This blog should come as no surprise for those following the news in the United States. For the past few months, the status of the United States Postal Service (USPS) has been rocky, at best. In fact, there has been some talk about shutting it down altogether.
While most people associate the USPS with letters from grandma or subscription boxes, the organization plays a huge role in the logistics industry as a whole. Here’s a closer look at everything the USPS does and what could happen to the industry if it slowed or disappeared.
The USPS may seem like an isolated system, but nothing could be further from the truth. Every American (and especially no logistics manager) has heard of FedEx, and we’re sure you’ve shipped or received something from the company at some point.
It turns out USPS is FedEx’s biggest customer. When people need to ship across the U.S. or to another country entirely, FedEx provides airport-to-airport services. This contract, though, expires in 2024. If the USPS goes under or if it can’t afford to work with FedEx in the future, FedEx will have to undergo some major restructuring. That means supply chains will be much less tried and true than they ever have been. Plus, FedEx won’t be able to offset the costs of their system as effectively. Ultimately, it spells disaster for any and all FedEx shipments.
This would, in turn, have a huge impact on retail giants like Amazon, who utilize both FedEx and USPS for deliveries from time to time. It’s like a row of dominos after that: Amazon experiences shipping issues (and possibly pays to keep its parcels a priority), which means carriers need to rethink routes, which necessitates blank sailings, and it just keeps going.
Say Goodbye to On Time
If there’s one thing the USPS is known for, it’s their “rain or shine” mentality. USPS periodically works overtime to account for inflated volumes of shipping, which helps eliminate inventory bloating to keep supply chains moving.
USPS is also known for their continuous shipments. If there are more packages for a certain location than a truck can carry in one trip, they’ll simply make another. When budgets are cut, though, these second trips get dropped, which means overflow packages are pushed to the next day.
USPS may be a headache for some supply chain managers, but it has a huge impact on the industry as a whole. Even those who don’t work in retail supply chains are bound to see the waves of impact from a USPS shutdown or cut as capacity and shipping schedules shift to account for the change.
Our advice? Stay informed. As with all things in the logistics industry, the sooner you know about a change, the sooner you can react. If you need help, get in touch with us or sign-up for our newsletter below: