WASHINGTON — In a bold move to compete in the fiercely contested "last mile" delivery market, the United States Postal Service (USPS) has announced plans to open its extensive network of Delivery Destination Units (DDUs) to shippers of all sizes, marking a significant strategic shift for the government agency.
Opening the DDU Network: USPS's Last Mile Gamble
The USPS revealed it will make its network of more than 18,000 DDUs available to commercial shippers through a competitive bidding process expected to launch in early 2024. This initiative represents the postal service's attempt to monetize its existing infrastructure while helping retailers and logistics companies accelerate delivery times.
"In logistics, the most expensive part is typically the last mile," said USPS Postmaster General and CEO David Steiner. "As part of our universal service obligation, we deliver to over 170 million addresses at least six days a week, making us the natural leader in last-mile delivery. We want to offer this valuable service to customers of all sizes who recognize the value of last-mile delivery—including other logistics companies and retailers."
The USPS plans to implement a bidding platform that will allow shippers to inject packages directly into its DDU network. Officials say this approach will help reduce shipping costs while generating much-needed revenue for the financially challenged postal service.
Infrastructure Investments Support Delivery Ambitions
To support its last-mile strategy, USPS has made substantial investments in modernization efforts, including:
- Automated sorting systems to improve processing efficiency
- Advanced package tracking technology
- Mobile payment systems for recipients
- Transition to electric delivery vehicles
The postal service claims these upgrades have positioned it to handle a greater share of national shipping demand. USPS expects to finalize bids for its direct-to-consumer Parcel Select product in Q2 2024, with service beginning in Q3.
Expanding Access for Faster Deliveries
A key aspect of the strategy involves expanding DDU access beyond large shippers to enable more retailers to offer same-day or next-day delivery options—services that have become increasingly important in e-commerce.
"Our solution is to establish a fair bidding process that lets the market find the best combination of local transportation attributes for optimal volume-driven pricing," Steiner explained. "Because our delivery operation already visits every home and business daily, we can help shippers reduce costs while creating revenue for USPS."
Industry Reaction: Promise and Skepticism
Logistics experts have expressed mixed views about USPS's ambitious plan:
"On paper, this is win-win," said Rob Martinez of Shipware. "Shippers gain access to an established, nationwide last-mile network, while USPS gets meaningful new revenue by better utilizing existing capacity. This could be transformative for U.S. logistics—if executed properly."
However, Martinez and others note significant unanswered questions about pricing structures, service levels, and operational complexity that could determine the program's success.
Paul Yaussy of Loop Capital highlighted both the potential and challenges: "USPS has a footprint no private carrier can replicate. But actual impact will depend entirely on execution—pricing, minimum volume requirements, and operational flexibility will determine whether this works beyond just a few large shippers."
Challenges Ahead
USPS faces several obstacles in its last-mile push:
- Quality and efficiency comparisons with private carriers like UPS and FedEx
- Competition from Amazon's growing logistics network
- Potential labor issues
- Historically slow negotiation processes for service agreements
Some analysts question whether the initiative is primarily aimed at gaining leverage with major shippers like Amazon. "This seems like USPS trying to get more from Amazon or get UPS to work with them again," said Shipware advisor Adi Karamcheti.
The Road Ahead
While USPS's last-mile strategy represents a significant opportunity to leverage its unique nationwide delivery network, success will depend on execution. The postal service must demonstrate it can compete on service quality, pricing, and efficiency in a market dominated by sophisticated private carriers.
As the e-commerce landscape continues to evolve, USPS's bold move could reshape competitive dynamics in last-mile delivery—if the agency can overcome its operational and financial challenges.