USPS Realignment: Moving Towards Privatization

Glenn Gooding [00:00:00]:

This realignment, this potential realignment to the.

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Glenn Gooding [00:00:02]:

Commerce Department is a move for the.

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Glenn Gooding [00:00:05]:

Trump administration to try to move it.

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Glenn Gooding [00:00:07]:

To a more privatized sector. Now, this is not being received well by the Board of Governors or the American Postal Workers Union, so I will tell you that the Board of Governors.

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Glenn Gooding [00:00:18]:

Is preparing legal strategies to counter any.

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Glenn Gooding [00:00:21]:

Executive action arguing that such a move.

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Glenn Gooding [00:00:23]:

Would violate federal law and harm public services, especially in rural areas. Critics, including postal unions, have condemned the.

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Glenn Gooding [00:00:31]:

Plan is an attack on public infrastructure.

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Glenn Gooding [00:00:33]:

Warning it could lead to higher rates, reduced services and job losses for millions of workers.

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Glenn Gooding [00:00:39]:

Welcome to Parcel Perspectives, the podcast dedicated to small parcel shippers. I'm Glenn Gooding and each episode we dive into insights, best practices and strategies to help you navigate this complex, costly market.

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Glenn Gooding [00:00:54]:

Hello everyone, Glenn Gooding with iDrive. Again, you're listening to another kind of quick edition of Parcel Perspectives. I'd like to offer you some perspective and some insights to some things I.

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Glenn Gooding [00:01:06]:

Think you're going to be seeing hitting.

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Glenn Gooding [00:01:08]:

The news soon and I want to provide some rational thought behind it. The Trump administration is looking very aggressively.

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Glenn Gooding [00:01:17]:

At the potential for privatizing the usps.

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Glenn Gooding [00:01:20]:

All the while the the end goal here is to try to get the USPS financially viable. So let's back up for just a.

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Glenn Gooding [00:01:29]:

Quick second here and make sure you.

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Glenn Gooding [00:01:31]:

Understand the lay of the land over.

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Glenn Gooding [00:01:33]:

The last year or so. And if you've listened to any of.

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Glenn Gooding [00:01:35]:

My prior podcasts, particularly on this subject.

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Glenn Gooding [00:01:38]:

You'Ll have some more detailed information.

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Glenn Gooding [00:01:39]:

But let's just say that a lot.

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Glenn Gooding [00:01:42]:

Of rate rationalization has been infused into.

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Glenn Gooding [00:01:45]:

The market over the last year in.

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Glenn Gooding [00:01:47]:

The lightweight residential delivery sector.

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Glenn Gooding [00:01:51]:

Less than a pound and lightweight one to nine pound type of an arena. Given my prior background, my 39 years in this space, I will tell you.

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Glenn Gooding [00:02:02]:

Always as long as small parcels will be delivered. Lightweight residential deliveries are problematic for carriers.

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Glenn Gooding [00:02:10]:

Why? High cost to serve, low revenue yield for them, right?

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Glenn Gooding [00:02:17]:

One £1 parcel in the revenue it brings has to pay for the driver.

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Glenn Gooding [00:02:22]:

The vehicle, the trip, the walk to the doorstep, right? And continuation on door route.

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Glenn Gooding [00:02:28]:

That's always been problematic for the carriers and for the longest time there have.

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Glenn Gooding [00:02:32]:

Been a lot of things that have happened in the USPS lightweight arena through a work share program that have allowed for some very economical options in the lightweight residential delivery market. Louis Dejoy, the current USPS Postmaster General keyword is current because he has tendered.

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Glenn Gooding [00:02:52]:

His resignation at the end of his contract here which will be ending shortly.

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Glenn Gooding [00:02:55]:

And they are looking for a replacement. Put together a Delivering for America plan in essence, 10 year plan to get the USPS financially viable.

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Glenn Gooding [00:03:06]:

Important to note, fiscal year 2024, it.

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Glenn Gooding [00:03:09]:

Looks like they're probably going to lose in the range of 6.9 to 7 billion taxpayer dollars. So it is an issue.

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Glenn Gooding [00:03:16]:

He has done a number of things including radically changing the work share program.

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Glenn Gooding [00:03:22]:

And infusing massive increases in that sector. So when I say rate rationalization, one perspective would be that over the course of a long period of time of.

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Glenn Gooding [00:03:35]:

What we might consider below market rates now, market rates are being infused that.

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Glenn Gooding [00:03:40]:

Are rational in the space. That's one perspective. Another perspective, and one you've heard me talk about from a term perspective, would be hyperinflation in the lightweight residential market. All that said, you're going to hear some things in the news. It appears that the Trump administration is looking seriously at removing or disbanding the Board of Governors that governs the USPS and reassigning it to the Commerce Department.

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Glenn Gooding [00:04:07]:

All for the sake of aligning it.

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Glenn Gooding [00:04:08]:

For more commercial, commercially aligned agenda priorities and execution. I want to offer some perspective on what that might mean to the marketplace right now and what you as a shipper should consider or look at doing as a result of this. First of all, the Board of governors consists of 11 members. There are nine governors that are appointed.

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Glenn Gooding [00:04:31]:

By the President with Senate confirmation. No more than five of those nine.

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Glenn Gooding [00:04:35]:

Can belong to the same political party. In addition, the Postmaster General and Deputy.

