Dive Brief:
- United States Postal Service package volume increased 19% (1.2 billion pieces) YoY for the service's 2020 fiscal year ending Sept. 30, the board of governors reported Friday. Parcel volume peaked in April and May — when USPS saw roughly 70% volume growth YoY — and has fallen steadily since, Chief Financial Officer Joe Corbett said at the board's meeting to discuss the results Friday.
- The board of governors expects package volume to remain flat in FY 2021 — consistent with a permanent elevation of e-commerce volume, though not at the height seen in April and May.
- "While we do believe that our package volumes will remain higher, given what looks to be a potential permanent shift in consumer behavior, we do not expect our package revenue growth caused by COVID over the medium to long term to make up for losses in mail revenue associated with the pandemic," Corbett said.
Dive Insight:
Postmaster General Louis DeJoy said on the call he would roll out his overhaul plan in the coming months, adding the plan would preserve the six-day delivery week and USPS' universal service mandate. He said the service needs to modernize and invest in a new fleet and training for workers.
"We need to address operational inefficiencies so the postal service can operate with much greater precision," DeJoy said Friday.
Greater efficiency could improve service and cut costs to improve USPS' competitiveness and financial footing. Shipping and package revenue was up 25% YoY for the fiscal year but USPS as a whole still posted a $9.2 billion loss.
The financial state of the postal service rebounds on shippers, depending on the tactics used to rectify it, which leadership has yet to reveal in specific terms. The funding squeeze could constrain capacity even further at USPS, a bedrock carrier for small businesses. And when all other parcel shipping options are exhausted, USPS picks up the slack.
In fact, parcel data provider ShipMatrix launched a service to provide greater visibility and guarantees to shippers and consumers, built on top of USPS' First Class parcel service.
As the pandemic has elevated e-commerce driven volume for most carriers, UPS, FedEx and DHL have taken steps to protect their profitability through either surcharges or price hikes. The increases have sent shippers to regional carriers, sometimes quite literally at the recommendation of the big two.
USPS, too, raised prices for peak season this year until Dec. 27, and politicians including President Donald Trump have long called for more. The postal service announced 2021 increases to its retail rates Monday. The new prices, effective Jan. 24, represent a smaller increase than the previous year in most parcel categories.
President-elect Joe Biden has committed to removing some of the legislative obstacles standing in the way of USPS profitability, without commenting on pricing. Biden announced an agency review team dedicated to the USPS Tuesday.
This story was updated with a price change announcement from USPS.
