Agency shone in 1997 and can today, but it will face a different challenge
Twenty-six years ago, the U.S. Postal Service stepped into the breach when a strike by the Teamsters union shut down virtually all of UPS Inc.’s domestic delivery network. By the accounts of people who were around at the time, the Postal Service performed admirably under difficult circumstances.
More than a quarter-century later, the same scenario confronts the parcel-shipping world, and people are again looking to the Postal Service for relief. Can it come through?
The fact is that with 21 million parcels delivered, on average, each day, UPS (NYSE: UPS) handles so much business that a near-complete shutdown would severely disrupt the nation’s delivery network. Most carriers know this, as do shippers, who would accept some level of delivery disruption as long as stuff gets moved from A to B.
The 1997 strike occurred in a market dominated by linear business-to-business traffic. This year, nonlinear and logistically complex e-commerce traffic going to consumers would be very much at risk.
Many others would pitch in. But the Postal Service, with an astonishing capacity of 60 million daily parcels and with more excess space than the number of parcels UPS moves each day, is being viewed as the “white knight.” By federal law, the Postal Service must pick up and deliver from every address and P.O. Box. Just because a package from a UPS shipper must at some point delivered, there’s no guarantee as to when. The pressure would be squarely on the agency because most private carriers will have stopped accepting new business weeks before then.
The challenge for the Postal Service, which was unavailable to comment for this story, isn’t how much capacity it can handle but the profiles of the packages themselves. “The Postal Service is structured for lighter-weighted shipments weighing up to 10 pounds. But in many cases, they are price-competitive only up to 5 pounds,” said John Haber, chief strategy officer at Transportation Insight Inc., a consultancy.
Amazon will pick up the slack, just as they do when you want to buy something and can’t find it local stores. Amazon can have it at your door in 2 maybe 3 days.