USPS grows international business
The US Postal Service (USPS) is expanding its international business and is poised to gain additional commercial freedom to negotiate rates with air suppliers in order to reduce transportation costs, a senior executive told CEP-Research in an interview.
In 2007, USPS increased its international revenues by 13.5 pct to USD 2,036 million (EUR 1,490 million), which represented 2.7 pct of its overall USD 74,973 million revenues. Volumes increased 5 pct to 833 million pieces. Packages have grown in recent years and last year represented 59 pct of international revenues, or USD 1,201 million (EUR 879 million), compared to 38 pct of international revenues in 2000.
Several factors have driven this international growth, Paul Vogel, managing director global business and senior vice-president, said on the sidelines of last week’s Courier and Parcel Logistics exhibition in London.
Customers, especially small businesses, were seeking cheaper alternatives to the global express companies, he said. “Customers do not want to pay exorbitant express prices for next-day deliveries,” he commented. “Deferred products such as a priority parcel are an attractive substitute with a lower price. They offer reliability instead of speed.”
Last year’s product simplification and re-branding in line with domestic products, improved IT tools such as tracking and tracing, as well as growing online shipping had also increased international business. “International traffic has blossomed from online usage,” Vogel commented.
Although the depressed US economy was impacting on USPS’ domestic business, and especially mail business from the financial sector, the weak dollar was encouraging more international business, Vogel pointed out. European customers, for example, were doing more online shopping with US websites.
In a significant development, USPS expects soon to gain commercial freedom to negotiate air transportation rates with airlines, Vogel disclosed. Until now, it has had to pay fixed tariffs, which represent about one third of its international supply chain costs. The House of Representatives had recently passed legislation to deregulate tariffs, and the legal change was now awaiting presidential approval, he pointed out. “I expect airlines to come to us with new proposals,” he commented.
USPS was continuing to use traditional postal partners for international deliveries, despite the past public threat of switching to alternative carriers if postal services were below-standard, Vogel said. “We have not yet had to move to an alternative carrier.” But USPS, which is often the largest customer for inbound international mail, had introduced performance levels into some of its contracts and had even invested into enhancing local delivery in some countries, he noted.
