KarlB737
Topic Author
Posts: 2635
Joined: Sat Mar 20, 2004 9:51 pm

Delta To Carry More US Mail

Thu Jul 26, 2012 6:58 pm

According to a story in the Atlanta Journal-Constitution Delta will be carrying more US Mail for the Postal Service. They abandoned the practice several years ago but have a new contract to do it. They also have invested in an automated mail sorting system for domestic mail in Atlanta.

I am pleased that they want to capture this service on top of acquiring their own oil refinery. Some individuals are doing some creative thinking to keep the airline strong. I hope both of these efforts works out well for them.

Courtesy: The Atlanta Journal-Constitution

Carrying More U.S. Mail, Delta Adds Mail Sorting System

"Delta's chief cargo officer Neel Shah sought to regain the business after joining the airline in 2008, and the airline now has a multiyear contract to carry mail. It's a $100 million-a-year business for Delta, which carries about 2.5 million to 3 million pounds of domestic mail a week."

http://www.ajc.com/business/carrying...493.html?cxtype=rss_business_87628
 
Rdh3e
Posts: 2827
Joined: Wed Mar 30, 2011 2:09 pm

RE: Delta To Carry More US Mail

Thu Jul 26, 2012 7:13 pm

Quoting KarlB737 (Thread starter):
I am pleased that they want to capture this service on top of acquiring their own oil refinery. Some individuals are doing some creative thinking to keep the airline strong. I hope both of these efforts works out well for them.

Interesting that they decreased this practice. It's probably not super-profitable, but it's reliable at least. UA has been the biggest mail carrier of late, I wonder if this is another competitive "take advantage" type move or if DL genuinely sees a decent profit in it.
 
User avatar
mayor
Posts: 6188
Joined: Sun Mar 09, 2008 3:58 pm

RE: Delta To Carry More US Mail

Thu Jul 26, 2012 7:48 pm

Quoting RDH3E (Reply 1):
Interesting that they decreased this practice. It's probably not super-profitable, but it's reliable at least. UA has been the biggest mail carrier of late, I wonder if this is another competitive "take advantage" type move or if DL genuinely sees a decent profit in it.

One of the reasons that they originally "decreased" the practice was that the terms of the contract they were trying to negotiate with the USPS were not favorable to DL. I believe that AA chose to drop carrying mail at the same time. There is nice profit to it and it seems as though it's an automatic way to add millions to the bottom line, however, it tends to put your air freight customers further down the priority list. With air freight, worldwide, being down right now, this is probably a good move. I just wonder what happens when air freight picks up, again.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
FlyingSicilian
Posts: 1388
Joined: Mon Mar 02, 2009 7:53 pm

RE: Delta To Carry More US Mail

Thu Jul 26, 2012 7:57 pm

Getting "old school" very, very old school, being that "hauling the mail" was such a big part of early aviation.
“Without seeing Sicily it is impossible to understand Italy.Sicily is the key of everything.”-Goethe "Journey to Italy"
 
catiii
Posts: 2394
Joined: Mon Mar 31, 2008 1:18 am

RE: Delta To Carry More US Mail

Thu Jul 26, 2012 8:23 pm

Quoting KarlB737 (Thread starter):
Some individuals are doing some creative thinking to keep the airline strong.

Given the looming insolvency of the USPS and the lost market share to email, I'm not sure there's really going to be any long term viability to it, but for a quick buck it sure works.
 
User avatar
mayor
Posts: 6188
Joined: Sun Mar 09, 2008 3:58 pm

RE: Delta To Carry More US Mail

Thu Jul 26, 2012 8:37 pm

Quoting catiii (Reply 4):

Given the looming insolvency of the USPS and the lost market share to email, I'm not sure there's really going to be any long term viability to it, but for a quick buck it sure works.

I could never quite figure why the USPS was a money losing operation. They got the most favorable rates possible (much better than air freight or express), priority loading, money back if it doesn't get loaded, etc. Compared to air freight, this is a great deal. On top of that, no matter how bulky the mail was, the still paid, rates based on actual weight, compared to air freight, which is subject to "dimensional weight", based on the bulk of the shipment.

Then, of course, the airlines give VERY favorable rates to certain shippers, to retain their loyalty. Example......in SLC we once gave a shipper an "air express" rate of approx 16 cents per pound to LGA for about 1700 lbs, compared to a trucking company, which would have been about 54 cents per pound..........the shipper got a better than 2/3 discount and shipping and arrival the same day. What a deal......this was by no means an isolated incident. Cargo marketing's stats were based on total weight shipped, not on actual revenue derived from the cargo.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
catiii
Posts: 2394
Joined: Mon Mar 31, 2008 1:18 am

RE: Delta To Carry More US Mail

Thu Jul 26, 2012 8:41 pm

Quoting mayor (Reply 5):
I could never quite figure why the USPS was a money losing operation. They got the most favorable rates possible (much better than air freight or express), priority loading, money back if it doesn't get loaded, etc.

I think a lot of goes back to what DL went through in 2005-2007, and that was the crushing weight of a lot of their legacy labor costs. Their pension obligations and benefits are pretty generous.
 
wjcandee
Posts: 5189
Joined: Mon Jun 05, 2000 12:50 am

RE: Delta To Carry More US Mail

Thu Jul 26, 2012 8:50 pm

The USPS is NOT a money-losing operation, at least operationally, that is. This is the great myth that is out there. The Postal Service posts literally hundreds of millions of dollars if not billions of dollars of operating surplus and continues to do so. Every penny of that, however, is gobbled up by retiree pension and benefit obligations, most incurred when the Post Office was a government agency. These are the same kind of public-sector union obligations that California cities are going bankrupt to shed, and all the airlines have now washed themselves through bankruptcy to shed. Instead of trying to save nickels by eliminating Saturday delivery, Congress has to address the issue, either to cover it through gov't funds or just modify the benefits, but they won't, so they are bleeding the Postal Service and ignoring the looming crisis.

