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USPS warns of market share loss

USPS delivery divideWASHINGTON, DC: August 19, 2016. A report from the U.S. Postal Service Inspector-General's office warns that competition for last-mile delivery in densely populated urban areas by Amazon, crowdsourced delivery companies and regional carriers such as LaserShip and Lone Star Overnight, could result in "significant" market share loss for the USPS.

The report warns that as these competitors move into urban delivery, the Postal Service could find itself relegated to providing rural delivery service to less people at a higher cost.

"Postal stakeholders and policymakers should note this potential urban-rural divide, as the Postal Service could end up being the only affordable way for Americans outside of urban areas to participate in e-commerce," it said.

With e-commerce growth continuing to rely on ground haulage, last year the U.S. domestic trucking industry carried 11.5 billion tons of goods worth over 
US$13 trillion - or roughly 66 percent of all domestic freight transport.

The USPS said it is almost entirely reliant on contracted highway carriers for its ground transportation services and spent over US$3.5 billion on highway transportation last year.

By contrast, Amazon spent 11.6 percent of its net sales, or over US$5 billion, to ship nearly 500 million packages in 2015.

The report says that the growth in e-commerce has led to new entrants and new business models from existing players that present the USPS with both risks and opportunities.

Within its existing legal authority, the report suggests the USPS could explore options for expanding into logistics services. One example could be the leasing of excess space in many postal facilities across the U.S. to logistic companies as warehouse space.

Another suggestion is the USPS could partner with innovative but asset-light new entrants that might need services like first-mile pickup and intercity delivery to make up for gaps in their own resources, networks, and competencies.

Noting U.S. and Canadian consumers returned
 US$290 billion worth of goods in 2015 - a 66 percent increase in five years - the report added this presents "a profound opportunity [to provide] improved reverse logistics services".

"While full end-to-end logistics services might currently be beyond the Postal Service's legal authority, other posts and delivery companies around the world have demonstrated they have the inherent skills and that offering targeted, value-added logistics services can be a significant opportunity for growth in this era of declining mail volumes," the report concluded.

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