The US Postal Service's volumes tanked for the first time in nearly a decade here's why insiders say FedEx and Amazon are to blame
The US Postal Service hemorrhaged some $69 billion from 2007 to 2018.
And now, one of the few pillars that seemed to be keeping the troubled USPS in business is crumbling. The agency, which is burdened with pre-funding its pension plan for the next 75 years, saw package volumes dip in the spring of 2019. It's the first time in nine years that package volumes decreased at the USPS.
In the second quarter of 2019, the Postal Service moved 47 million fewer packages than it did during the same period in 2018 a decline of 3.2%. (Meanwhile, its revenue in that sector, which moved 1.4 billion packages last quarter, actually increased by 4.8%.)
Such a dip seems bizarre in an environment where Americans are ordering more and more items online, which is naturally sent to their doorstep in a package. As Morgan Stanley's freight analyst Ravi Shanker told Business Insider, "parcel volumes were growing pretty strongly at the USPS for a while now, so this certainly is a pretty unique development."
To explain the downturn, the USPS said in its quarterly report that "(c)ertain major customers of the Postal Service have recently begun diverting additional volume from the Postal Service's network by in-sourcing the last-mile delivery."
The report didn't name which customers were taking their packages out of the USPS network, but analysts revealed their identities to Business Insider: Amazon and FedEx.
Both are looking to glean more profits from the world of e-commerce by moving their own packages, rather than outsourcing deliveries to the USPS. "It's a combination of all of these major carriers are getting more and more aggressive within this e-commerce space to really try to win market share," Zach Cummins, equity research analyst at B. Riley Financial, told Business Insider.
The US Postal Service hemorrhaged some $69 billion from 2007 to 2018.
And now, one of the few pillars that seemed to be keeping the troubled USPS in business is crumbling. The agency, which is burdened with pre-funding its pension plan for the next 75 years, saw package volumes dip in the spring of 2019. It's the first time in nine years that package volumes decreased at the USPS.
In the second quarter of 2019, the Postal Service moved 47 million fewer packages than it did during the same period in 2018 a decline of 3.2%. (Meanwhile, its revenue in that sector, which moved 1.4 billion packages last quarter, actually increased by 4.8%.)
Such a dip seems bizarre in an environment where Americans are ordering more and more items online, which is naturally sent to their doorstep in a package. As Morgan Stanley's freight analyst Ravi Shanker told Business Insider, "parcel volumes were growing pretty strongly at the USPS for a while now, so this certainly is a pretty unique development."
To explain the downturn, the USPS said in its quarterly report that "(c)ertain major customers of the Postal Service have recently begun diverting additional volume from the Postal Service's network by in-sourcing the last-mile delivery."
The report didn't name which customers were taking their packages out of the USPS network, but analysts revealed their identities to Business Insider: Amazon and FedEx.
Both are looking to glean more profits from the world of e-commerce by moving their own packages, rather than outsourcing deliveries to the USPS. "It's a combination of all of these major carriers are getting more and more aggressive within this e-commerce space to really try to win market share," Zach Cummins, equity research analyst at B. Riley Financial, told Business Insider.