The US Postal Service is terminating discounts for shipping consolidators like UPS and DHL, which leverage its extensive delivery network to transport about 2 billion packages annually, constituting about a quarter of its total parcel volume.
This policy change, aimed at aiding the Postal Service in curbing losses, is expected to enhance its revenues and operational efficiency, while encouraging shippers to utilize its services like Ground Advantage.
The big picture: The restructuring of agreements with consolidators is part of the Postal Service’s endeavor to grow its own Ground Advantage package deliveries and to eliminate inexpensive access to its vast network for the most expensive leg of shipping – the final delivery to 167 million addresses across the country.
- Shipping consolidators dropping off substantial package volumes at approximately 10,000 locations nationwide will be affected by the revised approach, with the number of designated hubs reduced to about 500 better-equipped facilities.
- These changes form part of Postmaster General Louis DeJoy’s broader initiatives to eliminate budget shortfalls and improve efficiency as outlined in a 10-year plan to achieve financial stability for the Postal Service.
Why it matters: While large-scale shippers like Amazon, directly engaged with the Postal Service, remain unaffected, the revised arrangement may lead to increased shipping expenses for various products transported by consolidators.
- Notably, important consolidators such as DHL eCommerce, OSM Worldwide, and UPS through SurePost and Mail Innovations might face higher costs for utilizing the Postal Service’s expansive network, potentially impacting their operations.
