Who Pays When the Music Stops

Here's the situation: USPS announced last week it's stopping its retirement contributions to the federal government. $200 million every two weeks, gone. Why? Because they're running out of cash. Officials now think they'll be completely unable to pay their bills by early 2027. They already hit their $15 billion borrowing limit. Lost $9 billion last year.

So yeah, things are bad.

But here's the part that should make you mad. This was not a surprise. In 1991, USPS's own board commissioned a report that basically said this organization was heading toward financial collapse. Costs aren't being recognized properly. Retirement obligations are being hidden off the balance sheet. The pricing model doesn't actually cover the cost of running this thing.

That report went to the people in charge. Nothing happened.

The structural problem was this: USPS had to deliver mail six days a week at the same price everywhere, whether you lived in Manhattan or rural Montana. Meanwhile, competitors lobbied regulators to make USPS absorb more costs in the markets they competed in. USPS also carried federal employee benefit costs that FedEx and UPS never had to deal with. So every year, the gap between what it cost to run the place and what it was allowed to charge got a little wider. And every year, someone kicked the can.

Fast forward to today, and now Amazon is pulling roughly 200 million packages a year out of the USPS network, about 20% of what it currently sends through them, as it shifts more volume into its own delivery system. Amazon is USPS's single largest customer. It accounts for 15% of their total package volume. USPS even expanded Sunday delivery largely to handle Amazon's load.

And now that load is shrinking.

The math here is simple and brutal. Fewer packages mean USPS spreads its fixed costs across a smaller base, which means the cost per package goes up for everyone else. Rural shippers feel it first. On-time delivery in rural areas already lags urban markets by 5-7%. Some remote zip codes already skip days. Those gaps are about to get wider.

For small businesses, the hit is immediate. They rely on USPS because it's the only affordable option for nationwide shipping. They don't have the volume to negotiate discounted rates with UPS or FedEx. When USPS prices go up, they either eat the cost or pass it to customers.

The fix being floated right now, suspending pension contributions, raising stamp prices, and asking Congress for help, is the same playbook from every other time this has come up. And every time, it's presented as having "no immediate detrimental impact." Which is technically true. Until it isn't.

What this means for you: If your clients ship to rural markets, now is the time to map out backup options before you need them. The Postal Regulatory Commission still has to approve the Amazon deal, but don't bank on that saving anyone. USPS was already in trouble. This just accelerates the timeline.

QVC Group, the parent company of QVC and HSN, announced it intends to file for Chapter 11 bankruptcy protection after reaching a restructuring agreement with creditors. Its goal is to emerge before the end of summer, though it warned that access to funding is difficult to predict. Shares that went for over $900 a decade ago were trading under $3 earlier this week.

Sales in 2024 were down almost 30% compared with the $14 billion peak in 2020. That is not a struggling company. That is a business model that has stopped working.

The diagnosis is not complicated. QVC built its audience over decades around women aged 50 and older who watched scheduled programming on cable. That group is aging and shrinking. Cable subscriptions have cratered. The people who used to watch QVC at 9pm on a Tuesday are now watching TikTok Shop influencers in real time or browsing Shein while their phones suggest next purchases before they finish the current one. The hosts who built QVC's emotional connection with its audience have no equivalent on an algorithm-driven feed.

QVC tried. It expanded digital sales and built out its social media presence. But as Lawrence Duke of Drexel's LeBow College of Business wrote, QVC "competes in a crowded marketplace where attention is fragmented and switching costs are low." That is a polite way of saying: the moat is gone.

What this means for you: QVC and HSN collectively represent a major chunk of home goods fulfillment volume. Bankruptcy proceedings add uncertainty to vendor relationships, payment terms, and shipping contracts. If you have exposure here, and I know some 3PLs have exclusive contracts with QVC, get ahead of it. More broadly, any fulfillment partner whose retail clients skew toward traditional television retail should be asking hard questions about the trajectory of volume.

