The rise of email, the recession, and a massive mandate from Congress to pre-fund 75 years of retirement benefits in ten years — a burden not legally required of any other business or government agency — has led to difficult times for the United States Postal Service.
The agency, which operates without taxpayer funding, has weathered a drop in letter volume, and has pioneered new programs which may ultimately hold the keys to its future. Now USPS officials have asked federal regulators for permission to expand a deal with Amazon which has postal carriers and vehicles delivering groceries and other prepackaged goods in big cities. The current arrangement is a test, operating just in San Francisco where the USPS makes early morning deliveries to customers of Amazon’s grocery delivery service.
The potential expanded arrangement would be a two year test which would expand the current setup into more cities. The Post Office requires approval from the Postal Regulatory Commission to enter an arrangement such as this one.
Deals like this are sort of the silver lining to the dark cloud the Internet has brought to the business of mail. People are sending less letters and paying bills online, but the rise of online retailers, including Amazon, has increased the number of packages being sent. It has also created a market for off hours delivery services like the USPS/Amazon arrangement which allows the postal service to take advantage of its existing infrastructure during off-peak hours.
How big a deal is Amazon grocery delivery for USPS?
The short-term financial impacts are nearly irrelevant. Revenues from the deal are not expected to top $10 million, according to the filing. …
The money in the short-term is not the point. The deal tests a path which could fundamentally change how the Post Office does business, which is part of the rationale used in the document seeking permission to expand the test.
Customized Delivery will provide the Postal Service a new opportunity to explore the demand for delivery during the 3 a.m. to 7.a.m. window at a specific location at the delivery address, particularly in the ever-growing grocery delivery market. The Postal Service believes these differences to be significant and worthy of testing in the marketplace.