The USPS' international mail volume fell from 1 billion pieces in fiscal 2017 to 355 million pieces in fiscal 2022.

The USPS' international mail volume fell from 1 billion pieces in fiscal 2017 to 355 million pieces in fiscal 2022. webking / Getty Images

GAO: USPS international mail volumes fell due to higher costs, pandemic restrictions

A new report found that international mail volumes fell by roughly 64% between fiscal 2017 and 2022, driven by a mix of price increases and COVID-19 impacts, but the increases helped the postal service cover costs. 

The U.S. Postal Service’s international mail volumes have fallen precipitously since fiscal 2017, in part due to rising prices, a new Government Accountability Office report has found. 

The watchdog report detailed that while international volume dropped from around 1 billion pieces in fiscal 2017 to about 355 million pieces in fiscal 2022 as the USPS increased its prices for shipping the mail, those increases helped the service make up for financial losses it was incurring delivering inbound international mail. 

When international mail is shipped, the post services of the mail’s country of origin pay the USPS for the cost of delivering the mail once it reaches the U.S. 

The delivery cost reimbursement process is organized through a terminal dues system managed by a United Nations agency known as the Universal Postal Union, consisting of 190 countries as members, with the costs staggered by gross national income per capita per country and other factors. 

But prior to 2017, the terminal dues paid to the USPS for small packages weren’t covering the costs of delivery, leading to the U.S. negotiating its own terminal dues with certain countries, starting in 2020. 

“We reported that USPS’s losses from inbound international mail doubled from $66 million in fiscal year 2012 to $135 million in fiscal year 2016,” the report said. “These losses were due to terminal dues from some countries (mainly China) not covering USPS’s costs to deliver small packages. The small packages were primarily irregularly sized e-commerce packages from countries designated as ‘transitional’ by the Universal Postal Union (Groups 3 and 4 at the time, which included China).” 

The USPS’s 2020 self-declared terminal dues — coupled with the Universal Postal Union’s own dues increases in 2018 — helped the service cover the costs of inbound international mail between fiscal 2017 and 2022, but that came as revenue dropped nearly $244 million. 

Revenue for outbound international mail also fell, leaving the USPS with a 37%, or $1 billion, decline in total international mail revenue between fiscal 2017 and 2022, even as its costs fell. 

“USPS officials stated that the start of self-declared rates for small packages in 2020 was the primary contributor to dramatic decreases in inbound volume,” GAO officials said. “USPS officials also stated that many U.S.-based outbound mailers stopped using USPS to mail items to other countries due to the self-declared rate price increases, instead turning to express companies or other mailing alternatives.”

But the impacts of the self-declared rates also came on the heels of the COVID-19 pandemic, which forced the USPS to ship mail by sea because of air travel restrictions, adding two to four weeks of delays. 

That, combined with new U.S. Customs and Border Protection requirements for “advance electronic data” to help combat synthetic opioids, contributed to a more than 64% decline in mail volume, USPS officials said. 

As a result, alternatives to the terminal dues system have become more popular, such as bilateral and multilateral agreements with other countries based on more market-based pricing, the USPS’ Global Direct Entry program — which partners with wholesalers to accept the mail and sends it to the service once its cleared CBP — companies like FedEx and UPS and others.

In its comments to the GAO, the Postal Regulatory Commission also noted that market trends may be driving volume away from the Universal Postal Union model and to methods like the USPS’ Global Direct Entry program as much as the factors outlined in the report.