USPS Shutdown

How Is the USPS Slowdown Affecting Ecommerce Retailers?

Categories: BCO/Shipper.

If you work in ecommerce, you’re likely well aware that the United States Postal Service has been experiencing delays.

While frustrating for everyday citizens, the slowdown is particularly affecting ecommerce retailers, as it’s impacting important factors such as shipping time frames and costs. Here, we’ll take a look at the causes, impacts, and effects of the USPS delays.

What’s slowing down the postal service?

There are several factors contributing to the slowdown of the USPS, including financial difficulties, process changes, and increased package volume.

For one, the organization has long-standing financial issues. It does not receive tax dollars for operating expenses, and relies on the sale of postage, products, and services for funds. Last year, the Postal Service reported a loss of nearly $9 billion, some of which was due to a congressional mandate that the USPS prepay retirees’ health care costs, as well as a decline in the volume of first-class mail over the last few years.

Recent process changes are also affecting the organization. In an effort to cut costs for the USPS, new Postmaster General Louis DeJoy implemented large operational changes, such as eliminating workers’ overtime and reducing transportation costs. As a result, mail was getting left behind or returned to distribution centers if letter carriers couldn’t deliver it by the end of their shifts.

The changes resulted in significant delays nationwide, according to Forbes: In New York City, some mail has been delayed by nearly a week, while in Maine, postal workers have been forced to leave as many as 80,000 letters behind.

DeJoy has since suspended these changes in response to backlash over how they might impact the upcoming election.

Additionally, the USPS is feeling the effects of the pandemic, as people continue to shop from home. From April to June, the Postal Service’s package volume increased by 708 million packages, up about 50% from last year. This increased volume combined with a decrease in resources has left the organization struggling to handle the spike.

How is the slowdown affecting ecommerce retailers?

The USPS slowdown is both causing delayed shipments and necessitating higher fees. To offset financial difficulties and increases in package volume, the Postal Service recently raised prices. From Oct. 18 through the end of 2020, the organization will charge more for commercial domestic competitive parcels.

Together, all these changes will acutely impact small businesses and online retailers, which heavily rely on the Postal Service to ship goods to customers. In fact, some 70% of micro-businesses (those with fewer than 10 employees) say they use the post office at least once every six months.

What was once an affordable way for small businesses and ecommerce retailers to handle shipping is becoming slower and more expensive. And as coronavirus continues to affect everyday life — and as the USPS continues to struggle — the delays aren’t likely to go away anytime soon.

Most businesses can’t afford delays, missing shipments, inaccurate shipping time estimates, and steep prices, especially during these tough economic times.

What can ecommerce retailers do?

Ecommerce retailers can lessen the impact of the USPS slowdown on their businesses by partnering with a 3PL company.

In previous blogs, we’ve covered why working with a 3PL partner is a great choice for ecommerce retailers — customer expectations are higher than ever, and it can be hard to keep pace when you’re handling shipping on your own.

Now that the USPS is raising prices and struggling to keep up with increased volume amid significant changes, there’s even more reason to make the switch to a 3PL provider.

Conclusion

The COVID-19 pandemic and the USPS slowdown will continue to have an impact on ecommerce for the foreseeable future, making it even more difficult for retailers to handle their shipments in-house.

Only time will tell whether the Postal Service will bounce back from its current setbacks. In the meantime, to continue delivering shipments on time and meeting consumer expectations, ecommerce retailers should consider partnering with an experienced 3PL organization.

Contact GlobeCon to learn more about our industry-leading 3PL services at the Port of Los Angeles and Long Beach.