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Glenn Gooding [00:04:39]:

Postmaster General are also members.

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Glenn Gooding [00:04:42]:

Not going to do a deep dive in the Board of Governors, but they have five particular key responsibilities. One, strategic oversight, two, financial management, three, leadership appointments, four, operational decisions and five, public accountability. In essence, in layman's terms, they really.

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Glenn Gooding [00:05:02]:

Serve similarly to a corporate Board of Directors.

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Glenn Gooding [00:05:07]:

Now, this realignment, this potential realignment to the Commerce Department is a move for.

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Glenn Gooding [00:05:15]:

The Trump administration to try to move.

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Glenn Gooding [00:05:17]:

It to a more privatized sector. Now, this is not being received well by the Board of Governors or the American Postal Workers Union. So I will tell you that the Board of Governors is preparing legal strategies to counter any executive action, arguing that such a move would violate federal law.

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Glenn Gooding [00:05:39]:

And harm public services, especially in rural areas. Critics, including postal unions, have condemned the.

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Glenn Gooding [00:05:46]:

Plan as an attack on public infrastructure.

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Glenn Gooding [00:05:48]:

Warning it could lead to higher rates, reduced services and job losses for millions of workers.

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Glenn Gooding [00:05:55]:

There are financial challenges that the Post Office faces. I mentioned the loss USPS faces about.

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Glenn Gooding [00:06:02]:

$409 billion in pension and health care.

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Glenn Gooding [00:06:05]:

Liabilities against $290 billion in assets. The problem, the American Postal Workers Union, as I just mentioned, is calling for public opposition to this plan and you.

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Glenn Gooding [00:06:19]:

Will see them rally in a lot of labor friendly geographies to oppose these changes.

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Glenn Gooding [00:06:27]:

Additionally, Postmaster DeJoy, as I mentioned, has announced his resignation and they are looking for a replacement. A lot of change, a lot of disruption and a lot of opposition to what's happening here.

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Glenn Gooding [00:06:41]:

What does this mean to you as.

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Glenn Gooding [00:06:43]:

A shipper in the short term? Frankly, probably nothing, meaning the rate rationalization.

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Glenn Gooding [00:06:52]:

Or the hyperinflation you're seeing in the.

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Glenn Gooding [00:06:54]:

Lightweight residential market will continue to exist and you need to continue to look for ways, I'm hoping you are already are, to contain that, mitigate that, align yourself as competitively as possible with a.

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Glenn Gooding [00:07:08]:

Variety of other options and solutions that.

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Glenn Gooding [00:07:11]:

May or may not work for you in this marketplace. Ultimately, I think in the near term.

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Glenn Gooding [00:07:18]:

The closest thing we could see potentially happen is with a new Postmaster General.

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Glenn Gooding [00:07:25]:

There may be a philosophical difference in the Delivering for America plan. Postmaster de Janey DeJoy I'm sorry, Postmaster DeJoy has publicly kind of criticized the historic workshare program that has created the postal consolidation model that's out there.

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Glenn Gooding [00:07:47]:

The DHL, E commerce is the UPSMIS.

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Glenn Gooding [00:07:50]:

The OSM's, the pitney bows when they existed in the marketplace.

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Glenn Gooding [00:07:54]:

The Post Office does exceedingly well and.

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Glenn Gooding [00:07:56]:

That is final mile delivery. It'll be interesting to see what happens. There may be a change on that front. For now, I'm sorry, don't jump or expect things to happen too soon. As you might imagine, this is a behemoth. This is a massive undertaking. You can't easily privatize the Post Office and we'll be met with massive amounts of obstacles and opposition. There will be a lot of lawsuits, a lot of challenges.

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Glenn Gooding [00:08:30]:

So steady as she goes, don't hold on to any hope in 2025 or frankly in 2026.

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Glenn Gooding [00:08:38]:

However, you could see a philosophical change.

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Glenn Gooding [00:08:41]:

In the Post Office's view toward postal consolidators in the workshare program. Please stay tuned for more. I hope you find that helpful. If you'd like to have an offline.

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Glenn Gooding [00:08:52]:

Conversation with me about how that particularly.

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Glenn Gooding [00:08:54]:

Impacts you as a shipper, I would welcome that Again. Glenn Gooding, Parcel Perspectives if you like.

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Glenn Gooding [00:09:00]:

What you're hearing, I encourage you to.

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Glenn Gooding [00:09:02]:

Subscribe and recommend it to other peers. Thank you very much.

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Glenn Gooding [00:09:10]:

Thanks for listening to Parcel Perspectives, hosted.

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Glenn Gooding [00:09:13]:

By me, Glenn Gooding I've been in.

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Glenn Gooding [00:09:15]:

The small parcel space for 37 years, starting with a deep and broad background working for one of the major carriers as an operator and industrial engineer, later managing pricing at the highest level for the largest, most complex shippers in the world. Since then, I've been a national thought leader and worked to help drive strategy for clients from Fortune 50 companies to startup e commerce businesses, helping them more competitively aligned this complex and expensive market.

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Glenn Gooding [00:09:41]:

If you enjoyed the show, please subscribe.

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Glenn Gooding [00:09:44]:

And share with friends. Join us next time for more expert advice and strategies to stay ahead of the shipping game.

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