption.

Another example of DeJoy’s no longer wishing to share with others is the recent proposed rule to ban dual shipping labels.  As stated in the proposed rule, this revision was developed because the USPS “has reviewed the practice of using dual shipping labels and has found that this practice no longer serves the interests of the Postal Service.”

Items shipped by United Parcel Service’s SurePost, for example, have a UPS label for the movement of the item to a post office, then a Postal Service label (and evidence of postage payment) to get it delivered to the customer by the USPS.

Under the proposed rule, however, if SurePost isn’t already killed off by the end of an NSA, it would at least be impeded by requiring UPS (if it chose to continue) to alter its process so that any label for the shipment to a delivery office doesn’t appear on the item itself – which would be allowed to bear only a Postal Service labe

Apparently, DeJoy doesn’t believe that “if it ain’t broke don’t fix it” applies here, choosing to end a shipping arrangement in which the USPS is paid a rate more than covering costs to only deliver what another carrier hauled from the sender to the delivery office.

DeJoy seems to want the USPS to control package movement from the shipper to the addressee, and get all the revenue, and so is pushing out other carriers who are now involved.

However, aside from whether any added postage the USPS may be paid will just offset the additional costs it will incur, the more important matter is service.  Shippers are carrier agnostic, shopping for price and expecting prompt service.  If DeJoy’s revised networks can’t meet those expectations, shippers will simply move to another carrier

If that happens, the USPS then would have lost more than it may have now, and DeJoy’s strategy would have backfired.

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