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.
Some of the Postal Service’s increases appear to be relatively benign. Many are equal to just cents per piece. Commercial and retail rates for Priority Mail and its more time-sensitive cousin, Priority Mail Express, will rise by low- to near-mid-single-digit rates, hardly off-the-charts increases. Then there are, on average, 20% increases on shipments weighing less than 1 pound and moving via the Postal Service’s Parcel Select service, where parcels are delivered to residences after being inducted deep into the postal infrastructure.