Mail By Rail - Feasable?

Yes, mail was a big source of traffic for the freight railroads, particularly those that had a premium intermodal service offering fast/reliable prioritized service underpinned by 2 daily train departures (evening and late night/early AM) in origin/destination lanes and a willingness to offer door-to-door transportation (printing plant or bulk mail center-to-bulk mail center) with a prime contractor relationship managing subcontracted trucking and railroad interchange partners under bonus/penalty service standards. US freight railroad USPS volume peaked around 1990 during the heyday of pre-internet commerce direct-mail marketing and periodicals with a big decline once the Postal Service began providing rate incentives for customers to purchase their own linehaul transportation and tender the mail as deep into their distribution network and close to the final destination address. This lead to what was once mail now moving simply as freight purchased by many customers instead of one and through a wide variety of channels.

As an example and adding to ExCon90's post, Conrail's volume around the time of this watershed change approached 100,000 annual trailerloads of mail and equipment, ranking the Postal Service within the top 10 of their customers, consisting mostly of 3rd and 4th class mail and mail handling equipment like bags and pallets, and some 2nd class mail, moving under contract and wide range of service requirements, though there was also a small amount of 1st class mail handled over the weekends when air was not necessary to meet USPS service standards. As a tribute to their big commitment to service the USPS, Conrail's annual net bonus rewards often ran into 6 figures.

Given that premium intermodal service still exists to meet the small-shipment market's requirements, I could see possibility for handling first class mail in lanes with reliable 2nd morning service as long as the rates, requirements (door-to-door and managed service, for example), volume, possible 3PL participation, etc. are attractive to both freight rail carriers and the USPS. I would think NS, with their Thoroughbred Direct Intermodal Service subsidiary managing the business, offers perhaps the best possibility.

I think you'll all be interested in this USPS study published in 2012

https://www.uspsoig.gov/sites/default/f ... -013_0.pdf

Thanks for posting that.

On page 5 of the USPS study (by the USPS Office of Inspector General) is a statement that J. B. Hunt is a major USPS contract trucker as well as being a major user of rail intermodal, and a suggestion that USPS may be using rail intermodal more than it realizes. (Many a webcam has shown trainloads of J. B. Hunt trailers moving around the country, with no way of knowing -- even by USPS -- how many contain USPS shipments.) One conclusion reached by the study (in 2012!) is that USPS has gotten out of touch with developments and fails to realize that it's losing parcel post business to UPS and FedEx, who make wide use of rail intermodal.

Going on 10 years now, I suppose we must assume they're giving the study a real in-depth analysis ...

Despite characterizing JB Hunt as a "major" surface transportation contractor in the IG's 2012 report, at best their annual USPS traffic likely is somewhere below 10,000 annual loads. Additionally, in terms of their volume moving via rail it's limited to some degree with NS' prohibition for handling all classes of mail in the east, if not by other potential barriers to using intermodal. This NS prohibition reflects their decision that they want a direct "retail" relationship with the US Postal Service as opposed to an indirect "wholesale" relationship through intermediary 3rd parties like Hunt, as was the case in the past across the industry though with both BNSF and CSX relaxing classification of mail to a restricted commodity requiring differentiation from standard freight-all-kinds (FAK) classification often associated with non-hazardous intermodal shipments handled through 3rd party logistics providers.

I believe the IG's report is off the mark describing the first "blow" in the early 1990's as related to railroad service issues, when instead their implementation of rate incentives for 2nd (periodicals) and 3rd (direct marketing) class mail lead to a relatively quick loss of about half of the Postal traffic moving via the freight railroads also within the overarching backdrop of their implementation of a highway-based land network strategy as well. Extending 1st class mail service standards, representing a still-large portion of the USPS' business that has been primarily excluded from possible handling by the freight railroads, should be a positive to that possibility.

Mr. QB, as I read your immediate, that Topper's (NS) salesforce could approach the Postal Service and offer containerized handling of mail - First Class included? Now that Service has relaxed their service standard to five day First Class handling, rail, which is not trying to win a "speed war" with motor carriers, can be "in the game".

NS's apparent prohibition relates to being a third party subcontractor to a motor carrier such as JBH. I guess with PG DeJoy coming to the Service with a background in the Motor Carrier industry (Con-Way XPO), that Topper would be "nickeled and dimed" for every perceived service deficiency. If Topper and the Service came together for a two party agreement, that would be OK.

Finally, I note that Mr. QB reports that this prohibition applies only to NS Eastern Lines. Does that mean only their former PRR and N&W lines and that for service over the SRY, they would enter into a third party agreement with the likes of JBH - or even XPO?

Yes, Mr. Norman, NS could bid for mail contracts for those services they deem appropriate, including 1st class mail, if/when the USPS puts out a request for competing bids and they qualify. Were it in the other freight railroads' interests, they, too, could bid as a direct prime-contractor provider of service under those circumstances.

For NS that mail prohibition is for their entire railroad and their choice very likely comes from the Conrail legacy they purchased in the split and how they view the business through that lens. A big part of Conrail's USPS/related franchise went to NS including their now-named Thoroughbred Direct Intermodal Service subsidiary, with the history of once managing Conrail's postal service and related business, so they still hold that expertise and culture of serving the USPS with full-on door-to-door logistics and high level of service execution that allows for the full potential benefit of a direct relationship with the Postal Service. TDIS appears to be the primary Class 1 freight railroad source in the USPS IG's 2012 report recommending greater use of railroad intermodal service.