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The U.S. Postal Service has emerged, bloodied and more than a bit bowed, from the most difficult year in its long history. But beyond the COVID-19 pandemic, the presidential election and the tussles with former President Donald Trump lies an existential crisis for the Postal Service: how to remain viable when most of the macro-trend winds are blowing in its face.
First-class and marketing mail, the traditional cores of the Postal Service, continued their secular declines in 2020, a downward trajectory accelerated by the pandemic. The shipping and package business is currently the lone bright spot, and to capitalize on its growth and offset the costs of processing and delivering parcels, the Postal Service implemented a series of rate increases on shipper-centric products. The increases, which took effect Jan. 24, will reduce, through not eliminate, the Postal Service s low-price proposition that e-merchants depend on to offer low- or no-cost shipping to end customers.
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The combined COVID-19 stimulus and government funding bill passed by Congress Monday night effectively forgives a $10 billion loan made to the United States Postal Service under the CARES Act signed into law in late March, according to a person familiar with the matter.
Lawmakers agreed to language in the Consolidated Appropriations Act of 2021 that would convert the loan from the Treasury Department to a grant. This means the Postal Service would not need to repay the loan and still keep the money. It is unclear if that is the only provision in the bill that affects the Postal Service. It is believed that the Postal Service, which is sitting on approximately $15 billion in cash, has never tapped the credit line. Agency officials did not respond to requests for comment.
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UPS, FedEx Diverge on Last-Mile Surcharges
December 23, 2020
UPS announced its extension of shipping surcharges for 2021, with some similarities and some differences from what was put out last week by FedEx.
Most notable was a steeper price drop for the surcharge on UPS’s SurePost last-mile service, used by many smaller ecommerce shippers, as FedEx may be covering the cost of shifting volume from the U.S. Postal Service into its own ground network. UPS remains a heavy user of the USPS.
As of Jan. 17, UPS is dropping the surcharge on its SurePost and ground services from the current volume-based tier schedule of $1 to $3 – depending on now much it grew relative to pre-pandemic levels – to a flat 30 cents, the same as in May. But now it will be based on straight volume (any shipper with 25,000 more packages during any week since February 2020) vs. a tiered system. FedEx meanwhile decreased the SmartPost surcharge as of Jan. 18 from $1 to 75 cents.
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