Industry Outlook for 2025 & Beyond

The Current State and Future Outlook of the Domestic Small Parcel Market

The US domestic small parcel market is undergoing transformative changes, presenting both challenges and opportunities. Kenneth Moyer, LJM Partner & Chief Supply Chain Officer, examines key trends shaping the industry and projects its future in a recent article in Parcel Media.

Key Shifts in the Parcel Market

Before the pandemic, the market was stable, with consumers demanding fast, low-cost deliveries, and carriers like UPS, FedEx, and USPS focused on market share.

The pandemic disrupted this balance, accelerating e-commerce growth by years and giving carriers unprecedented pricing power. Carriers implemented steep rate increases and shed low-margin customers, while consumers prioritized availability over speed and price.

Post-Pandemic Trends

As the economy recovers, inflation and excess capacity are reshaping the market:

• Carrier Pricing Wars: Carriers are shifting focus back to market share, spurring aggressive pricing strategies.
• Consumer & Shipper Behavior: Shippers are exploring cost-saving strategies, while consumers embrace alternative methods like delivery lockers and BOPIS.
  

Emerging Disruptors

The parcel market faces several potential disruptors that could significantly alter the competitive landscape:

• USPS Policy Changes: Increased costs and potential delays due to changes in package handling.
• Amazon’s Influence: Amazon’s growing delivery network and potential entry into the common carrier market.
• New Technologies: Drone and robotic deliveries by companies like Apple or Tesla
  
  

Long-Term Trends Shaping the Industry

Looking ahead, several longer-term trends are likely to influence the parcel market:

• Labor Movements: Unionization efforts in major organizations like Amazon and FedEx could reshape costs and operations.
• Shipper-Driven Innovations: Solutions like crowd-sourced delivery and localized fulfillment models could redefine how goods are delivered.
• Technological Advancements: Automation, robotics, and AI-driven logistics systems could dramatically improve efficiency and reduce costs.
  

2025 Industry Outlook Conclusion

The U.S. domestic small parcel market is at a crossroads. While the challenges are significant, the opportunities are equally compelling. Businesses that stay ahead of the curve by anticipating trends, innovating, and adapting their strategies will be well-positioned for success in this dynamic industry.

For a deeper dive into industry trends, read Kenneth Moyer’s full article in Parcel Media:

LJM: Your Partner in Small Parcel Contract Negotiation

Many businesses struggle to keep up with the ever-changing landscape of parcel shipping. Navigating these shifts requires expertise and innovative solutions. For over 25 years, LJM has been a trusted advisor, committed to providing our clients with the knowledge, tools, and support they need to make informed decisions, streamline operations, achieve long-term cost savings.

Contact LJM today to schedule a free consultation and discover how we can help you optimize your shipping operations.

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