BY MARK B. SOLOMON, SENIOR EDITOR
SMALL PARCELS
enroute
after DHL …
Can the post office
fill the void?
As one player whiffs in
the United States,
another waits to bat.
WHEN DHL PUSHED INTO THE U.S. PARCEL
market in 2003, its splashy ad campaign sent a
clear message to the marketplace: The days of the
duopoly enjoyed by FedEx Corp. and UPS Inc. were
over.
More than five years and billions of dollars in losses later,
the only thing that’s over is DHL. Last month, the company shut
down its U.S. express delivery operations, leaving parcel shippers to two
behemoths whose virtual stranglehold on the business has earned them the not-so-endearing
moniker of “FedUPS.”
But as DHL fades from view, a familiar face is emerging: the U.S. Postal Service.
Estimates vary as to the USPS’s share of the U.S. parcel market. During the third quarter of 2008,
the USPS controlled 11. 7 percent of domestic parcel volumes, according to SJ Consulting, a
Pittsburgh-based consultancy. Hempstead Consulting, an Orlando, Fla.-based firm that develops
pricing solutions for parcel users, estimates the Postal Service had 21 percent of the parcel market
in calendar year 2007. Whatever the case, its portion is dwarfed by rival UPS, whose share of U.S.
parcel traffic is estimated to be somewhere between 58 and 65 percent.
PHOTOS COURTESY OF USPS
What accounts for the lag? USPS executives privately acknowledge they have not been as aggressive as possible in promoting their shipping products. They also admit some shippers perceive the
post office as lacking the operational capabilities and the IT tools to consistently service the
demands of corporate supply chains. But the real barrier to growth, they claim, was federal regulations preventing the Postal Service from offering volume discounts and other contractual perks
to high-volume shippers.
That changed with a December 2006 law that gave the Postal Service authority to negotiate
market-based pricing with any business that came its way. Starting in May 2008, a slew of USPS
initiatives hit the street, among them discounts for online purchases of shipping services, cus-
