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Home » Postal Service names former New Breed Logistics, XPO executive to top job

Postal Service names former New Breed Logistics, XPO executive to top job

New postmaster general could signal increased pressure by Trump Administration to raise parcel delivery rates, Baird analyst says.

dejoy USPS postal service
May 7, 2020
Ben Ames
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The U.S. Postal Service (USPS) has confirmed former New Breed Logistics and XPO Logistics Inc. executive Louis DeJoy to serve as its newest postmaster general, taking the reins of a troubled agency that has reported several consecutive quarters of wide financial losses as it struggles to balance the loss of stamp revenue in a digital age with the sudden rise of e-commerce parcel delivery.

DeJoy comes to the job from a background as CEO of North Carolina-based New Breed Logistics, a contract logistics firm that provided supply chain logistics, program management, and transportation support. According to USPS, DeJoy transformed New Breed from a small, family owned transportation company with 10 employees into a nationwide provider of technology-driven, contract logistics solutions employing more than 9,000 people. New Breed was acquired by the upstart third party logistics (3PL) firm XPO for $615 million in 2014. Subsequently, he served for about 16 months as CEO of XPO’s supply chain business in the Americas before retiring to join the XPO board of directors, where he served until 2018.

DeJoy will now take the mantle as the 75th Postmaster General of the United States and Chief Executive Officer of the world's largest postal organization. He will assume the position on June 15, replacing Megan Brennan, who became the first woman to hold the title when she began the job in 2015. "Having worked closely with the Postal Service for many years, I have a great appreciation for this institution and the dedicated workers who faithfully execute its mission,” DeJoy said in a release. “I look forward to working with the supporters of the Postal Service in Congress and the Administration to ensure the Postal Service remains an integral part of the United States government. Postal workers are the heart and soul of this institution, and I will be honored to work alongside them and their unions.”

The confirmation follows recent reports of increased efforts by President Trump to exert more direct influence over the USPS in the face of its persistent financial losses. Trump has often asserted that the post office should charge more than its current rates for delivering parcels shipped by online retailers including amazon.com inc. Trump repeated that demand most recently in April, threatening to withhold $10 billion of coronavirus relief funds from the USPS unless it complied with his demand to charge a profitable rate for each package delivery, instead of following its current policy of charging rates that maximize parcel volume through its network.

DeJoy’s ascension now raises the probability of changes to USPS' competitive package pricing being realized, according to a release from Benjamin Hartford, a senior research analyst with the investment firm Baird Equity Research. USPS is now more likely to boost its parcel prices, considering that one recommendation of Trump’s own postal service task force was that the "USPS price its competitive (package) products in a manner that is not geared simply toward maximizing volume, but instead toward generating income that can be used to fund its capital expenditures and long-term liabilities,” Hartford said.

While the impact of such a fundamental prices change on the U.S. parcel sector is hard to predict, the Baird report predicted it would please investors. “USPS restructuring/reform has long been a red herring among investors given the much-discussed but little-acted-upon potential. However, DeJoy's appointment could serve as a credible step toward facilitating such reform,” Hartford said. “We view the appointment of DeJoy as a positive for investor sentiment regarding parcel incumbents [FredEx Corp. and UPS Inc.], if not parcel pricing directly.”

Parcel & Postal Carriers Business Management & Finance
KEYWORDS USPS XPO Logistics
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Benames
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

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