All of that money goes out
None of it comes back

And most operators don’t question it

At 3%, that’s roughly:
$2,000–$3,500/month
$25K–$40K/year

Same carriers
Same volume
No operational changes

Just structured correctly

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Uber launched a new feature through Uber Eats that lets customers return purchased items without leaving home. A courier picks up the item and drops it at the retailer. You get an instant refund credit, and skip the parking lot entirely.

The participating retailers include At Home, Best Buy, Dick's Sporting Goods, GNC, Michaels, Pet Food Express, Pacsun, Petco, and Target. The service applies to eligible items priced over $20, and customers must comply with each store's existing return policy. The courier fee is calculated based on time and distance.

Retail returns are a $890 billion problem in the U.S. On average, about 17% of merchandise gets returned, and the cost of processing those returns is rising. Most of that cost falls on retailers and their 3PL partners. Uber is not solving that problem. But it is solving the consumer-friction side, which matters because returns friction is a documented reason people don't buy in the first place.

This is also part of a longer pattern for Uber. The company launched Connect in 2020 for peer-to-peer package delivery. Then Uber Direct for retail delivery. Then a "Return a Package" feature in 2023 to take parcels to UPS or FedEx locations. This week's launch is the logical next step, collapsing the return process into the same app where the delivery happened.

What this means for you: Watch how retailers absorb returns volume from this. If Uber drives up consumer return rates (because now it’s frictionless) without a corresponding operational improvement in how reverse logistics gets processed, the increased inbound volume lands on warehouse operations. Reverse logistics is already one of the least-automated corners of the fulfillment business. This could accelerate the pressure to fix that.

M&A
Home Depot acquires Simpl Automation to speed up same-day and next-day fulfillment. The retailer aims to "house a broader assortment of high-demand products closer to the customer" as a result. Home Depot has added nearly 200 facilities over the last few years, filling various fulfillment roles. For context on where this fits: Walmart acquired Alert Innovation for e-grocery automation in 2022, and Amazon has been doing robotics acquisitions for most of the last decade. The supply chain automation arms race is not slowing down. (Read More)

M&A
Instacart acquires Instaleap to accelerate international expansion. Instaleap is a grocery fulfillment technology platform with nearly 100 retailer relationships across almost 30 countries, and has powered over 100 million transactions to date. Instacart's angle here is clear: its enterprise technology, including Storefront Pro, Caper Carts, and Carrot Ads, has been gaining traction outside North America, and Instaleap brings international retailer relationships and local market expertise to accelerate that push. Instaleap will initially operate as a wholly owned subsidiary to ensure continuity for its existing retail partners. (Read More)

GTM EFFICIENCY
New data shows 3PL marketing performance is splitting into winners and everyone else. The median logistics company generated $4.84 in pipeline per dollar of go-to-market spend, according to data from LeadCoverage. Top performers generated $200. The spread was $0.36 to $204.30, which means some companies are wasting nearly every dollar they spend on sales and marketing. (Read the full report)

CHINA PLAY
Amazon just opened its first smart warehouse in Shenzhen. The pitch to Chinese sellers: let us handle everything between your factory floor and a U.S. warehouse, and we'll cut your storage costs by up to 45%. The new Global Warehousing and Distribution center consolidates local storage, customs clearance, cross-border shipping, and inventory transfers under one roof. Amazon plans to expand the model to the Yangtze River Delta and eventually to Europe and Japan. The timing is deliberate. Temu hit 24% global market share last year. Shein is pouring over $1 billion into supply chain infrastructure in Guangdong. Amazon is responding the only way it knows how: by owning more of the chain. (Read More)

SHOW ME THE MONEY
The government opened a tariff refund portal yesterday. Up to $175 billion in illegally collected tariffs is on the table. The CAPE portal went live yesterday, and 56,000 importers have already registered. But this is not automatic. You have to opt in, submit paperwork, and wait 60 to 90 days. Only about 63% of duties are currently eligible; the rest could take years. If your clients imported goods under these tariffs, get them moving on this. And make sure their customs paperwork is clean before they file, because errors will slow everything down. If you need help with this, my friend's company can file all the paperwork for you and can also offer upfront cash. Reply to this email, and I will make the intro. (Check your ace portal)

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