The Consequences of the USPS Fallout

T Nguyen

August 17, 2012


News headlines are always full of doom and gloom when concerning the US Postal Service (USPS) and with probably good cause.  The USPS’ revenue has steadily been declining since 2001 with the advent of email and technology.  Even with more optimization and efficiency measures along with layoffs and office closings, the USPS lost nearly $3 billion per quarter in 2011 and even more in 2012 as they are currently unable to pay $5.5 billion in employee benefits.  Although this blog has looked into one effect of the USPS’ losses onto carriers, we take a careful look at the economic factors that will impact both the USPS in the future and the other carriers along with the effect on your business.

Without drastic changes in terms of the business and revenue, the future continues to look fairly harsh for the USPS.  One is due to the way they pay their employees.  With high retirement benefits and perks, the USPS is simply putting out too much out with the little they actually receive back from customers.  Without money to really spend, they are relegated to the same business model they had for years and will be unable to compete with others like UPS and FedEx when they continue to innovate and create new and more efficient shipping means and other business options.  One other final, difficult note is in international expansion in which the USPS currently has a weaker presence in comparison with it’s competitors.  While US population growth has peaked, there has been a high amount of growth in Asia, Africa and Latin America and will continue to shoot up in the next 25 years.  Again, without revenue, the USPS has little chance in pushing forward in these markets.

For most carriers, the effect of the USPS’ losses will be positive if not challenging for some.  Although FedEx may feel some hardships as their partnership with the USPS may change their partner in the Fall, both UPS and FedEx have services that can replace the USPS more and more as the USPS’ role slowly dwindles down, such as how FedEx bought Kinko and created centers that combine the two together.  Businesses will be impacted by such changes with new shipping rate changes that will have fewer competitors for the carriers although there will be space for disruption from new players, especially in the digital space.

Source Consulting is keenly aware of these changes that are happening and have tactics and experienced employees ready to help.  Specializing in reducing shipping rates and pointing out opportunities for savings, frequent small parcel shippers can receive great care and advice from Source.  The most important aspect to take away from these changes is to be vigilant of the future of shipping and to be open-minded to making sure where your shipping material is going.  Understanding these big changes can help your company be prepared for future focuses and directions.

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