USPS Sees Steep Drop In Expedited Shipping Demand

By Max Garland of SupplyChainDive

The U.S. Postal Service’s expedited package shipping services have seen a steep drop in demand, according to quarterly results released Thursday.

The agency weathered a 40.7% decline in Priority Mail Services volume year over year for the third quarter of fiscal year 2024, which ended June 30.

The category includes shipments for Priority Mail, which offers delivery in one-to-three business days, and Priority Mail Express shipments, providing delivery in one to two days with a money-back guarantee.

“Our Priority Mail Services subcategory can be more price sensitive than other services and it continues to face intense competition from more affordable products and an industry-wide trend away from expedited products,” the Postal Service said in its quarterly report.

Shippers are embracing slower parcel delivery services to save on shipping costs, a choice that’s easier to make as they move inventory closer to end consumers and carriers improve transit times within their ground transportation networks.

UPS is seeing shippers “trade down” from speedy air transportation to more cost-effective options like its SurePost product, which utilizes the Postal Service for final-mile delivery, CFO Brian Dykes told analysts during a July earnings call.

FedEx’s international customers are also opting for slower deferred services more often, tied in part to growth from e-commerce shippers that tend to utilize those offerings, President and CEO Raj Subramaniam said on a March earnings call.

The Postal Service is seeing this market shift play out within its own network.

More economical products like USPS Ground Advantage fared better for the Postal Service in Q3, leading to a 2.7% overall increase in volume within the agency’s Shipping and Packages category.

“USPS Ground Advantage, the Postal Service’s shipping offering which provides a simple, reliable, and more affordable way to ship packages, has continued to experience wide adoption and growth in the marketplace,” the agency said in a news release about the Q3 results.