24/7 Wall St.

The U.S. Postal Service is calling for big gains in holiday shipments this year. You know of course that online shopping is a part of the driving force behind this prediction. This is a big estimate here: 365 million packages are expected to be shipped through the Postal Service this holiday season. If this is hit, then that will be a gain of 20% over the 2011 holiday season.

As expected, the fondness of online shopping was cited. The press release also gave a forecast of nearly 18 billion cards, letters and packages which will be delivered between Thanksgiving and New Year’s Eve. The busiest mailing days for each class are as follows:

• for holiday cards/packages is Monday, Dec. 17, when more than 655 million pieces of mail are expected to be processed versus 538 million on an average day;
• for letters will be Wednesday, Dec. 19
• for packages will be Thursday, Dec. 20

Here is what is amazing. If this prediction is correct, the USPS is expecting more growth over the holidays for packages than FedEx and UPS. FedEx Corporation (NYSE: FDX) recently raised its shipping volume estimate by 13% for this year’s holiday season and United Parcel Service, Inc. (NYSE: UPS) recently raised its estimate by about 10%. UPS expects to handle a record 527 million packages this holiday season, while UPS forecasts more than 280 million shipments. Both companies expect shipments from online sales to grow this year.

So, as a taxpayer and as a concerned citizen, if the USPS is going to grow its holiday package shipping faster than both UPS and FedEx this begs a question. Shouldn’t the USPS try to raise its prices on a shadow basis during the holiday season for those packages where the service is far cheaper than UPS and/or FedEx?

JON C. OGG