In February 2017, the U.S. Postal Service (USPS) sent a warning about the outlook for its one consistently successful product. The multi-year growth of its shipping and package operations, USPS said in a government filing, could be jeopardized if the three customers responsible for most of the business – UPS Inc., (NYSE:UPS), FedEx Corp. (NYSE:FDX) and Amazon.com, Inc. (NASDAQ:AMZN) – continued to expand their own shipping capabilities and divert business from USPS.
Thirty months later, the prophecy may be nearing self-fulfillment. In its fiscal third quarter results released late last week, USPS said quarterly package and shipping volumes fell year-over-year for the first time in nine years. The decline was caused by the in-sourcing of USPS’ last-mile delivery service known as “Parcel Select,” in which private-sector partners ship and induct parcels deep into the postal infrastructure for inexpensive last-mile deliveries, USPS said. Parcel and shipping revenue rose year-on-year due to gains in Priority Mail and Parcel Post volumes, which USPS moves end-to-end and which typically generate higher revenue.