In a dramatic turn of events, the United States Postal Service (USPS) has managed to become sustainable in a bid to cut costs. This is thanks to a significant shift away from air transport for its first-class parcel shipments.
This sweeping reduction, spanning an impressive 90% over the last two years, has not only resulted in $1 billion in cost savings but has also yielded substantial environmental benefits.
This has contributed to the USPS’s commitment to becoming more environmentally responsible.
A happy coincidence
Previously, USPS was reliant on air cargo services primarily through FedEx. Louis DeJoy, USPS Postmaster General and CEO, revealed that an astounding 95% of the first-class mail is now efficiently managed via ground transport.
Operating as a government entity, USPS manages a hefty 32% share of domestic parcel shipments, placing it in direct competition with UPS at 24% and FedEx at 19%.
Managing expectations
However, despite its considerable market influence, USPS has grappled with severe financial deficits over the years, sustaining a loss of $1.7 billion between April and June of this year alone.
The mounting pressure to reshape its strategies and hold its ground against nimble private-sector contenders has led USPS to implement a series of innovative approaches aimed at mitigating losses. One such measure involves implementing substantial wage cuts under the Rural Route Evaluation Compensation System (RRECS), affecting numerous employees.
“We have proactively endeavored to optimize our operational efficiency through significant reductions in labor hours and transportation expenditures, thereby ensuring year-over-year stability,” DeJoy said.
DeJoy underscored the impact of “considerable inflation” and other associated service costs that exceeded projections by a staggering $6 billion this year. He also cautioned that these expenses were poised to remain integral to the operating budget for the foreseeable future.
USPS’ electrifying future
Looking ahead, USPS is clearly focused on upholding that eco-friendly badge.
The organization is set to introduce a fleet of 66,000 new electric vehicles. DeJoy emphasized that this initiative would coincide seamlessly with an environmental sustainability plan. It should integrate well with its carbon reduction and energy conservation efforts and its ongoing facilities, equipment, and transportation upgrades.
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According to data from USPS, up until March of this year, the agency used to transport approximately 2,700 metric tonnes of parcels daily, resulting in around 2,100 tonnes of carbon emissions per tonne-kilometer.Â
While trucks have often faced criticism for their environmental impact, their carbon emissions are estimated to be between 20 and 21 times lower per tonne-kilometer compared to air transport. An even greener alternative is rail transport, boasting nearly 90 times lower carbon emissions per tonne-kilometer than air travel.
USPS’s bold (and almost ‘accidental’) move towards eco-conscious practices sets a promising example for other entities grappling with both financial constraints and environmental concerns.
