News / Loss-making USPS slashes reliance on air to cut costs and 'go greener'

In an effort to become “a vibrant and self-sustaining organisation”, after years of extreme losses, the US Postal Service (USPS) has cut its reliance on air transport for first-class packages.

The reduction, around 90% over the past two years, brought a $1bn saving in costs and substantial climate gains.

USPS relies chiefly on FedEx for its air cargo freight and postmaster general, and CEO of USPS, Louis DeJoy said some 95% of first-class mail was now handled via ground transport.

Ultimately a branch of the government, the USPS carries some 32% of domestic parcel shipments, and has eager competition from UPS, with 24%, and FedEx, with 19%. But despite its market share, USPS has suffered crippling losses for many years, losing $1.7bn between April and June this year alone.

The pressure is now on for USPS to attempt to restructure to compete with these private sector rivals, and it has put various strategies in place to narrow its losses, including substantial pay cuts for many employees under a Rural Route Evaluation Compensation System (RRECS).

Mr DeJoy told the board of governors this month: “…we made significant efforts to reduce our cost of performance with substantial reductions in work hours and transportation costs, and year-over-year stability.”

He highlighted “significant inflation”, as well as other increases to the cost of its services, which added $6bn more than expected to its outgoings this year, “…and which will be in our operating cost base well into the future”.

Mr DeJoy said that USPS would be rolling-out 66,000 new electric vehicles as part of its various overhauls and added:  “Complementing this sustainability initiative is a more broad and ambitious environmental sustainability plan, which aligns our carbon reduction and energy conservation with the major facilities, equipment, and transport initiatives we are undertaking to reduce cost.”

According to USPS data, as of March this year, the group flew around 2,700 tonnes of parcels a day, entailing a tonne-km carbon emission of around 2,100 tonnes. Though trucks rarely come in for much praise environmentally, they emit between 20 and 21 times less CO2 per tonne-km than air. Better still is rail, which entails emissions of almost 90 times less CO2 per tonne-km.