William B. Cassidy | Aug 19, 2011 4:14PM EDT
The U.S. Postal Service is ending an experimental freight-hauling program as it faces massive losses, layoffs and a network-wide consolidation.
The program allowed the USPS to pursue less-than-truckload freight to correct imbalances of mail volume hauled between cities, filling out trailer cube. However, the cash-starved postal service is reviewing closing 3,700 offices across the country and considering laying off as many as 120,000 employees.
That sweeping reorganization and shrinking of the postal network would cut into revenue opportunities for the two-year-old Collaborative Logistics program.
The USPS faces a second year of losses totaling more than $8 billion. It lost $3.1 billion in the second quarter of 2011, handling 2.6 percent less mail than a year ago.
In an Aug. 19 notice file with the Postal Regulatory Commission, the postal service said it would terminate the “market test” program effective Sept. 19.
“Expiring contracts will sunset and will not be renewed, and any other contracts will be terminated during this time period,” the USPS said in its notice.
The service was never a big threat to commercial LTL trucking competitors. The USPS estimated its own potential LTL freight revenue at about $2.4 million.
A USPS Inspector General report in March 2010 found the service “ inconsistent with the postal service’s core strengths” and said it was priced too low.
However, the USPS earlier this year moved to make Collaborative Logistics a “permanent product,” winning an extension of the program until Sept. 30. The USPS said it would keep open the possibility of restarting the program in the future and continue to evaluate the freight-hauling test as it winds down.
Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter at @wbcassidy_joc
