The US Postal Service (USPS) reported a significant drop in demand for its expedited packaging shipping services, as per the company’s latest quarterly report.
This shift reflects an industry-wide trend as shippers opt for lower, more cost-effective and sustainable delivery options.
Other major delivery carriers such as UPS and FedEx are also seeing customers “trade down” to slower, more cost-effective shipping options.
USPS decline
USPS experienced a 40.7% year-over-year decline in mail services volume for the third quarter of fiscal year 2024 (ending June 30.)
Some of the affected services include Priority Mail (with a one to three-day delivery window) and Priority Mail Express (one to two-day delivery window with money-back guarantee).
Why the sharp decline? USPS says this decline is due to price sensitivity and intense competition from more affordable products.
In short:
- Shippers are saving costs by prioritizing affordability over speed.
- Carriers have enhanced their ground transportation networks, which improves transit times.
- Companies are taking their inventory closer to customers, which reduces the need for expedited shipping.
Amazon, for example, has a network of fulfillment centres strategically located within reach of their end customers.
Operating costs skyrocket
Other factors influencing the increase in operating expenses include the rise of compensation costs, retirement costs and other operating costs.
USPS’ chief financial officer, Joseph Corbett, says they’ve “reduced work hours by approximately one million, reflecting a continuing three-year trend of work hour reductions during the implementation of the Delivering for America plan.
He says the reduction in work hours, along with the “lower transportation expenses for the quarter reflects continued progress under the plan.”
Growth at the end of the tunnel
Despite the grim outlook for the company’s expedited services and the impact of its operational costs, USPS recorded growth for its Ground Advantage sector.
This growth contributes to a 2.7% overall increase in the ‘Shipping and Packages’ category.
The postal service is thus adapting to the latest industry trends by promoting its USPS Ground Advantage service, which it describes as offering a “simple, reliable, and more affordable way to ship packages.”
The full report can be viewed here.
Image credit: Pixabay/SoFuego
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About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
