Innovations in Delivery and Logistics

I spent a significant part of my business career at Pitney Bowes. During that time, as a company leader, I advocated and implemented a great deal of innovation to improve the delivery or mail and packages, but the U.S. Postal Service and its major competitors, UPS and FedEx, did not have the infrastructure in place to lead the market into a new era of same-day delivery of a wide variety of items.

I am pleased to see what has happened in the last few years. The Postal Service now offers Sunday delivery of packages for Amazon.com. FedEx and UPS both offer same-day delivery, a service that Uber is piloting through bicycle messengers. The Postal Service is even expanding into grocery delivery for Amazon.com.

Google is taking the delivery process into even more exciting territory with the piloting of drone-based delivery in sparsely populated areas in which there is little risk of interference with buildings and other flying objects. This is particularly welcome, because the U.S. Postal Service has always maintained that rural delivery is exorbitantly expensive, because of vehicle maintenance and fuel costs. If Google or someone else finds a way to reduce the power consumption and increase the reliability and security of unmanned vehicles, we can change the face of rural America in a way that hearkens back to the beginning of rural catalogue marketing by Sears and J.C. Penney in the 19^th century.

The explosive growth of e-commerce will change everything, including traffic flow patterns, how we spend our discretionary time, how retailers manage their businesses, and how commercial and retail areas are situated and laid out. Bricks-and-mortar retailers will need to rethink how they make money, especially since they secure major portions of their profits from fees paid by packaged goods companies for preferred positions on the retail store shelves.

We will also see the disappearance of retail checkout jobs, especially if minimum wage laws and Obamacare mandates raise the cost of labor too rapidly. Retail stores will operate more like showrooms and less like cash-and-carry operations, although retail outlets at which consumers need more face-to-face assistance from retail clerks will survive, and, presumably, increase their support capability.

The most profound change in the delivery and logistics process will occur when 3-D manufacturing drops in price and becomes easier to use by ordinary citizens. Imagine a day when we decide we want something and we produce it at home or we rely on a small neighborhood retailer who has mastered 3-D printing and manufacturing. This is not as far-fetched as it first appears.

Printing used to be done by specialized print shops. My Uncle Mike Amrose owned one and operated it for decades. Today, many of the services he delivered are done by individuals at their homes or offices, to the degree that they need small volume print work done. Kinkos started out as an on-campus service to print resumes and term papers for college students in the late 1960’s, but has had to migrate toward much more high-value and specialized print work, as well as shipping work for FedEx, to deliver profits for FedEx.

It is pleasing to see innovation in a marketplace that failed to deliver on its potential during my time at Pitney Bowes. We are in a much more exciting time for consumers and businesses.

As for the U.S. Postal Service, it should be smaller, more nimble, and more in tune with what the public wants and needs as a result of the changes it is making. The fixed route delivery system is still needed, but with a number of changes needed:

As Sweden, among other countries, has determined, there should be no inflexible rule that remote areas get the same frequency of delivery as easier-to-reach urban and suburban areas. In Sweden, remote mainland areas get 3-day-a-week delivery and island areas get 2-day-a-week delivery.
Delivery systems should be designed to work for the benefit of recipients. If people work during the week and want to receive mail at the office, the delivery systems should be flexible enough to offer that service. As a fee-based service, Denmark has been redirecting mail for over a decade.
Packages should be delivered to where people can pick them up, as opposed to an inflexible delivery to a home or office. DeustchePost, the German postal service, has been offering a delivery office to secure kiosks for over a decade with its Packstation 24 service. At Pitney Bowes, we changed our delivery routing to Cisco employees every day, depending on where they set up their office.
A variant of the last two points is the idea of creating incentives for delivery at centralized post office boxes. The U.S. Postal Service already does post office box delivery as the regular process in ski areas like Vail, Colorado, but it does not promote P.O. box delivery. In fact, its economic model is flawed: home and office delivery is free to the recipient, whereas P.O. box delivery costs the recipient. P.O. Box delivery should not only be free, but the Postal Service should pay recipients to give up their home or office delivery, especially in remote areas.

Just as the automobile changed far more than how people got from one place to another, the long-overdue innovations in delivery and logistics, along with 3-D printing, will have effects that we cannot even imagine today. It is exciting to contemplate what might happen and actually be part of making it happen.