Jun
21
Can DHL Help the USPS Survive?
“I am not sure that the American public is aware that the Postal Service is at a critical juncture.” — Postmaster General David Steiner, speaking before the House Committee on Oversight and Government Reform
We might normally think of DHL being a direct competitor to the United States Postal Service, but that ain’t necessarily, completely so. Postal delivery services (USPS, DHL, UPS, FedEx, Amazon) sometimes do partner up. In fact,…
After years of declining mail volumes — partly due to the competition, of course, and partly due to the popularity of email — and financial losses — multiple billions in annual financial shortfalls since 2007 — , the USPS has reached a new agreement (expanding from a more limited partnership) with DHL eCommerce worth more than $10 billion. This is the largest such agreement yet for the two companies that have had a relationship for 25 years.
This is a “last mile” arrangement, which refers to the final step of the delivery process, from local facility to addressee. In this case, DHL eCommerce will hand over packages for their “last mile” to the U.S. Post Office. As Newsweek‘s Aliss Higham reports,
“Companies often use USPS for the final handoff because the agency already maintains a delivery network that reaches every address in the country, including remote and rural communities that can be more expensive for private carriers to serve independently.”
Postmaster General David Steiner reinforced the logic of the arrangement, noting:
“Since the USPS delivers to 170 million locations six days a week, we are the best last-mile provider by default.”
Scott Ashbaugh, CEO of DHL eCommerce Americas, added the following perspective regarding the benefits for his company and its customers:
“This agreement creates a dependable, long-term platform for our customers. Working with USPS allows us to serve communities nationwide in a highly efficient way, minimizing additional vehicles on the road and supporting our commitment to reducing emissions.”
While speaking to Congress this past March (see quote at top of this blogpost), Steiner also said:
“I wasn’t aware of the extent of it before I took on this role, but at our current run rate and if we continue to pay our required obligations in the same manner as we have done in recent years, then we will be out of cash in less than 12 months.”
This influx of cash from the DHL deal will be a boon for the USPS, but the agency certainly has a ways to go before it can be considered financially healthy again. (Btw, I have long thought that Mitt Romney might be able to work his business acumen and turnaround experience on the USPS health problem, though it might have to go semi-private. DOGE should look into that.)
I’m guessing this agreement will put DHL delivery drivers out of jobs, though maybe the USPS will hire a few. Meanwhile, any small businesses looking for a pre-owned van or truck to expand their own services might find a decent deal from DHL, assuming it will be offloading a few.
