Airlines compete for mail transportation; must provide scanning

As part of its revamping of its air transportation
network, the Postal Service is holding a competitive bid
with the airlines, a fundamental change in how it contracts
for air transportation.
Last year the Postal Service informed the airlines that
it would terminate the domestic equal-tender contracts it
now has with them, known as ASYS, on May 30 (BMR
10/14/02). ASYS sets the price and terms for all airlines,
which they can decide to opt into under an equal-tender
arrangement. That means, for example, if four airlines
serving the Boston to Chicago route opt in to ASYS, the
USPS must split its volume four ways among the participating
airlines.
Paul Vogel, USPS vice president of network operations
management, said the airlines were anxious to
change this arrangement. With declining volume and
greater use of surface transportation, the Postal Service
agreed the current arrangement doesn’t make sense.
There just isn’t enough volume to satisfy 55 carriers
vying for a piece of the pie, Vogel has said. At the end of
December the USPS issued a solicitation, open to all
airlines, for bids on domestic air transportation. Airlines
have until Feb. 28 to respond.
Vogel says the solicitation is a big change for the
Postal Service, which has never done a competitive bid
with the airlines. Airlines will bid a price, which will be
good for their entire networks. If an airline is chosen as a
supplier, the Postal Service will have access to the
carrier’s entire scheduled transportation system. The
USPS can order services from the supplier as it needs
them. Under the solicitation, postal products would have
priority over all cargo. Only passenger cargo would be
allowed to supplant Postal Service products.
Obviously, the Postal Service intends to award more
than one contract under the arrangement. Further, airlines
are encouraged to work with business alliance partners or
subcontractors in a consolidated proposal. The contracts
would run through May 27, 2006.
The Postal Service expects this arrangement to help it
manage its network more efficiently, thus driving out
costs. Further, the USPS says the new contracts will
allow it to offer full tracking and tracing of its products.
As part of the solicitation, airlines must agree to scan all
destination and routing (D&R) tags on mail containers,
including trays, sacks and tubs. Vogel says airlines will
have to provide scanning within 90 days of the contract
being signed. This removes the stumbling block to true
track-and-trace for the Postal Service. For years it has
said it has no way to scan mail when it turns it over to
airlines for transportation, which meant full tracking and
tracing was not possible.
The solicitation is available at www.eps.gov under
USPS, “Transportation.” The original solicitation, which
has had amendments added, was issued on Dec. 23, 2002.