E-commerce shippers exploit USPS to dispose of undelivered packages

A recent inspector general's report revealed that the U.S. Postal Service (USPS) suffered $163 million in revenue loss over a year due to the inability to track a surge in undeliverable packages from e-commerce shippers. These companies treat the Postal Service as a cost-free disposal service. The number of packages ending up at the Postal Service's "lost & found" unit increased by 45% in the 12 months leading to February, primarily due to fulfillment centers refusing to receive them.

To recover $19 million in revenue over the next 13 months, the Postal Service could collect postage due from direct shippers and impose refusal fees. The Mail Recovery Center (MRC) received four times more "dead mail" than reported, returning only 1% of missing packages, far less than management claimed. Clerks at the MRC attempt to match packages to missing items in a database. If the content is worth over $25 or meets certain criteria, it is held for at least 30 days before being sold at auction, recycled, or donated.

Parcel Select, a discounted program where shippers presort packages for last-mile delivery, accounts for 62% of incoming volume, with 75% coming from commercial shippers. Return-to-sender packages, without return service, often have postage due. Fulfillment centers avoid returning packages to save postage and processing costs, incentivizing them to reject returns.

The MRC undercounted inbound packages by 27 million due to flawed methods of counting packages. The center also overstated the return rate by excluding 98% of packages from its calculation.

Postal officials plan to update how inbound package volume is measured by April 30, 2027, but disagree on how to calculate the return rate. A new measurement system for evaluating the MRC's performance is scheduled to be implemented by November 30, 2028.