The Republican fundraiser Louis DeJoy took over as the US Postmaster General this month. ParcelHero predicted Trump would appoint an ally back in January, but will DeJoy’s appointment inevitably spell the break-up of the USPS, or could he prove to be its savour?
In January, the international courier service ParcelHero, which specialises in services to the US, warned that President Trump was planning to privatise the United States Parcel Service (USPS) by stealth. ParcelHero predicted he would exert his influence on its board to hire an ally to be the next Postmaster General.
This month, Louis DeJoy, a top Trump donor who was in charge of fundraising for the 2020 Republican National Convention, took over as US Postmaster General. He’s the first person to take the role who hasn’t come from within the postal service for over 20 years.
ParcelHero’s Head of Consumer Research, David Jinks MILT, says the appointment certainly comes as no surprise. He says that major reform of the USPS looks highly likely but, even so, Trump may not get things all his own way:
‘Many US industry watchers believe DeJoy has got the top job in order to push through privatisation proposals. Right at the start of his Presidency, Trump commissioned a report that claimed: “A privatized Postal Service would have a substantially lower cost structure.” Trump, however, has always made it clear that he is furious with the USPS for – in his eyes – undercharging Amazon for parcel deliveries. Amazon is owned by Jeff Bezos, who also owns The Washington Post, a newspaper leading the criticism of Trump’s administration. Trump claims Amazon costs the USPS “massive amounts of money for being their Delivery Boy”.
‘Trump has been softening up the USPS for privatisation for some time. In April, as the service reeled under the impact of the coronavirus, the President intervened to keep the USPS out of a US $2.3 trillion economic stimulus package. Instead, Trump offered it $10 billion in additional debt, which would only be granted if it agreed to his demand to “raise the price of a package by approximately four times”.
‘However, President Trump doesn’t always get his way, even when he has hand-picked people to do his bidding. Last week, the US Supreme Court, which Trump has stuffed with supposedly right-wing judges, went against his wishes in their rulings on young immigrants and LGBTQ rights.
‘Likewise, DeJoy has considerable experience in the parcels and logistics industry. He spent more than 35 years running the supply chain company New Breed Logistics, which provided support for the USPS. When New Breed Logistics was sold to XPO in 2015, he served on the multi-national logistics provider’s board until 2018. He says he is committed to creating a long-term, viable operating model for the Postal Service that will ensure the organisation can fulfil its public service mission while remaining self-sustaining.
‘It’s not yet clear whether DeJoy will strictly follow Trump’s agenda and push for service cuts and increased prices for key customers such as Amazon. Once he has seen the notoriously secret contracts USPS has with Amazon and other major e-commerce players, he may decide it is in the service’s best interest to maintain its role as a universal service provider, with its losses on letter post subsidised by profits made on its substantial parcels contracts, including that with Amazon.
‘ParcelHero’s assessment is that the USPS makes more money on its parcel deliveries than any other sector. Our analysis is that delivering packages is good business for the USPS. Parcels make up just 5 percent of the Postal Service’s volume but account for 30 percent of its revenue. As a logistics businessman, DeJoy may feel that to sell off the profitable parcels arm or drastically raise its prices, thereby losing Amazon’s custom, may not be the smartest move.
‘If DeJoy does push through Trump’s privatisation agenda, it could mean significant changes to some UK- US parcel services. Economy mailings of up to 2kg to the US would be worst impacted by significant price increases at the USPS, as these frequently use the postal service for final delivery. Apart from these light packet deliveries, it is likely to be traditional UK Post Office services which connect to USPS deliveries that will be most affected by potential reductions in Saturday services or remote area deliveries. International courier services should not be as significantly impacted. You can find out the latest information on US deliveries; including the latest on USPS restructuring and price changes, at https://www.parcelhero.com/en-gb/international-courier-services/usa-parcel-delivery