THE US Postal Service loses continue to make headlines as they continue to dominate the last mile delivery for USA e-commerce.

 

The US Postal Service is considered as both a government agency and an independent business.    Besides getting financing from the US treasury, the biggest advantage used to be its monopoly on first class mail.    But mail volume continues to drop.   The highly profitable first class mail revenue has essentially disappeared and third class/ junk / advertising mail is a zero to negative growth business.   

E-commerce parcels have given the USPS a new lifeline and reason for existence.   That USPS pricing for parcels is above their direct costs is not really being disputed.   

It is clear the the USPS result would be much worse if not for the e-commerce parcel delivery volumes - which are growing.    It is expected that growth in parcel revenue for 2018 will exceed $400 million dollars in ADDITIONAL revenue.

usps_delivery_usa

From a 2016 Report to Congress:

  • Since 2007, the USPS cumulative losses total more than $55 billion.   The liquidity of the postal service has been provided by the U.S. Treasury.     
  • The rise in parcel revenue has not been able to offset the dramatic loss of the more highly profitable mail revenue.
  • Total USPS mail volume in 2015 dropped to the amount of mail delivered in 1988!   
  • The USPS is mandated to serve 150 million households on a typical day - which facilitates trillions of dollars in commerce
  • The USPS has over $125 billion ins unfunded liabilities and debt 

USPS is the preferred last mile delivery in the USA  ...   

even for UPS, FedEx and DHL

Along with Amazon, USPS largest customers include:

  • FedEx (SmartPost)
  • UPS (Surepost)
  • DHL (Global Mail)
  • ... and AMAZON   

Jet Worldwide provides international e-commerce merchants direct access to the USA via high volume parcel express clearance processes.

Does Amazon get “too good a deal” from the USPS?

Most believe that parcel revenue saved the US Postal service.   

The massive Amazon - and other e-commerce parcel - has simply saved the USPS and given it reason for existing.     USPS parcel delivery business has given the USPS a way to service huge legacy costs (mostly related to politically sensitive pension obligations).  Costs which would surely otherwise be imposed on taxpayers/

 

Alternative Argument: USPS crowding out private competition

The position of FedEx and UPS is that the impressive growth in the USPS parcel delivery business is adding costs that are being incorrectly associated with the costs of letter delivery.    

Amazon itself - along with a network of hundreds of "independent contractor couriers" could become a competitive alternative to the USPS.     However, FedEx and UPS enjoy a monopoly status for nationwide delivery.

 

USPS_parcel_post_PAEA_costs_2018_jetworldwide

 

Many shippers worry about the dominance of FedEx and UPS and see the USPS as counter balance.   Small shippers get much lower costs via the USPS which is viewed as being more fair to small businesses. 

 

Jet can assist retailers to develop direct entry import processes via direct USPS labeling, direct airfreight to the USA and Express Consignment Clearance.

The loses at the USPS will continue until the pension liability issue is resolved.    FedEx and UPS will continue to argue for free market (that they dominate) competition and Amazon is the only player with enough volume to create a viable fourth option.   

Innovation will likely spur new last mile solutions but we do not expect the USPS to be the dominant last mile solution for the foreseeable future. 

From a cross border parcel logistics perspective, the opportunity for direct entry via the USPS has never been greater. Shippers in France, Germany, Italy, China, Japan and across Europe, Asia and South America have more direct access to the USA than ever before.  

USPS Global Direct Entry:   Contact our team for duty free high volume express parcel volume import process for USPS Global Direct Entry.    

jet world wide international parcel delivery specialists

 

 

 

Written by Timothy Byrnes