...it is an indication of how swamped that the USPS still is...
The two significant macro events this peak are:
1) COVID: a). disrupted belly freight capacity; b). customer behavior shifted to online/delivery
2) Amazon: a). USPS executed an Amazon contract; b). FedEx executed customer deliveries, having chosen not to renew, without its Amazon contract
datum: it is cheaper to pay for shipping a small package from Shanghai to grandma's house than it is to pay for shipping the same volume/weight small package from one county/township to the next(neighboring). Carrier cost of shipping/delivering the two examples is arguably different.
You're munging a few things here.
Amazon has had a negotiated service agreement since 2013
, it's nothing new. As wjcandee stated almost all of those packages are sorted down to carrier routes and dropped at the DDU (destination delivery unit). Amazon takes up exceptionally little, if any, of USPS's line haul capacity; it does utilize the last mile capability extensively.
The difference in the shipping cost for the package from Shanghai to grandma's house is a result of a treaty/agreement with the Universal Postal Union. China was deemed a "transitional" country, and it was given lower postal rates to encourage its growth and trade with the US. The rates that Chinese shippers pay for small packages will be rising
. In my experience these packages are slow, often taking over a month to arrive after they are shipped.
Neither of these have to do with the USPS's reported backlogs in December. You'll note most of those reported backlogged sorting facilities, not DDUs.
(And FWIW, USPS is also forced to support Alaskans with Bypass Mail
to the tune of $100 million a year. It's likely something that should be subsidized, but it shouldn't come out of the USPS's budget.)
for reflection and thought
Thesis: The Amazon/USPS contract is toxic as it is subsidized and displaces packages shipped at posted rates. Further, the contract moves the heavily indebted USPS further into the hole / further away from self sustaining.
FedEx and UPS do not wish to deliver Amazon packages at cost during peak. Nor do they wish to give Amazon priority over profitable customer relationships.
The Amazon contract is lucrative for USPS
. In Financial Year 2019 it brought in $3.9 billion in revenue and earns the post office $1.6 billion more than its costs.
FedEx doesn't wish to deliver Amazon packages period, so they don't. FedEx never really was a huge Amazon's delivery partner.
UPS does deliver Amazon packages during peak. In my limited data set, I've received more packages recently routed via UPS than I have during the rest of 2020.
If anything Amazon is moving toward delivering more and more of their own packages. I've seen analysts that state Amazon will deliver 80% to 90% of their own packages in the US within a few years. In my recent personal experience the percentage of packages delivered directly via Amazon has skyrocketed. I've had a Lyft passenger who was recruiter for Amazon. She stated that they have a mandate to grow their own delivery dramatically. She tried to bring me on as either an Amazon Flex driver or as a Delivery Service Provider (DSP). (DSPs are the Amazon branded vans, they're operated by independent contractors/companies.)
If anything the "Amazon/USPS contract is toxic as it is subsidized and displaces packages shipped at posted rates." belief espoused by many has hurt USPS, because it made Amazon skittish that their rate would be forced higher due to political pressures. As a result they decided to be less reliant on USPS, which may reduce the revenue USPS receives from Amazon.
FWIW, USPS has other negotiated service contracts with other companies. It's one of the ways that USPS is allowed to compete for business.