Parcel shipping: USPS makes realignments with a focus on the future

Earlier this week, the United States Postal Service (USPS) announced major realignments within two groups as part of what it described as an organizational shift designed to achieve long-term business objectives.

Through these realignments, the Expedited Shipping and Ground Shipping groups, which are part of the USPS’ Mailing and Shipping Services group and were established in March 2008, have been merged into a single group—entitled Shipping Services. This group will be led by USPS Vice President Gary Reblin, a 15-year USPS veteran whom has served as vice president, Expedited Shipping since March 2008, where he was in charge of Express Mail and Priority Mail products. In his new role, Reblin will oversee shipping products and services and customer service improvements, including product services, marketing promotions and revenue in both market dominant and competitive product classifications.

The USPS also announced also announced the rollout of the Product Visibility and Operational Performance group, which will be led by USPS Vice President Jim Cochrane, a 34-year USPS veteran whom previously served as vice president, Ground Shipping, in which he was in charge of ground packages, among other duties, and also was previously manager of USPS Package Services. Cochrane will oversee development of USPS scanning technologies and tracking systems, including the Intelligent Mail barcode, and the implementation of product scanning technologies.

USPS Postmaster General John Potter said in a statement that Reblin and Cochrane have solid track records in building the USPS’ shipping services businesses, adding that “their proven leadership is critical to the continued growth in our shipping business and the implementation of technology-driven solutions that match the needs of a rapidly evolving mailing industry.”

Potter added that these changes will provide the USPS with more competitive products and scanning visibility for customers, with staffing for the new groups coming from its Expedited Shipping, Ground Shipping, and Intelligent Mail and Address Quality groups.

A USPS spokesman told LM that the organization has covered a lot of ground in terms of the “heavy lifting” done to build the Expedited Shipping and Ground Shipping groups.

“With most of that lifting done, [the groups] have had tremendous successes,” said the spokesman, “so in looking at these realignments from a strategic viewpoint, it is a great opportunity in terms of economies of scale by unifying the two groups and putting all of the package products under one umbrella.”

A noted parcel industry expert told LM this news makes sense for the USPS on multiple fronts.

“Reblin was in charge of Priority and Express Mail and Cochrane was in charge of Ground products, which are companion products and had to be sold across the portfolio between Parcel Select and Priority Mail,” said Caldwell. “And it probably makes more sense to have one person [Reblin] running it.”

Caldwell also noted that Cochrane, a seasoned package veteran, is moving into a new arena, where he will focus on package quality and enhancing the visibility of mail and packages, which he said is a big USPS initiative.

“Cochrane has a reputation of being customer friendly and knows the customers well and knows the shipping product business well and comes from an operations background in the USPS,” he said. “They are going to try to improve the visibility and performance of shipping services in terms of how can you increase the visibility on packages of all kinds. There is not anybody that knows more about a combination of packages, internal performance workings and bringing customers in than Cochrane. These are both good fits and decisions to increase the visibility of packages.

Reblin’s experience in the package arena, with him now covering all package business from a domestic standpoint, and Cochrane focusing on quality issues is a good match and good news for shippers in the long run, according to Caldwell.

While the USPS has been in the red financially, due to volume and earnings losses over the past several quarters, parcel industry sources say that this week’s news cannot be read into too deeply. But they agree that the USPS is well aware of how important its package business is to its future, because it is one of its segments that has significant growth potential.

“What you charge for packages is directly related to quality of service performance, how fast it is and its tracking capabilities, and that makes this news a smart move,” said Caldwell.

For the three months ending March 31, USPS volume was down 3.3 percent year-over-year, and total revenue at $16.7 billion was down 1.4 percent. A large amount of these losses are due to declines in First Class Mail revenue and subsequent volume declines. But its shipping services, mainly Express Mail and Priority Mail, which are considered competitive products and represent 12 percent of total revenues, grew 5.7 percent.