USPS to shutter LTL market test, effective September 19

In early 2009, the United States Postal Service (USPS) stated its intent in a filing with the Postal Regulatory Commission (PRC) to launch a market test to provide service akin to a less-than-truckload (LTL) network.

But in a filing submitted to the PRC on August 19, the USPS said it intends to shutter this initiative—it entitled “Collaborative Logistics”—on September 19.

According to the filing, the USPS planned to make its LTL service a permanent product offering “in light of its favorable reaction to the results of its market test.” Now, though, it explained it has been forced to reevaluate its plans based on changes in its organizational structure, its current financial condition, and operations concerns (the USPS ended the third quarter of fiscal year 2011 with a net loss of $3.1 billion, compared to a net loss of $3.5 billion for the same period in FY 2010).

It added that area mail processing and other consolidation activities have resulted in significant opportunities to reduce transportation, with management determining that resources should be devoted to consideration of initiatives to consolidate facilities and transportation to reduce costs. And it also said that aggressive cost cutting measures will impact revenue opportunities for Collaborative Logistics.

On September 19, expiring contracts for this initiative will not be renewed and other contracts will be terminated, with the USPS expecting that by this date all customer agreements will have concluded. The USPS will consider revisiting LTL services as a permanent product in the future depending on financial and operational conditions and “evaluate the successes and challenges of the Collaborative Logistics market test over the coming months.”

An industry source told Logistics Management in 2009 that this plan made sense on various levels, considering the USPS has plenty of excess capacity on the roads at the moment with a network that is already delivering mail on a daily basis. And he added that if viewed as an LTL player, the USPS has a bigger LTL footprint—or network—due to its existing mail routes.

“There is no place the USPS does not go,” explained the source.

However, the catch for shippers is that they would need to determine how to get freight to and from the USPS sectional center facility or bulk mailing center. This presents an opportunity for third-party integrators to take an active role in delivering and picking up freight and then collect and deliver it to a consignee.