As mail volumes fall, USPS is competing for packages

USPS package volumes

USPS is investing heavily into packages, as mail volumes decline

6/10/24 12:22PM

Keeping posted

Postmaster General Louis DeJoy’s 10-year plan to modernize the US Postal Service — and turn around cumulative losses of $98B in the past 17 years alone — has hit a snag. That’s according to reporting from the Wall Street Journal, which revealed that the new one-million-square-foot postal processing facility near Atlanta is already experiencing delays and package backlogs, despite only fully opening in February. As a result, Georgia’s inbound first-class mail took on average 2.2 days longer to arrive in March than in the same period last year.

While the sorting center has all the hallmarks of DeJoy’s $40B overhaul proposal — including advanced equipment to process high volumes of mail/packages — union leaders noted staff shortages, poor management, and overwhelmed machines among reasons for the bottleneck, citing a “rush to implement plans”.

Union scrutiny aside, a mix of soaring production costs and limits on price hikes has put the USPS firmly in the red in past years. And, with overall mail volumes declining, the institution has been trying to pivot towards the more lucrative package business to assuage losses, with 40% of its $78B of revenue last year coming from parcel deliveries, despite only making up 6% of volume. But that’s a space that’s always had serious competition in UPS, FedEx, and more recently, Amazon, which is now bigger than both of its older parcel rivals.

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American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

American Airlines updates bag fees and Basic Economy fares

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

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Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.