What was once a boring federal agency is now a political flash point. Political passions aside, the post office enjoys the support of majority of the Americans. Most view the post office as part of their local community that helps connect them via both mail and parcel delivery.
At Jet Worldwide, we help connect shippers to international shipping solutions to North America. In addition to import clearance processes, a critical element of cross border shipping is via the USPS.
The USPS is the Preferred Last Mile Delivery for the USA
- Directly (for example via Global Direct Entry or online postal sites),
- Parcel Select via FedEx, UPS, DHL and other USPS partners
- international postal services such as China Post, La Poste
- Postal consolidators such as Pitney Bowes
Contact Jet Worldwide to learn about Shipping to the USA via Canada
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The method of entry is a sort of arbitrage where shippers simply look for the best deal for accessing the USPS. But the growth of parcel volumes giving way to new private networks but these networks are best suited for mega volumes and not necessary a solution smaller online merchants.
At Jet Worldwide, we support networks that support connecting people parcels and businesses around the world. Postal networks play an important role for the success of online sellers.
USPS and Politics
The post office is losing a lot of money and competes with private carriers. While private carriers complain about unfairly subsidized competition, their relationship the USPS is symbiotic: UPS, FedEx and Amazon are among the USPS’s largest customers and vendors.
The postal board is designed to be bipartisan in nature with the party in power usually having the majority. The Post Master General is hired by the Board of Governors and a President cannot fire governors without cause. The main political sticking point was whether the USPS delivered parcels for Amazon below costs with most non-political analysis concluding that Amazon’s business was financial win for the USPS.
The Financial
The largest financial burden - at least on paper - is the mandate (from the Postal Accountability and Enhancement Act)/ PAEA) that the USPS pre-fund the health and retirement benefits of its over 600,000 workers. Although the balance sheet would look much better without this obligation (which costs over $4.5 billion per year).
When the PAEA was passed in 2006, the post office was making enough money the setting aside payments for health care and retirement seemed prudent.
Around half the reported loss by the Postal Service in 2020 ($9.2 billion) was from the pre-funding requirement ($4.5 billion). Policy makers have unofficially realized that the federal treasury will have to write off the debt owed by the USPS. Or so it would seem….
Mail Down by More Than Parcels are Up
The Postal Service’s biggest problem is their top profit generator, first class and marketing mail , has suffered historic declines. 2020 was the first year in which the Postal Service earned more from packages than it did from first-class mail albeit with much less contribution to the bottom line.
Support Outside of Washington
While turning around the Postal Service’s finances will require cost cutting, rate adjustments, and offloading the retiree health-care pre-funding requirement. The choices are made harder by the fact that USPS enjoys broad support in communities across America. Democrat’s support the workforce issues and Republican-leaning rural areas consider the post office as central part of their community.
Support from Independent online sellers
For online merchants, the post office offers low pricing and universal coverage that private carriers simply cannot. The USPS - through their various direct to shipper options such as Global Direct Entry - provides a community infrastructure that connects communities and marketplaces.
Contact our team for information on section 321 duty free import processes and final mile delivery and logistics support.
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