The post office announced a deal this week for 300,000 hand-held computing devices to be supplied by
The move has implications for peers such as
United Parcel Service
(FDX). It doesn’t, however, necessarily mean more competition for the publicly traded pair. The post office, or USPS, is already a big competitor, with sales rivaling the other two. In fact, anything that moves the post office toward market-based competition is a good thing for the shipping industry.
Consider that USPS recently won an international battle with the Universal Postal Union, giving the U.S. mail-delivery service more control over prices charged to deliver packages originating in foreign countries. The issue was part of President Trump’s agenda to win better terms of trade for U.S. businesses. The parcel-shipping stocks didn’t move much after the win because the projected impact on the industry is small. Still, it is a positive.
New-technology adoption isn’t a pricing issue. Instead, mobile computing is about lowering costs—another factor determining long-term industry health and profitability.
“The USPS is facing the same challenges as other shippers,” Zebra CEO Anders Gustafsson said in an interview. “We provide better visibility across parcel networks.”
The post office has roughly 500,000 employees, more than 200,000 of whom deliver mail. The modernization plan closely aligns with Gustafsson’s belief about the future of mobile computing in service businesses: “a device in every hand.”
“Mobile Delivery Devices have been used by our carriers for many years,” a USPS spokesperson said in an emailed statement. “The next-generation devices will enhance our ability to provide real-time scanning information for the Postal Service’s daily delivery operations and to generate accurate and timely information our customers need to track packages.” Deployment will start next year.
Of course, the Post Office is no stranger to mobile computing, with more than 260,000 devices already in use nationwide. “This will expand and upgrade [the USPS] with new capabilities,” Gustafsson said.
The USPS contract is Zebra’s largest-ever. Wins such as this are one reason Zebra stock has worked spectacularly, returning about 27% a year on average for the past five years, more than double the average annual return of the
Dow Jones Industrial Average
over the same span.
This contract is a win for Zebra in one other way: recognition. Zebra gains some attention for investors who may not be familiar with its stock. Zebra has another public-relations-worthy business relationship with the National Football League. Zebra RFID technology tracks player movement and vital statistics that fans see on sports shows or during game broadcasts.
“This is a different scale than the NFL contract,” Gustafsson said of the postal service contract. It is much bigger. And it is another example of solid execution by the industrial technology company.
Write to Al Root at firstname.lastname@example.org