Trend of Competitive Contracts Not Indicative of Package Growth

The Postal Service’s 10-year Plan, released March 23, optimistically assumes package volume will grow and provide a critical source of revenue to offset the Plan’s projected $160 billion loss over the period.

However, as we first reported last April, the continuing trend of competitive product contracts seems to not support the agency’s rosy expectations.  According to data available from the Postal Regulatory Commission website, from January 1, 2020, through August 13, 2021, 48% more competitive product (CP) contracts with the USPS were terminated (426) than were approved (287).

The data below is based on the dates that a CP contract approved by the PRC, or termination reported by the USPS, is posted on the PRC website.  Of course, not all contracts are for the same products or equivalent volume, so changes in the number of contracts don’t necessarily correlate to proportional changes in net volume.

Nonetheless, new contracts have slowed, whether because of attractive competitor pricing or dissatisfaction with poor USPS service.  Through mid-August 2021, the Postal Service has secured only 69 competitive product contracts (51% of the total (134) through August 2020) while 191 have been terminated (including 29 “early” terminations), 31% more than the 146 terminated from January through August 2020.

While the PMG is assuming package volume growth, he might first ask why customers aren’t acting accordingly.

Competitive Product Contract Approvals

Competitive Product Contract Terminations

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