The USPS's financial report for the last quarter shows that Priority Mail volume has decreased by 40% compared to the same period last year. This significant decline might seem surprising, but it is a normal occurrence. Priority Mail volume is likely to continue declining, primarily due to:

1. Strategic Shift by USPS: Currently, the USPS’s main product is USPS Ground Advantage, rather than Priority Mail. Before 2018, Priority Mail was a competitive product within USPS’s shipping product lineup. Priority Mail had a pricing monopoly: for items weighing up to three pounds, the price of Priority Mail was cheaper than Parcel Post and also faster. Consequently, few people chose Parcel Post. Additionally, Priority Mail offered several flat-rate services, such as Priority Mail Flat Rate Envelope, Priority Mail Flat Rate Box, and Priority Mail Cubic, which were very competitive. The Priority Mail Flat Rate Envelope, for example, offered a flat rate nationwide without zone differences. For a considerable time, the flat rate envelope was very competitively priced and was the lowest charge within the entire Priority Mail product system. For items over one pound that could fit in the flat rate envelope, it was the cheapest product. However, with USPS's strategic shift towards developing its own ground network products, Priority Mail has gradually lost its competitive edge. Priority Mail now follows the USPS ground network in zones 1 through 4, making it essentially equivalent to USPS Ground Advantage but at a higher price, which is not very meaningful. In zones 5 through 8, where Priority Mail requires air transport, prices are significantly higher, and competitors offer two-to- three day products with comparable prices, erasing its price advantage. For the Priority Mail Flat Rate Envelope, it is no longer the lowest priced product in the Priority Mail system. For example, if a three-pound item fits into this flat rate envelope, regular Priority Mail (charged by zone and weight) is now cheaper in zones 1 through 4, meaning it has lost its competitiveness even over short distances. The flat rate envelope remains competitive only for small items over long distances with high density. Currently, Priority Mail’s competitiveness is mainly in long-distance zones 5 through 9, particularly with the flat rate envelope, flat rate box, and cubic box services.

2. Speed of Ground Network Products Has Been Increasing: This has rendered two-to-three day shipping products less competitive. It’s not just USPS’s Priority Mail that is affected; UPS and FedEx’s two-to-three day shipping products have also seen a significant decline in volume. The core reason for this is that the speed of ground products has improved considerably. For example, a package sent from Los Angeles to New York can now be delivered in four business days by both UPS and FedEx Ground, as shown in the below images.

UPS:

FedEx：

Ten years ago, UPS and FedEx Ground services took five business days to deliver a package from Los Angeles to New York, and over 20 years ago, it took six business days. This demonstrates that the speed of ground shipping has been improving over time. Although USPS's current Ground product is not as fast as UPS or FedEx, it still delivers within five business days, as shown in the image:

However, a few years ago, before the reform of USPS’s ground network, USPS Parcel Post took seven business days to reach its destination. I believe USPS will continue to enhance the speed of its ground network and must ensure that its delivery times are competitive with UPS Ground and FedEx Ground, which are also ground products.

If ground shipping products can meet the same three-day delivery timeframe, their pricing would be competitive compared to the current 2-3 day shipping options.

If you want a single warehouse to ensure that ground shipping products can reach most areas within the 48 contiguous states of the US in three days, the warehouse should be located in Kansas City, with ZIP codes starting with 640 or 641. According to current UPS and FedEx ground shipping data, this location covers 94% of the land area and 98% of the population within the 48 contiguous states in three days, as shown in the image:

UPS:

FedEx：

With the rapid development of e-commerce, reducing logistics costs has become a top priority. As a result, most e-commerce companies now operate more than one distribution center. By having centers on both the West Coast and the East Coast, they can ensure that ground shipping products reach 95% of areas within the 48 contiguous states in three days. Larger e-commerce companies in the US may even have up to 50 domestic distribution centers. Relying on this extensive ground network, they can achieve next-day delivery within a significant portion of the country. Consequently, the two-to-three day delayed air products offered by logistics companies are becoming increasingly marginalized.

These two reasons summarize the core reasons for the significant decline in Priority Mail volume.

Lucas Zheng is the founder of SameZip and senior consultant of Piggyexpress, and loves the US Postal Service and logistics industry. He has spent 16 years researching and studying the US Postal Service, US logistics, and US package delivery. He is familiar with all e-commerce delivery channels in the United States, China to the United States, the United States to China, and domestic China.