Billions in operating surplus. Billions.

Don't let anyone tell you the Postal Service doesn't make money. It does. All of that money, however, goes directly to pay former obligations of the US Gov't.

As to why Delta left the mail biz -- simple. They screwed up massively one Christmas, and the Postal Service lowered the boom on all the carriers. Their contract with FedEx opened their eyes to the level of accountability that FedEx imposes on itself, and which FedEx could offer the Service. The Service realized that with accountability comes better performance, and demanded in the new contract that the airlines scan mail bags and containers at all sorts of intermediate points. Many airlines felt it wasn't worth it or "just said no" in the hopes of having the standards relaxed; others decided to step up and comply. Now it's widely-accepted that if you want to carry mail, you have to meet performance metrics, like FedEx and UPS make themselves do every day. The Postal Service's service has greatly improved as a result, and it's actually a much-more-efficient operation than it was a decade ago. Hey, it's still the Postal Service, but, all in all, it does a pretty good job.

And it makes money.
 
User avatar
mayor
Posts: 6188
Joined: Sun Mar 09, 2008 3:58 pm

RE: Delta To Carry More US Mail

Thu Jul 26, 2012 9:13 pm

Quoting wjcandee (Reply 7):
As to why Delta left the mail biz -- simple. They screwed up massively one Christmas, and the Postal Service lowered the boom on all the carriers. Their contract with FedEx opened their eyes to the level of accountability that FedEx imposes on itself, and which FedEx could offer the Service. The Service realized that with accountability comes better performance, and demanded in the new contract that the airlines scan mail bags and containers at all sorts of intermediate points. Many airlines felt it wasn't worth it or "just said no" in the hopes of having the standards relaxed; others decided to step up and comply. Now it's widely-accepted that if you want to carry mail, you have to meet performance metrics, like FedEx and UPS make themselves do every day. The Postal Service's service has greatly improved as a result, and it's actually a much-more-efficient operation than it was a decade ago. Hey, it's still the Postal Service, but, all in all, it does a pretty good job.

And it makes money.

FedEx picked up that contract right after 9/11, because of security concerns of both the gov't. and the airlines. Both were worried about carrying mail that could have been a security risk, on pax flights, so FedEx was the logical choice. As far as the requirement of scanning at intermediate points goes, that was a cluster f**k from the beginning. Also, the USPS was allowed to fine the airlines if they put the mail on an earlier flight than what it was assigned to. Then they tried to fine the airlines if they didn't move first class mail (which was space available in the first place) on assigned flights. The only reason that first class was assigned was that's how the computer system was set up......the ramp guys saw a cart of orange mail bags, a cart of first class and one or two carts of air freight and because two of them were mail, that's what they loaded before the air freight, whether it was supposed to go or not.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
tsnamm
Posts: 531
Joined: Wed May 04, 2005 3:28 am

RE: Delta To Carry More US Mail

Fri Jul 27, 2012 1:51 am

Quoting mayor (Reply 8):

FedEx picked up that contract right after 9/11, because of security concerns of both the gov't. and the airlines. Both were worried about carrying mail that could have been a security risk, on pax flights, so FedEx was the logical choice. As far as the requirement of scanning at intermediate points goes, that was a cluster f**k from the beginning. Also, the USPS was allowed to fine the airlines if they put the mail on an earlier flight than what it was assigned to. Then they tried to fine the airlines if they didn't move first class mail (which was space available in the first place) on assigned flights. The only reason that first class was assigned was that's how the computer system was set up......the ramp guys saw a cart of orange mail bags, a cart of first class and one or two carts of air freight and because two of them were mail, that's what they loaded before the air freight, whether it was supposed to go or not.

Spot on...USPS has all the metrics until you try and turn it in to the AMF...then suddenly they're not interested in metrics...with disinterested employees, who are always on break, only one belt or window operating when your trying to dump tons of inbound with 10 carriers in line, or nobody to scan the international inbound making you wait for hours before anyone shows up...Christmas?? you couldn't even get within a 1/2 mile of the yard let alone dump anything,since as a cost cutting move the USPS didn't hire any casuals for the holiday season....before they point any fingers they ought to look in house 1st.
 
FlyASAGuy2005
Posts: 3965
Joined: Sun Sep 23, 2007 4:55 am

RE: Delta To Carry More US Mail

Fri Jul 27, 2012 3:44 am

Quoting mayor (Reply 2):
One of the reasons that they originally "decreased" the practice was that the terms of the contract they were trying to negotiate with the USPS were not favorable to DL. I believe that AA chose to drop carrying mail at the same time. There is nice profit to it and it seems as though it's an automatic way to add millions to the bottom line, however, it tends to put your air freight customers further down the priority list. With air freight, worldwide, being down right now, this is probably a good move. I just wonder what happens when air freight picks up, again.

Actually, right now mail falls behind freight as far as loading. If you have mail and freight to load and you only have time or weight to do one, the freight rides.
What gets measured gets done.
 
User avatar
mayor
Posts: 6188
Joined: Sun Mar 09, 2008 3:58 pm

RE: Delta To Carry More US Mail

Fri Jul 27, 2012 3:49 am

Quoting FlyASAGuy2005 (Reply 10):
Actually, right now mail falls behind freight as far as loading. If you have mail and freight to load and you only have time or weight to do one, the freight rides.

Wow, that's a change. I'm guessing it might go back to the old way, once this new contract is in effect.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen