Unfortunately, the partnership was not as mutually beneficial as once hoped. But that’s not for lack of trying.
In 2015, Amazon shipped nearly 500 million packages, and approximately 40% of them were delivered by the USPS – nearly double that of both UPS and FedEx. While dominating the e-commerce behemoth’s deliveries was certainly a much-needed boon for the USPS, the sharp increase in package deliveries came hand-in-hand with additional costs due to labor, supplies and technology.
Fast forward to August 2016, when the USPS released a sobering statistic: package revenues would have to increase 260% to make up for the losses in first-class profits. Package deliveries were more prevalent than ever, but their earnings still paled in comparison to that from first-class mail. But first-class revenue is on a landslide, of course. And delivering packages is significantly more expensive.
To accommodate market changes and what Postmaster General Megan Brennan clearly sees as a package-dominated future, the USPS has invested heavily in larger vehicles, sorting equipment and additional labor. This would make Amazon’s potential withdrawal even more devastating.