E-commerce shipments give US Postal Service new life

It's not dead yet.

The U.S. Postal Service may have been written off by the internet, but e-commerce gave the government agency new life during the holiday season. The USPS saw a net loss of $754 million compared to a $354 million loss the year before, but it increased its operating revenue due to political mail related to the mid-term elections and holiday parcel deliveries. It saw a 12.8 percent increase in shipping and package volumes, Reuters reported.

On Monday, Dec. 22, USPS delivered a record 28.2 million packages — the largest number in its 237-year history, according to USA Today. This was a 10.5 percent increase over the same day in 2013.

"Our employees delivered double-digit growth in packages this holiday season, which shows our growing ability to compete for and win new package delivery customers," Megan Brennan, Postmaster General and CEO, said in a prepared statement. "To keep the momentum going — and to ensure we are the shipper of choice for our residential and business customers — we will continue to expand customized delivery solutions and package capacity while delivering high levels of service."

USPS expanded its Sunday deliveries, which it had been doing in partnership with Amazon, going after e-commerce business more aggressively. It has also been testing early-morning grocery delivery in the San Francisco area with Amazon, according to the Wall Street Journal, and plans to expand this service to other retailers.

Ebay also is using USPS. "Pretty much anyone who's in the e-commerce space at least does some volume with us," Nagisa Manabe, chief marketing and sales officer, told Reuters. The agency expects 80 percent of U.S. zip codes to see "significantly more business," Manabe said. However many of its vehicles are more than 25 years old and not built for package delivery.

The USPS plans to spend more than $10 billion on a new fleet of vehicles over the next four years. Manabe said there could be three or four different sizes of vehicles to handle different package volumes in urban and rural areas.

USPS has an advantage in that it delivers to almost every residence in the country, and can do so for a quarter of what UPS and Federal Express charge, analysts estimate. "The U.S. Postal Service has the ultimate last-mile delivery network, so it has a real opportunity here," said Vinnie DeAngelis, vice president of postal relations at Neopost USA.

Shipping will become the Post Office's main focus in the year ahead, Brennan said. With e-commerce growing as a percentage of retail sales, and with brick-and-mortar retail stores putting more emphasis on omnichannel service, the USPS could benefit if it becomes the shipper of choice for retailers and consumers, noted Pymnts.

For more:
-See this Reuters article
-See this USA Today article
-See this USPS press release
-See this Wall Street Journal article
-See this Pymnts article

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