Wednesday, July 18, 2012

USPS ponders boosting mail by rail

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Hit-or-miss efforts (mostly miss) by the U.S. Postal Service to move mail by railroad have characterized the mode's declining mail modal share for decades, but the USPS is once more eyeing freight railroads as a way to lower costs and improve efficiency.

In a 26-page report dated July 16 prepared by the USPS Office of Inspector General, a recommendation is made to pursue intermodal mail movement to "save transportation costs, gain long-term strategic advantages, and still continue to meet existing service standards."

The report acknowledges, "Competitors such as UPS and FedEx have become major users of freight rail over the last decade just as the Postal Service has moved away from it. In fact, UPS is now the single largest user of intermodal rail service in the United States. J.B. Hunt, one of the Postal Service's largest highway trucking contractors, now earns about 60% of its revenues from intermodal rail operations."

USPS spent more than $3.3 billion on highway-based contracts in 2011, but only $40 millon on rail-based alternatives, the report says.

The potential use of Amtrak, which previously contracted with USPS for mail movement, specifically is not included in the main body of the report. In Appendix A, USPS recaps Amtrak's efforts during the 1990s to enhance mail transport by rail, which Amtrak largely abandoned by 2004.

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