The U.S. Postal Service has announced that it will deliver groceries on a test basis for Amazon. In doing so, the world’s largest mail delivery service is deepening its relationship with the influential e-commerce provider. So much for drone delivery. Amazon’s Jeff Bezos has the USPS, which handles 40 percent of the world’s mail and visits every address in America six days a week, now delivering packages for the Everything Store on Sundays, too.
The news comes just as the USPS is entering a new period of tension with its chief competitors in the parcel space, UPS and FedEx. The USPS is lowering its parcel delivery prices at a time when the private guys are preparing to raise theirs. Clearly, UPS and FedEx fear that the USPS will siphon away their customers. The deepening relationship with Amazon virtually guarantees that. The e-commerce giant was miffed last December when UPS and FedEx misjudged the volume of holiday packages and ended up getting many of them to customers after Christmas.
FedEx and UPS complain that the government-owned delivery service has an unfair advantage because it has a monopoly on letter delivery. True enough. For most of the agency’s colorful history, that kept the USPS afloat. Now, however, first-class mail is in terminal decline because consumers have embraced e-mail. The USPS’s monopoly means it has to visit every doorstep six days a week and see if people have letters to be picked up. It’s part of the universal service requirement.
Here’s a way to resolve the dispute between the USPS and the private couriers. Congress could give the USPS permission to relinquish its letter monopoly and let firms and couriers compete for this shrinking business as European posts have done. That would enable the USPS to compete more aggressively with the private guys in the parcel arena and avoid a financial collapse.
It would also make the USPS more attractive to the kind of private investors that have taken stakes in some European posts. With their money, the USPS could modernize its aging fleet of trucks. The question is, would the private couriers go along? Or are they just interested in protecting their turf?