Consumers in the United States spent about $1 trillion during last year’s holiday spending stampede, a 3.4% increase from the year prior. The winter holiday season is without a doubt the most important period of annual consumer spending for the economy, particularly for retailers and e-commerce companies. But the record-shattering 2019 spending blitz was complemented by a flush economy and record-low unemployment. And, as foreign as it would seem today, there wasn’t a pandemic destabilizing the economy. If the U.S. is to capture a similar share of its annual consumer spending targets this holiday season, the U.S. Postal Service will be an indispensable vehicle to getting us there.
During the first 10 days of this year’s holiday shipping season, consumers spent 21% more on online goods than last year, a rise due mostly to the fact that 63% of consumers have said they’re avoiding stores and buying more online. As retailers work around the clock to ensure their packages arrive in time for the holidays, the Postal Service is the most affordable option for most businesses and consumers. And it isn’t only integral to delivering e-commerce packages from retailer to consumer. It’s also going to play a significant role in delivering presents to friends and family who aren’t able to celebrate in person.
Private carriers will deliver big this holiday season, too, but they levy surcharges in more than half of the country’s ZIP codes and are not a viable alternative to the Postal Service for rural businesses and communities. The competitive prices at USPS keep shipping costs reasonable, but there are efforts underway in Washington to hobble USPS with artificial rate hikes and even threats of privatization. With so much economic uncertainty and so much riding on the USPS to bridge our economy through the next few months, there is little room for error.
These measures would not improve the financial situation of the Postal Service either. They would only stand to benefit private carriers and pose a threat to the USPS’s financial solvency. Private carriers would not have the public service mandate to deliver to all addresses carried by USPS and would be able to charge consumers more if USPS prices were made less competitive. We must protect the USPS, not make it more difficult for the agency to do its job.
A recent analysis found that with a 50% price increase, a rate much lower than some of the proposed changes, USPS would lose 84% of its package volume. That would have year-round effects, but just imagine if that were the case during this holiday season. Consumers and small businesses would be forced to pay higher prices for private shipping, which would come with walloping surcharges for rural communities. This analysis also found that package price increases would result in all but the largest online retailers facing reduced sales and reduced profits, for a loss ranging from $27 billion to $49 billion over five years. Many smaller retail businesses could be forced to close.
The holidays, with the help of USPS, will bring us the opportunity to give joy to family and friends, some of whom we haven’t been able to see this year. But it isn’t all about holiday cheer. These next months are critical for our economy, and the Postal Service needs the support required to shepherd us through.
John M. McHugh, a former Secretary of the Army , serves as the chairman of the Package Coalition.