The United States Postal Service (USPS) is preparing to revolutionize last-mile delivery by opening its extensive network to private shippers. This bold move could reshape the logistics landscape while providing USPS with much-needed revenue streams.
The Core Initiative: Direct Access to 18,000 Delivery Points
USPS recently announced plans to allow shippers of all sizes to bid for access to its network of over 18,000 Destination Delivery Units (DDUs). This initiative would enable companies to inject packages directly into USPS's last-mile delivery system, bypassing traditional middle-mile processes.
The bidding process is scheduled to launch in late January or early February next year, with winning bids expected to be announced in Q2 2023. Successful bidders would begin utilizing the network in Q3 through Negotiated Service Agreements (NSAs) under USPS's Parcel Select product.
Strategic Motivations Behind the Move
Postmaster General Louis DeJoy framed the initiative as a natural extension of USPS's universal service obligation: "In logistics, the most expensive part is typically the 'last mile.' With our six-day weekly delivery to over 170 million addresses, we're positioned as the natural leader in final delivery."
The program aims to achieve three key objectives:
- Generate new revenue streams for the financially challenged postal service
- Improve service speed for retailers through same-day/next-day delivery options
- Better utilize existing delivery capacity following recent modernization investments
Industry Reactions: Optimism Meets Skepticism
Logistics experts remain divided on the initiative's potential impact. Rob Martinez of Shipware called it "potentially transformative" for U.S. logistics, noting that "shippers gain access to a built-out, nationwide last-mile network while USPS monetizes existing capacity."
However, others expressed reservations. Adi Karamcheti, also from Shipware, questioned whether the program would truly benefit smaller shippers: "You need significant scale to justify direct injection into postal facilities. This looks more like a play for Amazon's business."
Paul Yaussy of Loop Capital highlighted execution risks: "The real impact depends entirely on implementation. Pricing structures, minimum volume requirements, and operational flexibility will determine whether this works beyond a handful of mega-shippers."
Market Implications and Competitive Landscape
The move positions USPS in more direct competition with UPS, FedEx, and regional carriers. Analysts note it reflects broader industry trends as carriers seek new revenue amid tightening parcel economics.
Key considerations for potential participants include:
- Pricing models: Traditional USPS NSAs have been notoriously difficult to negotiate
- Service quality: USPS must address historical concerns about delivery reliability
- Technology integration: Improved tracking capabilities will be essential for commercial adoption
Assessing the Potential Impact
With U.S. e-commerce sales projected to reach $1.6 trillion by 2027, the last-mile delivery market presents significant growth opportunities. USPS's universal service obligation gives it unique advantages in rural and hard-to-serve areas where private carriers struggle with profitability.
However, success will require overcoming operational challenges. As Yaussy noted, "If pricing or operational restrictions mirror traditional postal agreements, adoption may be limited." The coming months' bidding process and contract terms will reveal whether USPS can truly transform last-mile delivery or simply add another layer to an already complex logistics ecosystem.