The U.S. Postal Service, United Parcel Service and FedEx
expect a year-end surge in parcel delivery, fueled by booming online shopping
during the holiday season. The Postal Service expects to deliver 4 billion
packages this year, an 8% increase over 2013 U.S. Postmaster General Patrick
Donahoe said. But deliveries over the holiday season could total 475 million, up
12% to 14% from last year. Parcel deliveries will peak between Thanksgiving and
Christmas.
UPS predicts it will handle 585 million packages in
December, up 11% over 2013. UPS says it expects Dec. 22 to be its busiest
delivery day of the season. Last year, hundreds of irate customers vented on
social media and provoked national media attention after UPS failed to deliver
thousands of packages by Christmas Eve. UPS said it did not properly calculate
and prepare for a huge surge in online shopping.
UPS says it has invested $175 million to increase its
sorting capacity and is hiring up to 95,000 seasonal workers to deal with the
holiday crush. Employees will also work Nov. 28, the day after Thanksgiving, the
company said Wednesday.
FedEx expects to move more than 290 million shipments
between Black Friday and Christmas Eve, an 8.8% increase in overall
year-over-year peak seasonal volume. The company predicts Dec. 15 will be its
busiest day.
The Postal Service, with carriers working through the
holiday, managed to deliver most packages on time, even as package volume
exceeded its prediction of a 10% surge, Donahoe said. UPS and rival FedEx also
pay the Postal Service to deliver more than 470 million packages to residences.
With 215,000 routes, the Postal Service can shift employees and resources to
deliver packages seven days a week to most homes and businesses. The Postal
Service shifts to seven-day package delivery after Thanksgiving.
The record surges in package delivery gives added urgency to
the Postal Service's need to change. First class mail volume has dropped more
than a third in the last decade, while online shopping is growing. The Postal
Service needs to shift more of its resources to daily package delivery, he
said.
The Postal Service, which posted net losses of $2 billion in
the third quarter, has asked Congress to allow it to eliminate Saturday mail
delivery and recalculate its federal pension and retiree health benefit
contribution to cut costs. The Postal Service was unable to pay a $5.7 billion
retiree health pre-funding payment due to the U.S. Treasury in September. Eliminating
Saturday mail delivery would save $2 billion a year.
Donahoe says he's pushing Congress to give the Postal
Service more freedom to respond the market changes so it can compete with the
likes of UPS and FedEx and stay solvent while still providing universal mail
delivery to 166 million homes and businesses. The Postal Reform Act of 2014 would
give the Postal Service more flexibility to set rates and change business
practices as well as recalculate federal requirements for advance funding of
retiree benefits.
The Postal Service operates on the money it earns from
postage. It does not receive a federal budget appropriation, but it has
borrowed $15 billion from the U.S. Treasury to cover its losses.
Under current law, the Postal Service can't respond to
market changes because price increases are capped at the rate of inflation, and
such increases require postal commission approval. Last year, the postal
commission approved a temporary 3-cent increase in the price of a stamp to 49
cents.
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