HUNTINGTON — While the coronavirus pandemic presented financial challenges for countless businesses and organizations around the globe, delivery services like FedEx, the U.S. Postal Service and UPS generally reported increases in revenue for the 2020 fiscal year.
The culprit? A surge in e-commerce as consumers looked for safer ways to shop amid the global health crisis, combined with the usual increase in deliveries around the holiday season.
While the U.S. Postal Service reported that traditional mail traffic decreased by nearly 14 billion pieces, the demand for shipping and packaging of retail and other items led to an increase in overall revenue from 2019 to 2020 by about $2 billion, according to their annual report.
First-class mail declined 2.3 billion pieces, or 4.2%, and marketing mail declined 11.5 billion pieces, or 15.2%. Mail volume began to show slight improvement in the last few weeks of the year, although that was driven in part by the temporary surge in political and election mail associated with the recent general election cycle.
However, package volume grew by nearly 1.2 billion pieces, or 18.8%, compared to last year due to the surge in e-commerce. Although package volume growth has recently slowed since its early fourth-quarter peak, the Postal Service believes that consumer behavior has evolved during the pandemic as the nation has increasingly relied on the safety and convenience of e-commerce.
“2020 has been an extraordinary year for the Postal Service and the nation,” said Postmaster General and Chief Executive Officer Louis DeJoy. “Amid the tumult of the COVID-19 pandemic — and with the challenges of the election, disruptions in our workforce, rapid changes in our marketplace and long-term financial distress — the 644,000 women and men of the Postal Service delivered for the American public.”
When comparing the first quarter of fiscal year 2021 to this time last year, the Postal Service report showed that revenue was continuing in an upward trend.
United Parcel Service (UPS) reported a consolidated revenue increase of nearly $4 billion, from $21 billion in 2019 to $24.9 billion last fiscal year.
According to their annual report, average daily volume increased 10.6% year over year. Their operating profit was $2.2 billion, up 1.6% compared to last year’s fourth quarter, or 26.0% on an adjusted basis. Net loss was $3.3 billion for the quarter; adjusted net income was $2.3 billion, or 26.4% above the same period last year.
“Our financial performance in the fourth quarter exceeded our expectations, and I thank all UPSers for their extraordinary efforts to deliver industry-leading service through the holidays,” said Carol Tomé, UPS chief executive officer. “I’d also like to thank our customers who worked with us during this challenging year. As we look past 2020 into the new year, we are optimistic. During the fourth quarter, we began transporting COVID-19 vaccines, and we stand ready to deliver hope and health to people around the world.”
FedEx was the only major distributor to report a loss of revenue in fiscal year 2020, citing the loss of a large customer and other factors listed in its annual report, but that didn’t stop executives from looking on the bright side of things.
For FedEx, the challenges presented by the pandemic allowed the company to introduce strategic business methods earlier than they had initially planned to, including seven-day residential delivery service, taking back packages previously given to the U.S. Postal Service to increase delivery density and improve the efficiency of last-mile operations, and building out capabilities to more easily handle an increase in large items ordered online, such as furniture, rugs and exercise equipment.
“While our strategic course at FedEx was plotted long before COVID-19 entered the picture, in many ways, the world accelerated to meet our existing strategy. The e-commerce growth we anticipated over a few years happened in a matter of a few months, with e-commerce as a percentage of the U.S. retail market increasing from 16% in calendar year 2019 to 27% in April 2020,” CEO Frederick W. Smith said.
The loss in revenue, the report said, was offset by volume growth as it related to residential delivery at FedEx Ground, including the increase in demand resulting from stay-at-home orders and other responsive measures caused by the COVID-19 pandemic.