WASHINGTON Feb 7 The U.S. Postal Service is
soliciting advice on how to create a new, high-technology system
for routing mail and packages, in a move that could help close
the gap between it and private-sector rivals FedEx and
The financially struggling mail agency said it wants a
"dynamic routing" strategy that can help it offer new products
that could boost revenue, such as same-day delivery and pickups
at retail locations.
It would also help the agency deliver more efficiently as it
moves to five-day delivery of first-class mail. The Postal
Service announced on Wednesday that it will phase out Saturday
delivery to cut costs.
The U.S. agency has struggled for years to regain financial
footing as it grapples with massive payments for future retiree
health benefits and as Americans' reliance on online
communications drives down mail volume. It lost nearly $16
billion in its last fiscal year.
The mail agency quietly posted last month a "request for
information" on a U.S. government website seeking advice from
private companies or individuals for a dynamic routing system
for delivering individual packages outside its day-to-day
routes. It is not offering any compensation for information at
The Postal Service sees an opportunity in the growth of
e-commerce, but it lacks a state-of-the-art software or
GPS-based system to help the deliverer find individual addresses
and the best routes to get there.
"There's an upside and a downside to the Internet," USPS
spokeswoman Sue Brennan said in an interview. "It has decreased
our first class mail, but what it's done is that people are
shopping online and they need someone to deliver these
Postal Service mail volume has dropped by about 25 percent
over the last decade as more Americans communicate through
email. But the National Retail Federation projects that online
retail sales could go up by up to 12 percent this year, which
translates into an increased need for package delivery services.
"We're looking for a system that will enable expedited
delivery of packages in a delivery sequence that makes best use
of our resources: employees, their time, fuel, etc, outside of
regular carrier routing," Brennan said. "Someone could just be
delivering packages and it wouldn't be every house in a
neighborhood - so what's the best way to get to all the
addresses in a specific geographic area or ZIP Code?"
The Postal Service's main competitors, FedEx and UPS, have
been using dynamic routing for years, and are able to do more
with less using this system, said Jeff Kauffman, a
transportation analyst with research firm Sterne Agee in New
"I would argue that the Post Office doesn't understand the
flow on an individual basis. The Postal Service infrastructure
was created a world ago for a world that has changed," he said.
Dynamic routing, Kauffman said, would make the Postal
Service more efficient and more relevant, but wouldn't
necessarily give it a competitive advantage over UPS and FedEx.
Unlike its competitors, the Postal Service remains
constrained by its universal service obligation, including
delivering to remote places that aren't profitable. FedEx and
UPS don't have this problem, and often use the services of the
Postal Service for final-mile deliveries. Both private companies
seem to welcome the Postal Service's attempt to improve.
Kara Ross, a spokeswoman for UPS, said in an email that
dynamic routing is a fairly complex system, and that UPS is
continually updating its technology to be more efficient in
delivery. "We utilize dynamic routing extensively and we view
our systems as a competitive asset," she said. "We encourage
competition, and the use of such technology by USPS is not
FedEx spokeswoman Maury Donahue, said the company - a major
customer of and supplier to the Postal Service - supports any
efforts by the Postal Service to successfully manage its
business. "We believe that a healthy Postal Service, the largest
postal operator in the world, is important to America," she said
At this point, the Postal Service is collecting information
and has no plans yet to award a contract.
Kauffman said dynamic routing would help the Postal Service
make more money over the long term, but a new system wouldn't
necessarily come cheap.
"It's do-able," he said. "The question is does it require a