Services conducted online have increased at the industry's expense
Los Angeles, CA (PRWEB) September 01, 2012
The United States Postal Service (USPS) operates in every geographic region in the United States and provide services for the entire population, as mandated by law. As such, it is the only operator in the Postal Service industry. Services are separated into dominant products (first class mail, standard mail and periodicals) provided only by the USPS and competitive products (Priority Mail, Express Mail and bulk parcels). Only competitive products and services are subject to external competition from private courier and messenger services like FedEx and UPS. Despite the industry’s ubiquity in American life and lack of direct competition for core services, the Postal Service Industry has declined in recent years, largely due to the recession. According to IBISWorld industry analyst David Yang, “consumers and businesses conduct fewer mail transactions and correspondences during a recession because they are more cautious with their expenses.” In addition, the USPS is highly regulated, leave it vulnerable to mandated expenses. Internet services, like online banking and e-mail, have also been increasingly replacing traditional mail. Over the five years to 2012, IBISWorld estimates that revenue will decline at an annualized 3.9% to $66.5 billion. Revenue is expected to decline by only 0.3% over 2012, however, as continued economic recovery mitigates some of these burdens.
Consumer confidence fell in recent years due to high unemployment and lower disposable income. As a result, the consumer sentiment index, which measures consumer confidence in the economy, is expected to decline 2.9% per year on average over the five years to 2012. In addition, online services are expected to grow at an annualized 11.7%, further reducing demand for the Postal Service industry. “The growth of e-commerce mitigated some of online services' negative effects because goods purchased online require package delivery services,” says Yang. Still, overall mail volume is expected to decline at an average of 5.6% per year over the period. Profit also plummeted due to the Postal Accountability and Enhancement Act of 2006 (PAEA), which required the USPS to contribute a significant portion to employee retirement health benefits over the 10 years to 2016. Over the five years to 2012, IBISWorld estimates the PAEA will cause industry operating costs to increase at 7.8% per year on average.
The industry is projected to operate at a loss over the five years to 2017 due to PAEA payments, but other areas of the industry's performance are expected to improve. For example, demand for postal services is projected to increase as the economy picks up and individuals and companies begin making more transactions through mail. The USPS is also expected to reduce costs through wage cuts and reduced hours. Over the next five years, wages are forecast to fall faster than revenue, which will offset some of the industry's losses. Nonetheless, online services will continue to replace traditional mail and mail volume is projected to continue declining over the next five years. As a result of these trends, IBISWorld anticipates overall revenue to steadily over this period. For more information, visit IBISWorld’s Postal Service in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes establishments that operate the National Postal Service and perform one or more postal services, such as sorting, routing and delivery. Establishments that operate on a contract basis (except the bulk transportation of mail) are included in this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
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