The U.S. Postal Service has successfully reduced its reliance on air shipments by a staggering 90% over the course of two years, a move that is expected to yield substantial savings. U.S. Postmaster General Louis DeJoy announced on Tuesday that this reduction in air cargo usage is part of a broader plan aimed at saving approximately $1 billion in annual transportation costs.
To achieve this cost-saving milestone, the Postal Service has shifted its focus from air transport to ground transportation methods. This involves using contracted drivers of large trucks and postal service-owned tractor-trailers for the bulk of its shipping needs. DeJoy’s overarching goal is to enhance the financial stability of the Postal Service.
DeJoy highlighted that more than 95% of first-class mail and 95% of first-class packages are now being processed through the postal service’s ground transportation network. This transition to ground transportation is part of a multifaceted strategy to reduce operational expenses, generate higher revenue from package deliveries, ensure punctual deliveries, adjust pricing to combat inflation, and expand delivery points over the next 17 months.
Despite these efforts, DeJoy revealed that the Postal Service is facing approximately $6 billion in unanticipated costs for the current year due to inflation, unexpected retirement expenses, and other unforeseen factors. Nevertheless, the Postal Service continues to focus on managing costs within its control, such as cutting work hours by 6 million hours compared to the same period the previous year, as well as concentrating on transportation and other operational expenses, according to Chief Financial Officer Joseph Corbett.
Additionally, DeJoy disclosed the opening of the Postal Service’s first regional distribution center in Richmond, Virginia, with plans to establish nine more regional centers and renovate 27 local processing centers and 60 additional sorting and delivery centers. These initiatives mark the beginning of a comprehensive effort to address over $20 billion in deferred maintenance and prepare the Postal Service for the next three decades.