Q1 2024 Reveals Good News for USPS

Following years of historically low volumes, the tide is finally beginning to change for the United States Postal Service. The Postal Service saw significant growth in its package shipping service, with Postmaster General Louis DeJoy attributing much of the growth to USPS’ recently implemented Ground Advantage service.

But it’s not all good news in logistics: retailers saw a steep drop in sales in January, and U.S. warehouse demand is shrinking as retailers rethink their strategies. Here are the headlines you need to know in an industry that's always moving.

USPS Sees Volume Gain in Q1

The USPS, which has struggled with stubbornly low volumes in recent years, has reported an uptick in volumes and revenue in its package shipping services. During Q1, USPS’ shipping and packages category saw a 2.7% revenue increase, resulting from a 5.1% volume increase YoY.

Postmaster General Louis DeJoy attributes the increase to the wide uptake of USPS’ Ground Advantage service among shippers. “We see package shippers becoming more interested, as we begin implementation of the full features of our e-commerce marketing initiatives and the widely accepted offering of Ground Advantage,” DeJoy told the Postal Service’s Board of Governors on a Feb. 8 call.

Retail Sales Plummet in January

Despite early optimism, January retail sales revealed a difficult sales environment for businesses throughout the consumer economy. Advance retail sales dropped 0.8% from December 2024, a significantly starker decrease than the expected 0.3%.

“Despite these grim numbers, experts advise that the significance of the decrease in retail sales may be overestimated. “December was high due to holiday shopping, and January saw drops in those spending categories, plus frigid weather plus an unfavorable seasonal adjustment,” said Robert Frick, corporate economist for Navy Federal Credit Union, in an interview with CNBC. “Consumer spending likely won’t be great this year, but with real wage gains and increasing employment it should be plenty to help keep the economy expanding.”

Facing Volatile Maritime Landscape, Shippers Reroute to U.S.  West Coast

As maritime shippers contend with a highly volatile supply chain landscape, many are rerouting shipments to the West Coast of the U.S. in search of a more secure venue for their freight. Pressure from the Red Sea crisis and the Panama Canal's ongoing drought has forced many shippers to reconsider their logistics strategies, leading to an increase in imports at West Coast logistics hubs, including the Port of L.A.

  • Total TEU’s have increased by 18% YoY.
  • Loaded imports have increased by 19% YoY.
  • Loaded exports have increased by 23% YoY.

“Recently, as I’ve traveled overseas shippers are beginning to tell me that they’re starting to reroute cargo over to the West Coast of the United States, and avoid these hotspots,” said the Executive Director of the Port of L.A., Gene Seroka, according to reporting from Supply Chain Dive.

UPS To Deploy New Air Freighters By 2025

Despite parcel giant UPS’s recent struggles to mitigate the fallout from plummeting air freight volumes, the carrier recently purchased two Boeing 747-8 freighters from Qatar Airways. The carriers, slated to join UPS’ fleet in 2025, will be retrofitted to meet UPS’ specifications and color schemes.

According to reporting from FreightWaves, the decision to purchase the 747-8s resulted from the carrier’s intent to expand in key international markets and prioritize more sustainability aircraft within their fleet.

Chinese Shipyards Lead Shipbuilding Boom

Chinese shipbuilders are in the midst of a shipbuilding boom. Per reporting from YiCai Global, China was responsible for roughly 50% of global shipbuilding output. Chinese shipyards were the recipients of more than 65% of all orders for new ships last year, and are reportedly fully booked until 2026.  

The Chinese shipbuilding boom comes despite the significant hurdles faced by the maritime industry, including stubbornly low volumes and major disruptions to key trade routes. While the effect of these disruptions and volume issues remain significant, the sharp uptick in orders at Chinese shipyards points to considerable optimism on the part of carriers.

Norfolk Southern Sees Spike in Demand From FedEx Ground

During peak season, Norfolk Southern saw a notable increase in demand from FedEx Ground. The demand increase came following strategic adjustments made by the two companies as they cooperated to meet the needs of FedEx customers. While the specifics of the increase have yet to be announced, Norfolk Southern saw a 3% increase in volume during 2023, with FedEx Ground likely playing a significant role in that volume spike.

“We listened to their business forecast and made strategic adjustments that we knew would set us up to better serve this valued customer,” said Ed Elkins, Norfolk Southern’s Executive Vice President and Chief Marketing Officer, according to reporting from Supply Chain Dive.

U.S. Warehouse Demand Shrinks as Retailers Slash Inventory

As retailers recover from inventory surpluses, many are cutting back on storage space. This shift follows a historic boom in warehousing in 2023, when retailers sublet over 155M sq. ft. of warehouse space in Q4. This boom led to a significant rise in warehouse rental costs, leading retailers to further consider strategies to streamline their warehousing operations.

“If you’ve got three different facilities or four different facilities and your real-estate costs are high, if you’re coming up on renewal, it might make sense to go down from four to three in a more efficient facility,” Mehtab Randhawa, global head of industrial research at JLL, told the Wall Street Journal.

In an Industry of High-Highs and Low-Lows, Intelligent Audit is the Smart Shippers Choice

As the global logistics industry navigates continual challenges, shippers are experiencing high highs and low lows. With Intelligent Audit, shippers can build the data-driven stability needed to navigate a volatile moment in the supply chain. With 25 years of experience at the cutting edge of supply chain innovation, Intelligent Audit offers shippers an invaluable suite of vital software assets:

Get started with Intelligent Audit today, and see how 25 years of supply chain innovation can transform your logistics today.

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