The U.S. Postal Service on Tuesday opened a website where retailers and logistics providers can begin bidding for last-mile delivery service to homes and businesses, part of a broader strategy by new Postmaster General David Steiner to raise revenue for the money-losing organization.
The Postal Service has sold delivery service direct from post offices for many years, but it has been mostly limited to very large customers that bring bulk shipments to local or regional stations themselves. Under Steiner’s predecessor, the agency encouraged shippers to induct parcels at upstream distribution centers, which can sort parcels more efficiently. The new bid solicitation platform, developed with feedback with industry stakeholders, opens the network to e-commerce shippers of all sizes willing to pay a premium for fast, front-door parcel delivery.
“We recognize trends in the shipping marketplace — as well as changing market conditions, supply chain disruptions and the effects of a post-pandemic world — have driven our customers to prioritize convenience. To best accommodate the evolving needs of American commerce, and consumers, we are evolving our business strategies to better reflect the value in our last-mile delivery network,” Steiner said in a news release.
The national post says it expects to generate billions of dollars in revenue from last-mile deliveries, which would help reduce a $2.8 billion operating loss in the previous fiscal year, ended Sept. 30. The new process allows shippers to reserve capacity at more than 170 local processing units and 18,000 local post offices nationwide.
Customers will be able to propose a combination of volume, pricing and tender times at each available destination delivery unit for same-day or next-day delivery, ensuring that the last-mile network is correctly priced for supply and demand, according to the solicitation. The prospect of higher prices has raised speculation that Amazon may reduce its use of the USPS as a last-mile delivery partner.
The agency announced on Dec. 17 that it planned for e-commerce businesses to compete for access to the last-mile delivery network. Since then, there has been a substantial increase in interest from many companies wishing to leverage the Postal Service’s universal delivery footprint, the agency said. Companies like Amazon and UPS have used USPS because having a network that goes to every address is expensive, especially in less dense areas.
The Postal Service expects to formalize accepted bids for its Parcel Select product through negotiated service agreements. NSAs are contractual agreements between the Postal Service and individual mailers that give the mailer customized pricing in exchange for meeting volume and mail preparation requirements.
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