USPS troubles could have profound impact on trucking

The United States Postal Service is on the edge of clicking the panic button. USPS was in the news again, this time for allegedly violating the Hatch Act, which is the law prohibiting federal employees from participating in partisan politics-related activities with funding from the union. The mail carrier’s financial and legal standing is of interest to carriers large and small due to its large supplier based used to move the country’s mail and small packages.

A report from Fox News on a report published by the Office of Special Council, noted that an unnamed USPS employee spotted “unnecessary overtime costs” that were “improperly coordinated” with the National Association of Letter Carriers (NALC). These so-called overtime expenditures were traced to “union official leave” spanning weeks. That leave was spent by the employees on the campaign trail of Democrat presidential candidate Hillary Clinton, said the report, though it does not mention if ever there are any truck drivers included among these employees on leave.

Nevertheless, it highlighted the bad financial situation that USPS is in. In another report, this time by Fox Business, USPS seemed like it is bleeding money. USPS lost $5.1 billion for the year 2016.

The financial crisis is one possible reason that chassis specialist Spartan Motors withdrew from the USPS Next Generation Delivery Vehicle Program (NGDV) as its body builder. The withdrawal was confirmed in a press release.  Spartan Motors’ President and CEO Daryl Adams said he felt honored on behalf of his company’s flagship brand, Utilimaster, to be in an exclusive circle of chassis makers involved in this USPS project. But he claimed that “further participation in the program as the primary body builder did not meet our baseline financial targets.”

While Adams did not mention any dollar figures, he reiterated in the same press release that “working closely with one of the USPS prototype award participants will enable us to participate in this significant NGDV program without the related upfront developmental capital requirement.”

The withdrawal fueled doubts about the $37.4 million granted by USPS in contracts to Utilimaster and other companies selected to participate in the NGDV according to a report by Heavy Duty Trucking. The publication identified the other companies as Indiana-based body builder AM General, North Carolina-based body builder VT Hackney, Turkish manufacturer Karsan, Oshkosh and Mumbai-based automobile manufacturer Mahindra. Together with Utilimaster, the companies were working to develop 50 prototypes of the NGDV.

USPS also as ordered 12,472 cargo vans from Ram Trucks.

According to the Fox Business report, USPS managed to increase package volume more than 15% between 2007 and 2016. But the increased volume has led to increased losses as shipping costs has jumped.

Then-Utah congressman Jason Chaffetz sponsored the Postal Reform Act of 2017 to help bail out USPS. But, with Chaffetz having now resigned from Congress, most pundits viewed believe the bill has little chance of passing.

The bill leaned heavily on workforce reforms, rather than expenditure reforms. Notable policies related to logistics efficiency are in Title IV – Postal Contracting Reform. It hopes to “post noncompetitive contract awards meeting certain value thresholds, and improve oversight and response to potential conflicts of interest regarding contracting.”

The troubles for USPS also affect thousands of trucking companies that rely on contracts with the mail carrier. In a press release announcing that Sacramento-based Matheson Trucking, Inc. was one of 12 companies to be recognized by USPS in its annual awards (Matheson won the Sustainability Excellence Award), it was noted that some 17,000 plus companies participate in USPS’s supplier base providing transportation-related services.

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One Comment

  1. Mahindra is continuing to develop a NGDV for the USPS, and it is a great vehicle and great looking! I know, because I work there. 😉

    1. Kevin: have the prototypes been delivered yet? I ask because Workhorse (ticker WKHS) filed an 8k annoncing that they ane their partner VT Hackney delivered theirs.