August 15, 2016 (RARC-WP-16-015)
- Logistics is emerging as a prime means for posts and their partners to enhance their offerings, which could be critical in the face of changing and declining mail volumes.
- The continued growth of ecommerce packages is stretching the capacity of the logistics and transportation systems.
- The logistics industry is quickly growing and represents significant opportunities and risks to the Postal Service.
- Many aspects of the logistics industry are central to the Postal Service’s core business. By expanding its logistics offerings, the Postal Service could better retain or grow its package delivery business.
Logistics is the glue that holds the global economy together. Its function as a binding agent in global commerce makes logistics directly related to postal operators’ core mission. In an era of declining and changing mail volumes, logistics may be one of the best options for posts and their partners to enhance their offerings and a key element of their long-term survival.
The continuing surge of ecommerce has strained major parts of the supply chain, raising questions about whether the logistics and transportation industries have the capacity to handle the increased load. Dense urban areas present unique delivery challenges that exacerbate these concerns about capacity. Although the Postal Service is currently the dominant last-mile delivery provider in the United States, competition is intensifying. Crowdsourced delivery companies, regional carriers, and major players like Amazon are moving into last-mile delivery, particularly in urban areas, often with innovative new business models.
The Postal Service is not a logistics company, but many aspects of the logistics industry are central to its core business. By taking steps to expand its logistics offerings to the extent allowed under existing law, the Postal Service could better retain or even grow its current package delivery business. This paper examines several major changes in the logistics industry and the significant opportunities and risks they represent to the Postal Service.