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The International Package Market – Trends and Opportunities for the Postal Service

White Papers

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    cover image: Illustration of the International Package Market.
May
15
2023
Report Number:
RISC-WP-23-006
Report Type:
White Papers
Category: Strategy & Investments, Innovation, Customer Service

The International Package Market – Trends and Opportunities for the Postal Service

 

  • The growth in international ecommerce is not translating into increases in international package volumes for the Postal Service. The Postal Service’s total international revenue for FY 2022 is at its lowest level in 18 years.
     
  • Higher terminal dues and new customs data and sales tax have made the international postal channel more expensive and less convenient, while new international supply chain models and innovations in technology have exacerbated competition and facilitated the use of alternative commercial channels.
     
  • A large part of the Postal Service’s foregone post-to-post international inbound package flows have become domestic volume, entered into the U.S. as bulk commercial shipments, and passed on to USPS and other domestic carriers for final delivery. Pandemic-related supply chain disruptions aggravated structural declines in outbound volumes.
     
  • The Postal Service has been working on several measures to protect its international business. The USPS OIG suggests it further develop support services for smaller shippers, speed up efforts to combat counterfeit postage, and provide more clarity on the role the Postal Service intends to play in the international shipping arena now and in the future.

Even in an uncertain global economy, international ecommerce is expected to continue to increase at rates of up to 20 percent annually until 2030. The growth in international ecommerce, however, is not translating into increases in international package volumes for most of the world’s postal operators, including the Postal Service. In fact, USPS’ international volume is in an unprecedented decline.

The Postal Service’s total inbound volume decreased by 74 percent between FY 2017 and FY 2022, most of which were packages. On the outbound side, pandemic-related supply chain disruptions aggravated a structural decline, causing a 38 percent decrease in volume over the same period. As a result, the Postal Service’s FY 2022 international revenue is the lowest in 18 years.

figure 4 - USPS inbound volume decreasing over time.

A combination of factors has contributed to the loss in competitiveness of international postal products. Higher shipping rates, new customs data, and sales tax imposed on packages shipped overseas have made international postal products more expensive and less convenient. Additionally, new international supply chain models and innovations in technology have exacerbated competition and facilitated the usage of the commercial channel, which often limits or even eliminates the role of postal operators from the international supply chain. As a result, a large part of the Postal Service’s foregone post-to-post international inbound package flows have become domestic volume entered into the U.S. as bulk commercial shipments and passed on to USPS and other domestic carriers for final delivery. Meanwhile, pandemic-related transportation capacity shortages and the lack of outbound solutions for smaller merchants are among the factors that have accelerated the Postal Service’s longstanding loss of competitiveness in the international outbound package market.

The Postal Service has been working on several measures to protect its international business. The OIG suggests it develop commercial shipping options, both in inbound and outbound, to better cater to the requirements of large ecommerce shippers and provide more support to help smaller merchants navigate the complexity of international shipping. USPS could also speed up efforts to combat fake, low-cost shipping labels on packages shipped to the U.S., which harm both revenue and brand. Finally, it could provide more clarity on the role the Postal Service intends to play in the international shipping arena now and in the future.


Jean-Philippe Ducasse, Aaron Anfinson, and Paola Piscioneri contributed to this report.