![]() Overall, the trend line is clearly downward. The first quarter of 2018 was up 9.7 percent over the same quarter last year the second quarter was up 5.3 percent, and the third quarter, 7.8 percent. For the first three quarters of FY 2018, Parcel Select volumes are up 7.7 percent over the same period in 2017. Then it slowed to about 18 percent in FY 2017. (Hover over bars for exact numbers.)ĭuring 20, the growth rate of Parcel Select was about 26 percent. It illustrates how the growth of competitive product volumes is due mostly to Parcel Select. The double-digit growth of competitive products overall is due almost entirely to the dramatic success of Parcel Select. Since 2014, the non-Parcel Select products have been growing at single-digit rates, while Parcel Select volumes have grown an average of about 21 percent a year. (A more detailed table is here, and links to the Revenue, Piece & Weight (RPW) reports from which the numbers come are here a table with revenues is here.) Here’s a table showing volumes for Parcel Select, volumes for all other shipping services (Express, Priority, International, etc.), and volumes for competitive products as a whole. The evidence for a slowdown in growth becomes more apparent when one focuses on Parcel Select. Total volumes doubled, from 2.5 billion pieces to 5 billion, with average growth of 22 percent.įor the first three quarters of FY 2018, competitive revenues are up about 12.5 percent - somewhat less than during the previous five years - and volumes are up 10.8 percent - well below the average rate of the previous five years. From 2012 to 2017, revenues increased by 82 percent, with average annual growth rates of 14 percent. ![]() “We expect growth to continue,” said Corbett, “but we think that the years of double-digit growth are going to be difficult to get back to, given the level of competition.”įor the past few years, competitive products have seen significant increases in volumes and revenues. Joe Corbett, the Postal Service’s chief financial officer, pointed out that new entrants to the package business could make it difficult for the agency to see the same rate of growth it’s been enjoying. “We’ve got established players and a variety of startups, so we compete for business every day.” ![]() In a recent conference call with journalists about the Postal Service’s third quarter financial report, Postmaster General Megan Brennan focused on just this issue: “We operate in a highly competitive delivery marketplace,” said Brennan. And when it comes to parcels, the marketplace provides plenty of competition - not just UPS and FedEx, but also regional shipping companies, local couriers, and retailers themselves. It’s called the marketplace.Īccording to the rate system set up in 2006 by the Postal Accountability and Enhancement Act, price increases on market-dominant products are limited by the consumer price index, while increases on competitive products are constrained by the marketplace. Whatever the Task Force recommends, there is one major constraint on just how much the Postal Service can charge to deliver parcels. The claim has gotten little traction with the PRC and courts, but UPS has been persistent, and it may be about to take one of its appeals to the Supreme Court. The undercharge argument has been fueled by UPS, which for years has been making the case with the Postal Regulatory Commission and federal courts that the Postal Service is competing unfairly by using market-dominant products (letters and flats) to subsidize competitive products (mostly parcels), which allows the Postal Service to charge below market rates on packages. A $1.50 increase would represent a 70 percent rate hike. Parcel Select currently averages about $2.15 per piece. Thanks to a Citigroup report and Trump’s tweets, there’s now a widespread - and totally mistaken - belief that the Postal Service is undercharging Amazon by $1.50 per package. The concern now is that a much bigger hike could be in the offing. For Parcel Select - the low-cost, workshared Ground product that’s used for last-mile delivery by Amazon, FedEx (SmartPost), and UPS (SurePost) - rates have gone up an average of 6 percent a year. Over the past ten years, rates on Priority Mail - which includes the popular Flat Rate Boxes - have gone up an average of 4.2 percent annually (as seen in this table shared with the PRC). The Postal Service raises prices on shipping services every year. They have already begun lobbying Congress to prevent a rate hike on parcels and to counter any move toward privatizing the nation’s postal system. In the meantime, Amazon and other stakeholders in the Package Coalition aren’t waiting around to see what the Task Force has to say. It was supposed to come out on August 10th, but for some reason the administration has delayed making it public, and there’s no word yet on when it will be released. The report of the President’s Task Force on the Postal Service is overdue. ![]()
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