Imagine if the sprawling U.S. Postal Service network, traditionally focused on letter delivery, could become the backbone for rapid e-commerce package distribution. This vision could reshape retail and logistics industries as USPS moves to make it reality by opening its "last mile" delivery network to shippers of all sizes through a competitive bidding process.
USPS's "Last Mile" Strategy: Open Bidding to Reshape the Landscape
The Postal Service announced plans to open bidding for access to its nationwide network of over 18,000 Destination Delivery Units (DDUs). The bidding process, expected to launch in late January or early February, will allow USPS to "fine-tune" the platform based on shipper feedback before finalizing the procedure. Additional details will be released in coming months.
USPS emphasized that recent modernization investments have equipped it with sufficient package processing capacity to handle increased national shipping demand. The service seeks partnerships to accommodate diverse needs and shipping volumes.
Bidding Process and Timeline
The Postal Service will formalize bids through Negotiated Service Agreements (NSAs) for its Parcel Select product's direct-to-consumer functionality. Winning bidders will be notified in Q2 2024, with services commencing in Q3.
This expansion of DDU delivery — historically limited to major clients — aims to boost USPS revenue, improve financial sustainability, and help retailers achieve same-day or next-day delivery through redesigned last-mile services.
Expert Perspectives: Opportunities and Challenges
Rob Martinez, founder of Shipware, noted: "On paper, this is win-win. Shippers gain access to an established last-mile network covering every U.S. address, while USPS gains meaningful new revenue by better utilizing existing capabilities. This could be transformative for U.S. logistics."
However, Martinez cautioned about unknowns: "How the bidding process works, pricing and service level predictability, and whether both parties can manage increased operational complexity remain unanswered."
Adi Karamcheti, Shipware consultant, offered a different perspective: "This seems like USPS trying to get more from Amazon or regain UPS business. The claim this is open to small shippers makes little sense — you need substantial scale to inject directly into postal facilities."
Paul Yaussy of Loop Capital observed this marks a significant strategic shift: "USPS is monetizing the most expensive, operationally complex part of delivery chains. Their unmatched footprint — 18,000 DDUs with six-day delivery — becomes a revenue asset rather than just universal service cost."
Potential Impact and Challenges
The initiative could significantly disrupt U.S. logistics markets. While offering retailers new options to reduce last-mile costs and accelerate deliveries, it may intensify competition and reshape existing logistics structures.
Implementation challenges include designing fair bidding processes, ensuring predictable pricing and service levels, and managing operational complexity. Reactions from e-commerce giants like Amazon — potentially accelerating their own logistics networks — could affect USPS's competitive position.
Ultimately, USPS's bold last-mile strategy presents substantial opportunities alongside significant challenges. Its success will depend on execution quality and market responses.