Logistics Services and Transportation Providers

The transportation industry in the U.S. is huge, but only a part of it is primarily concerned with delivering mail and small packages. This sector is still large, with 2014 revenues of about $158 billion and employing about 787,000 people.

Source: 2015 EMA Mailing Industry Jobs Study, EMA

The Postal System Uses What it Can to Move the Mail

The Post Office has used just about everything to carry mail. It has used stagecoaches, railroads, and airplanes, even experimenting with a missile. It has used horses, burros, mules, and dogs. It has used snowmobiles, helicopters and small private planes to reach isolated communities. It came up with a way to sort mail while traveling (the Railway Post Office and Highway Post Office to name two).

It supported Samuel Morse’s early work with the telegraph. It developed a system of pneumatic tubes to carry mail underground some northeastern cities that avoided their congested roadways. It tested motorized scooters and was using electric-powered vehicles before the First World War.

As the population grew and as people began to move away from the settlements on the coast, there was even more need to build a network of communication. The new Congress authorized the establishment of post offices and post roads.

These roads helped move people, mail and goods up and down the colonies and westward into the American frontier. A great example is the highway once known as the National Road, the first major improved road funded by the Federal government. It was begun in 1811, and extended across the Allegheny Mountains at the Cumberland Gap westward to Illinois. The eastern extension reached Baltimore, at the time one of the top seaports in America. Eventually, this route was absorbed in the U.S. highway system as U.S. Route 40.

The Postal System of the New Nation Amazed Europeans

The nation’s roads grew significantly between 1792 and 1828, from about 5600 miles to 155,000. By 1828, there were 74 post offices for every 100,000 Americans. By comparison, France had only four post offices and Great Britain had only 17 post offices per 100,000 people. Visitors from Europe were amazed at how the postal system worked.

In 1831, Frenchman Alexis de Tocqueville began his travels in America, a journey that led to his classic book, Democracy in America. He wrote of the mail:

“I traveled along a portion of the frontier of the United States in a sort of cart, which was termed the mail. Day and night we passed with great rapidity along the roads, which were scarcely marked out through immense forests. When the gloom of the woods became impenetrable, the driver lighted branches of pine, and we journeyed along by the light they cast. From time to time we came to a hut in the midst of the forest; this was a post-office. The mail dropped an enormous bundle of letters at the door of this isolated dwelling, and we pursued our way at full gallop, leaving the inhabitants of the neighboring log houses to send for their share of the treasure.”

The Postal Service Contracts Out Much of its Transportation

The majority of mail transportation contracts have come through what is known as “Star Route” service. It got its name from the manner in which clerks registered the contracts in postal ledgers. The contracts required “celerity, certainty, and security”, but clerks developed the practice of shortening the phrase by using asterisks (***). A significant amount of mail on rural and some suburban routes

The Postal Service Introduced Significant Discounts for doing some of the Work

In the 1970’s, mail volume was growing faster than the Postal Service could install advanced equipment to handle it. In 1976, it offered discounts to mailers and their service bureaus who could sort and transport mail cheaper than the Postal Service. These discounts came to be called “worksharing” and have been regarded as “the quiet liberalization” of the postal system. Now, mailers transport the mail to the processing center or even the post office closest to the point of delivery. Sophisticated logistics software helps identify where this makes sense.

The Postal Service Developed a Revolutionary Way to Cooperate with Key Competitors

The Postal Service needed additional, more reliable daytime airlift for mail, and its traditional competitors, FedEx and UPS, had extra capacity since they were busiest at night. The Postal Service has become one of the largest customers for these firms. FedEx and UPS, however, have become large customers of the Postal Service as they deliver packages to post offices for final delivery when it is unprofitable for them to deliver it themselves. The Postal Service can do it since they are going to these delivery points anyway, carrying other items such as letters, direct mail, catalogs and magazines.

Technology Continues to Drive Change in the Logistics and Delivery Market

It takes a lot of sophisticated technology and expertise to make sure a letter, publication or package gets on the right truck at the right time and is delivered quickly to the right address. It involves planning and coordination by many different people in different companies. Technology continues to drive change as we enter the age of the “Internet of Things”, where machines “talk” to other machines and objects such as a piece of mail. Items can be tracked from origin to final delivery, and advance notice can be given of expected delivery.

Logistics specialists can forecast and avoid bottlenecks, immediately identify emerging problems, and reroute the mail. An example would be an area affected by a hurricane, tornado or a flood. The Postal Service can identify mail on its way to the area, collect it at alternate sites, and deliver the mail when service can be resumed. It will notify the sender of such actions, so mailers can be aware that their messages or merchandise may be delayed, but reassure