Dive Brief:
- The U.S. Postal Service's package shipping segment was a bright spot in an otherwise challenging Q1 as the agency’s the only service category to see both volume and revenue growth.
- For the quarter that ended Dec. 31, the Postal Service's Shipping and Packages category saw revenue jump 2.7% and volume increase 5.1% year over year. Those gains outpaced all other agency service categories, many of which saw volumes fall.
- The Postal Service noted in its quarterly report that USPS Ground Advantage, its shipping service that competes with FedEx and UPS, has seen "wide adoption with both existing and new consumer and commercial customers" since its debut in July.
Dive Insight:
The Postal Service aims to become the nation's "preferred delivery provider" as part of its 10-year transformation plan under Postmaster General and CEO Louis DeJoy. There is plenty of work ahead for the agency to reach that ambitious goal, but package volume and revenue gains are a positive sign as other carriers struggle with soft demand.
"We see package shippers becoming more interested, as we begin implementation of the full features of our e-commerce marketing initiatives and the widely accepted offering of Ground Advantage," DeJoy told the Postal Service Board of Governors on Thursday.
Ground Advantage is the result of the Postal Service consolidating three of its package shipping options — USPS Retail Ground, Parcel Select Ground and First-Class Package Service — into a single product. It offers delivery in 2 to 5 days for packages up to 70 pounds.
For its second quarter in service ending Dec. 31, Ground Advantage handled 614 million packages and made $3.3 billion in revenue, a sizable increase from its its debut quarter when it handled nearly 448 million packages and made $2.3 billion. That jump is unsurprising, however, given the surge in delivery activity the Postal Service and other parcel carriers see during the holiday season.
The Postal Service noted in its quarterly report that further growth for Ground Advantage won't come easy, as competing carriers fight to gain market share in a weak demand environment.
"While USPS Ground Advantage promises to continue to meet market needs and offer significant value, there will likely be heavy competition in the market to challenge its growth," the agency said. "USPS Ground Advantage anchors our shipping portfolio, and our focus is to consistently enhance the product to maximize its value, ensuring long-term growth and customer utilization."
