Lexington Institute – March 29, 2016
The U.S. Postal Service is investing heavily in major technology initiatives with a focus on improving delivery of its competitive package products. Over the past two years, it has replaced older Intelligent Mail Devices with more than 260,000 new handheld Mobile Delivery Devices (MDDs). The MDDs are single-device scanners with GPS capabilities that allow letter carriers to track package delivery in real time. Clerks scan packages when received, and letter carriers do the same when they are delivered to notify customers within minutes.
Phase 1 of the rollout put more than 75,000 MDDs in the hands of letter carriers and cost $149 million between September and December 2014. Phase 2 distributed another 188,000 MDDs at a cost of $349 million through September 2015. A July 2015 audit report by the Postal Service’s Inspector General cited “common functionality issues” in need of improvement.
The Postal Service is also moving forward with its plan for Next Generation Delivery Vehicles. The $6.3 billion program will overhaul the agency’s existing 200,000-truck fleet with upgraded vehicles that incorporate new technology-enabled functionality and provide more storage space for packages. The agency’s Request for Proposals closed February 5.
USPS plans to utilize the new trucks to deliver both letters and packages. Private-express carriers, by contrast, typically use different, dedicated vehicles for packages. It is unclear how the Postal Service will attribute the costs it incurs jointly delivering letters and packages, given that federal law bars USPS from using revenue from monopoly products like letters to subsidize the delivery of competitive products, like packages.
The Postal Service has also launched a pilot “informed delivery” program, which sends customers emails with images and details about their letter and package mail before it’s delivered that day, free of charge. Customers can then let the Postal Service know if they’d like the mail delivered to them.
The U.S. Postal Service lost $5.1 billion in 2015 — its ninth consecutive year of losses. USPS management has not specified how it plans to pay for these technology upgrades.