While parcel volume in the U.S. increased nearly 6% to 21.5 billion pieces in 2021, it was the slowest growth in five years, and considerably less than the massive 31.5% gain in a pandemic-driven 2020, according to an annual index put out by parcel consolidator Pitney Bowes.
The index also showed smaller carriers growing rapidly as shippers seek to diversify, but in aggregate still holding a tiny percentage of the overall pie. The last index was conducted in the fall of 2021, but moved up to keep track of the dynamic nature of the market.
UPS remained the largest carrier by volume, revenue and market share (5.26 billion, $69.51 billion and 37%, respectively). FedEx was second in terms of revenue at $62 billion, but was edged out once again by Amazon in terms of volume and share (4.81 billion vs. 4.18 billion, 22% vs. 19%). FedEx had greater revenue than Amazon, which came in at $22 billion.
While Amazon delivered the majority of its own parcels in 2021, 57% to 43%, it still leans heavily on other carriers, principally UPS and the USPS. The volume of parcels it handed off to outside carriers increased from 2.6 billion pieces in 2020 to 3.8 billion pieces in 2021.
The U.S. Postal Service saw its revenue decline by 0.4% to $31.5 billion, while its market share dropped from 19% to 17% as the agency lowered its days-in-transit promise and works to implement a 10-year performance improvement plan.
While the market share of carriers outside the big 4 was only 2%, it increased by 95% from about 1% in 2020, according to Pitney Bowes, which includes itself in that group along with DHL and regional carriers such as LaserShip, Pitt Ohio and LSO. Diversification by shippers based on available capacity plus rapidly increasing costs were cited as the drivers of that growth.
“In the context of COVID, supply chain costs and skyrocketing demand, they’re all factors forcing merchants to rethink their carrier strategies,” said Jason Dies, EVP and President of Sending Technology Solutions for Pitney Bowes. “We’re seeing the impact of that in a couple ways, with a lot of merchants continuing to diversify their multi-carrier strategy.”
With so many internal and external factors impacting the market (inflation, labor, fuel costs, COVID, supply chains, etc.) and all the uncertainty based on continued disruptions, Pitney Bowes has widened the band of its five-year forecast. It now calls for a range of between 25-40 billion parcels annually by 2027, with a 5%-10% CAGR.
Separately, a Box poll of U.S. adults conducted by Morning Consult on behalf of Pitney Bowes during the first week of May found they had made more than one-third of their purchases (37%) online during that period. The figures were higher for Gen X (39.6%), millennials (41.7%) and Gen Z (38.8%).
“This tells you that our behavior has changed since the pandemic and we’re not going back,” Dies said. “We see the environment changing, but it’s hard to predict the slope. It’s causing carriers to rethink their networks, with some expanding and some retrenching, including Amazon leasing out space as it seeks to right-size its network.”
The parcel volume and market share figures in the Pitney Bowes index were based on data from a proprietary source, while revenue was based on publicly available reporting on shipments from origin to destination.