Kalitta Air seals USPS Deal

The U.S. Postal Service is changing the way it moves mail to soldiers and others in the Middle East by signing a large contract with Kalitta Air.  Ypsilanti, Mich.-based Kalitta Air beat out four other bidders for the contract requiring it to deliver all the mail to the Middle Easter each day, which will necessitate the use of subcontracted carriers as well. Five-year-old Kalitta, which is headed by industry veteran Conrad "Connie" Kalitta, had already been carrying a substantial portion of the mail to the region, but the new contract gives them more responsibility beyond just moving the mail. The Postal Service moves, literally, tons of packages and letters to Iraq, Afghanistan and other countries in the region each day. The agency says it moves 200,000 pounds of military mail daily to the Persian Gulf region. "You name it, they get it," Postal Service Vice President of Network Operations Paul Vogel said in an interview. "The American people are loving people, and they mail everything you could imagine over there. We mail everything from refrigerators to love letters over there." Exact financial conditions of the contract were not available, but experts estimate the contract is worth millions of dollars. The Department of Defense, the Postal Service's partner in the contract, did not want to disclose the length of the contract, Vogel said. Vogel characterized the contract as being worth "a lot." "It's just not being released right now," Vogel said. "The Department of Defense does not want to discuss the contract cost at the moment." Postal contracting expert and Wickwire Gavin attorney David Hendel said he is unfamiliar with the new contract but estimated it is in the millions of dollars, which pales in comparison to the holy grail of postal contracts inked with FedEx in 2001 worth $6.3 billion over seven years. Airline officials were in meetings with the Postal Service and unavailable for comment for this story. Vogel said the contract, which begins next month, will allow the Postal Service to better track mail going to the Middle East and to accurately measure how long it takes to get there.   The Postal Service has been working to modernize its network, and Vogel said the military mail change is a peripheral portion of that. The ability under the new contract to track and trace mail going to the Middle East is a big advantage over the current system, he said. The DOD has also been working to outsource more of its logistics functions so it can focus on its core defense missions. The idea of streamlining the DOD and USPS mail to the Middle East arose during the 2004 elections when deployed absentee voters needed to receive and return absentee ballots in a timely manner. In a report, the Government Accountability Office also recommended improving metrics on moving mail there. "We were doing the long haul from the United States over to the Persian Gulf," Vogel said. "Then there was another contract for the terminal handling and another for moving it to the outposts. As we sat down and looked at how we could speed up service, this came up there wasn't uniformity or integration among the pieces of the system. Each provider did its piece fine, but it wasn't integrated. With this agreement, it's one provider that's going to be held accountable." The system was six months in the making as USPS and DOD determined where the carrier would need to fly and what the volume of mail would be. "It was difficult to do because we didn't have the stability in the region," Vogel said. Kalitta will move all military mail going to APO addresses in the region as well as mail to civilian DOD contractors there. Mail to regular Iraqi addresses is not included and will continue to move separately. Under the contract, the Postal Service will tender the mail to Kalitta in Newark, N.J., where mail to Middle East APO addresses is consolidated. From there, it will be Kalitta's responsibility until it delivers the goods to 10 designated DOD hubs serving Iraq, Afghanistan and Kuwait. From there, DOD personnel will deliver the letters and parcels to soldiers. Vogel said it would be too dangerous for Kalitta to be responsible for the last-mile delivery.