As the holiday season approaches, the United States Postal Service (USPS) is gearing up for another year of delivering holiday gifts and well wishes across the nation.
This year, the USPS is set to deliver a pre-season ‘holiday gift’ to online merchants by not implementing holiday peak season surcharges on parcels.
This stands in stark contrast to announcements from other carriers, like FedEx and UPS, that have unveiled surcharges for the holidays. Even Amazon followed the ‘tradition’ for a second year now by temporarily increasing rates during the holidays.
Postmaster General and CEO, Louis DeJoy, expressed satisfaction with the Postal Service’s performance during the 2022 peak season, describing it as “a tremendous success.”
He emphasized the organization’s readiness to provide superior and consistent service throughout the upcoming holidays, underscoring their early planning and strategic investments in personnel, infrastructure, transportation, and technology, all made possible through the Delivering for America plan.
Furthermore, DeJoy highlighted the USPS’s commitment to cost-effectiveness for all customers, stating that the Postal Service is the “most affordable delivery provider this holiday season.”
This news is particularly positive for many small online businesses and marketplace sellers, who rely on reliable and cost-effective shipping services during the busiest time of the year.
With FedEx and UPS announcing holiday surcharges, the Postal Service’s decision to eliminate peak season surcharges may give it a bit of a boost this season. This move represents a notable change in the USPS’s holiday pricing strategy.
Since 2020, the Postal Service has added peak season surcharges to match industry practices, making this year’s decision to forgo extra charges a welcome departure from recent practices.
It’s worth noting, however, that while the USPS is not implementing additional holiday surcharges, it has undergone significant changes in its services and pricing structure.
Postmaster General and CEO Louis DeJoy – A USPS Turnaround
Since DeJoy was appointed as Postmaster General in 2020, he has introduced many changes, including significantly adjusting rates in response to continued red ink at the Postal Service as well as evolving market demands and increased package volumes.
These changes have shocked many small online sellers and political foes, as he was a President Trump donor who was appointed by a board filled by Trump’s appointees.
Yet, it appears under the current administration and within Congress, there appears to be an acceptance that changes had to be made at the Postal Service.
Between the changes outlined in the 10-year ‘Delivering for America’ plan, he was also instrumental in working with the Biden White House and Congress to pass the Postal Service Reform Act of 2022 which included many key Democratic wish list items.
But it appears that helped him to become a more ‘politically neutral’ figure for now. In turn, he appears to have been given the freedom to continue his vision for USPS, many of which are being ‘rubber-stamped’ by the Postal Regulatory Commission.
USPS and The 2023 Holiday Season
Besides the good news of no peak season surcharges, here are some of the investments the organization has made to be ready for this year’s holiday season.
Recruiting 10,000 Seasonal Employees: The Postal Service’s Delivering for America initiative, which has successfully transformed over 150,000 pre-career positions into career roles since October 2020, has minimized the need for additional seasonal hires. As a result, USPS plans to bring on just 10,000 seasonal workers.
Introducing 348 Cutting-Edge Package Sorting Machines: These state-of-the-art machines represent a strategic investment in local postal infrastructure, enabling postal workers to efficiently and reliably sort packages of all sizes.
Since the start of 2021, the Postal Service has implemented 348 new package processing machines nationwide, including 100 sorting machines added since the last peak season. An additional 47 machines will be installed preparing for the upcoming holiday season, as part of USPS’s $40 billion commitment to modernizing technology and facilities under the Delivering for America initiative.
Boosting Daily Processing Capacity to Around 70 Million Packages: USPS has expanded its daily package processing capacity to approximately 70 million, a remarkable 10 million increase from the previous year. Since 2020, the Postal Service has nearly tripled its daily package processing capacity, streamlining package flow through the postal network and eliminating the need for temporary annex leasing.
Shifting 95% of Volume to More Reliable Ground Transportation: USPS has revamped its transportation and logistics procedures to handle the expected surge in mail and package volumes during the peak holiday season.
The Postal Service has transitioned a significant portion of its mail and package volume from costly air transportation to a revamped ground transportation network. Currently, over 95% of First-Class Mail and more than 95% of First-Class packages are transported through this ground transportation system.
Streamlined New Parcel Solution – USPS Ground Advantage: USPS Ground Advantage offers a straightforward, dependable, and cost-effective way to send packages across the continental United States in just two to five business days this holiday season. This new streamlined service has reduced the confusing levels of ‘ground services’ USPS offered in the past.
DeJoy added that USPS continues “to adapt and execute on strategies to modernize and transform the Postal Service into the high performing organization the nation expects and deserves.”
The Bottom Line
DeJoy may continue to be a controversial Postmaster for some, and price increases under his reign have hit small businesses hard. However, from a pure perspective of restructuring a broken organization, he seems to have accomplished more than most of his predecessors.
Postal operators around the world are grappling with similar issues, some of which are privately run companies today.
For example, the UK’s mail service Royal Mail is owned and operated by International Distributions Services plc, which also owns Parcelforce and GLS parcel courier services. Germany’s Deutsche Post is a wholly owned brand of the DHL Group, one of the world’s largest international courier and logistics companies.
Certainly, the gap in pricing between USPS and UPS/FedEx has significantly closed, and in some cases may even favor either private courier service.
Regardless, the announcement that USPS won’t be adding surcharges will make it a better option for many small sellers this holiday season, and it may give it a boost in business, one that may continue to drive revenue to the organization over the long haul.
Let’s just hope it can deliver on its promises.
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