USPS Welcomes Growing Package-Delivery Business from FedEx and UPS

August 6, 2014 DATAMARK

The U.S. Postal service is counting on income from business with FedEx and UPS to help the quasigovernmental agency gain financial stability, according to a recent Forbes article.

The express couriers have contracted with the post office to use its Parcel Select service. With Parcel Select, FedEx and UPS transport packages to the destination city, sort them by ZIP code, and deliver them to the local post office. The mail carrier then takes care of the last (and most expensive) leg of delivery, bringing packages to the doors of homes and businesses.

The couriers use Parcel Select as a cost-saving tactic for shipping packages through their cheaper, and slower, two- to seven-day delivery options.

Forbes reported that the USPS is eager to pick up the extra package business from FedEx, UPS and Amazon.com because the volume of first-class mail–the post office’s most profitable segment–has plunged by 30 percent over the past decade as communication and advertising shifted to the Internet.

The cash-strapped post office needs the income from the package delivery business to help modernize its fleet of aging delivery vehicles, and to help pay for an estimated $5.5 billion in annual contributions for retiree benefits.

Here are some interesting facts about the post office’s package-delivery business (and overall financial condition) from the Forbes article:

  • USPS delivers an average of 2.2 million packages a day for FedEx.
  • Parcel Select volume has grown tremendously over the past for years: from 223 million packages in 2009 to 1.29 billion packages in 2013.
  • Package delivery accounts for about 20 percent of USPS revenue. It’s the post office’s fastest-growing segment, growing 7 percent annually over the past for years. The USPS wants to double the package-delivery business over the next few years, according to Postmaster General Patrick R. Donahoe.

The post USPS Welcomes Growing Package-Delivery Business from FedEx and UPS appeared first on Outsourcing Insights.

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