Report Says Postal Service Gains U.S. Air Market Share

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The U.S. Postal Service, riding a wave of strong demand for its Priority Mail deferred air product, gained U.S. air market share in 2005 for the first time in three years. The findings were part of the Colography Group Inc.'s full-year 2005 analysis of the domestic U.S. air cargo market released on Aug. 25.

According to Atlanta, GA-based The Colography Group, USPS' share of the air shipment market increased to 37.7 percent in 2005, as compared to 37.1 percent in 2004. The USPS, the only carrier to gain shipment share year-over-year, grew its shipment base by 4.9 percent in 2005, by far the fastest growth of any domestic air competitor.

The agency's gains could be attributed to a resurgence in Priority Mail, the USPS' two-to-three day delivery product that had fallen on three years of hard times following a 15 percent rate increase in 2002, The Colography Group said.

Since then, however, the USPS has kept rates steady while its private-sector rivals have imposed annual price increases. In addition, USPS can pass on lower operating costs to its customers because it cannot by law impose surcharges to offset rising fuel costs. The result has been a widening price differential between low-cost Priority Mail and its competition, leading to increased demand from value-conscious shippers.

Deferred air shipments showed healthy growth in 2005, rising 4.2 percent over 2004 levels. By contrast, overnight air traffic grew by less than half that at 1.9 percent. Priority Mail accounted for almost three-quarters of total growth in the deferred air shipment category.

The Colography Group said another highlight of 2005 was the overall performance of the domestic air market.

In the last three quarters of the year, domestic air growth exceeded that of U.S. GDP, the first time in four years that has occurred. For the full year, air shipments grew by 3.2 percent to 2.5 billion shipments, with gains across all market categories: letters and envelopes, packages and freight.

Revenue totaled $33.6 billion, a 5 percent increase over 2004 levels, a phenomenon driven largely by the impact of fuel and other surcharges on the carriers' top lines.

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