USPS's international business volume has experienced a "sudden drop"! Is there still hope for it to catch up with FedEx and UPS?

The USPS Office of Inspector General said in a May 15 white paper that despite the booming cross-border e-commerce market, the USPS's international business volume has seen an "unprecedented decline."

Over the past five fiscal years, USPS inbound international volume has fallen 74%, while outbound international volume has fallen 38% over the same period. The OIG cited increased competition, new international supply chain models, and price increases for lightweight postal products as reasons for the decline.

To address the decline in business, the report recommends that the USPS develop commercial shipping options, revitalize postal channels, and accelerate its crackdown on counterfeit, low-cost shipping labels on packages entering the United States.

As part of a decade-long transformation plan under Postmaster General Louis DeJoy, the USPS wants to improve its position relative to companies like FedEx and UPS, and increasing cross-border package volume would help it achieve that goal.

Agency management, in response to the inspector general’s office’s white paper, said they agreed that “increasing competitive pressures in the international package market, with slower delivery times, higher rates and limited tracking, challenge the global postal model.”

The report said the reasons for the decline in business varied depending on whether the packages were shipped to the United States or to other countries.

For inbound volumes, large shippers are increasingly turning to alternative shipping modes in which packages are consolidated and brought into the U.S. as large commercial shipments. Those packages are then passed to the Postal Service and other carriers for last-mile delivery, leading the agency to treat them as domestic freight rather than international.

“As a result, the Postal Service’s role in the international package supply chain is changing to that of a domestic delivery provider, which presents both benefits and challenges,” the inspector general’s office said.

Meanwhile, the Postal Service’s international outbound volumes have been declining since fiscal 2013. The OIG noted that competitors outperform the USPS in areas such as speed and reliability.

Some of those shortfalls were caused by pandemic-related disruptions, as the agency suspended package deliveries to more than 20 countries. As of June 2, mail service to more than two dozen countries remained suspended due to the pandemic and other disruptions, according to the USPS.

“Postal Service management indicated that the uncertainty caused by the suspension also caused some shippers to permanently shift all of their outbound volume to other carriers, resulting in volume losses beyond the countries initially affected by the suspension,” the OIG said.

The inspector general's office recommended several ways to make the Postal Service more competitive in the international package arena, including offering merchants a "delivery duty paid" solution to find out how much sales tax and duties are due in the destination country.

Most commercial operators already offer a "delivered duty paid" service that allows foreign online buyers to pay these fees at the time of purchase rather than upon delivery, resulting in a better customer experience. The Postal Service began developing such a solution this year, the report said.

Editor ✎Estella/

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