Parcel sector lone bright spot in USPS's dismal 10-year outlook

Gains in package traffic won't be enough to offset decline in overall mail volumes, study says.

By Mark B. Solomon

The U.S. Postal Service is projected to handle 1 billion more parcels 10 years from now than it does today, but parcel growth won't nearly offset the expected significant losses in overall mail volumes during that time, according to a multiyear forecast prepared for the post office.

The study by the Boston Consulting Group was released last week as the Postal Service was outlining steps to combat what it expects to be "unprecedented" declines in mail traffic and a cumulative $238 billion budget shortfall over the next decade.

The study said that by 2020, the USPS will handle 4 billion packages a year, up from 3 billion a year currently. However, that increase pales next to a projected decline in total mail volumes from 177 billion pieces in 2009 to 150 billion in 2020, the report said. First-class mail volumes are projected to fall by 37 percent during that time, the report said.

Postmaster General John Potter said on March 2 that the USPS could cut the $238 billion shortfall roughly in half through cost cuts and productivity improvements. The remaining gap, he said, will need to be filled by reforms to the USPS's pension fund programs and adjustments to delivery schedules, among other things.

One option that has been discussed is eliminating or reducing Saturday deliveries.