The U.S. Postal Service will sharply curtail use of private air cargo airlines for annual and lucrative delivery of Christmas season mail this year, costing domestic freighter operators millions of dollars in highly-sought flight contract.
The decision, extending a dramatic revamp of the USPS's management of transport operations, effectively ends the so-called "C-Net" - for Christmas Network - system that has funneled huge volumes of greeting cards, parcels and very profitable revenue to a handful of domestic airlines.
"We are going to diminish our use of the C-Net significantly and rely instead on FedEx and greater use of ground transportation," said USPS spokesman Mark Saunders. "Customer service will not be impacted."
Other industry officials say they expect few if any private airlines to get any Christmas flights because the USPS has fine-tuned its management of trucking services and extended the limits for ground coverage from 1,700 to 3,500 miles. That allows for the entire country to be covered for all but Priority Mail and Express Mail services.
The Christmas mail network has been a dependable annual event for air carriers, keeping from 30 to 50 domestic freighters filled with mail in the weeks before Dec. 25, particularly the final two weeks of the season. Carriers such as Kitty Hawk Cargo, Evergreen International and Express One have counted important revenue from the contracts.
But those airlines are the latest to be hit by an upheaval at the USPS that has shifted huge volumes of mail away from the commercial airlines to the ground and to FedEx under a multi-year, multi-billion dollar contract. Publicly, postal air managers say they are pleased with the FedEx deal, but privately the officials almost joyful over what they say are huge gains in service and information from the FedEx service.
The Postal Service used a new lane-by-lane bidding method in air contracts awarded in June that prompted at least one airline to drop out of the network.
"We have withdrawn from the domestic mail contracts," said Jim Friedel, president of Northwest Airlines Cargo. "Under their new contracting methodology, our volumes would go down about 45 percent. At that reduced volume, the economics of the business wasn't attractive."
— Paul Page
Air Cargo World
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