USPS bets on last-mile expansion to drive revenue and enable faster delivery for retailers and logistics providers

With a focus on expanding access to its last mile delivery network, the United States Postal Service (USPS) said this week that shippers of all sizes will now be able to access more than 18,000 USPS delivery destination units (DDU) across the country.

USPS explained that this will be done through a solicitation process to start accepting bids next year, around late January or early into February. And it added that in advance of setting up a dedicated bid solicitation platform, the USPS will communicate with shippers, regarding the procedure and also to gauge interest in participation, as well as “fine-tune” the bidding process based on feedback to provide the most effective platform,” with more details announced over the coming months.  

“In the logistics business, the most expensive part of delivery is generally the ‘last mile’ portion of a route. As part of our universal service obligation, we deliver to more than 170 million addresses at least six days a week, so we are the natural leader in last-mile delivery. We want to make this valuable service available to a wide range of customers that see the worth of last mile access — other logistics companies and retailers large and small,” said Postmaster General and CEO David Steiner. “We see this initiative as a compelling value proposition for many shippers who we know are wrestling with the need to deliver to their customer as quickly and reliably as possible. Our solution is to establish a fair bidding process that enables the marketplace to find the best mix of local shipping attributes for the best volume-driven pricing. Because our delivery operations are already visiting every home and business daily, we can help shippers reduce their costs while generating much-needed revenue for the Postal Service.”

What’s more, USPS explained that through its recent modernization investments, it has the package processing and delivery capability needed to meet, or handle, a larger percentage of the country’s shipping needs than is being handled—adding that it is looking to work with customers on various needs and also shipping volumes.

In terms of the roadmap for the last-mile bid solicitation process, USPS said it expects to formalize accepted bids for the direct-to-consumer capability for its Parcel Select offering through an NSA (negotiated service agreement). And it said it expects to notify winning bidders in the second quarter of next year, with service beginning in the third quarter.

USPS also noted it plans to expand DDU delivery, which has historically been limited to a few large customers, to a wider range of shippers. It said this change is expected to increase USPS revenue, improve financial sustainability, and help retailers and others achieve same-day or next-day delivery by reworking last-mile service offerings.

“On paper, this is a win-win,” said Rob Martinez, Founder of San Diego-based Shipware. “Shippers get access to an already-built last-mile network that reaches every address in the country, and USPS gets a meaningful new revenue stream by better utilizing capacity it already has. This is a potentially transformative move in U.S. logistics. The opportunity to lower last-mile costs and enable same- or next-day delivery is very real. If executed well, USPS could become the default national last-mile provider for retailers and logistics companies seeking faster delivery at lower cost. That said, there are still too many unknowns for me to predict the success of the initiative: how the bidding process works, how predictable pricing and service levels are, and whether both sides can manage the added operational complexity.”

Paul Yaussy, Head of Parcel Contract Intelligence, at Loop, said that this announcement signals a meaningful strategic shift for USPS, noting that by opening its last-mile delivery network to a broader bid process, USPS is effectively attempting to monetize the most expensive and operationally complex part of the delivery chain.

“The Postal Service has a footprint no private carrier can replicate, with 18k DDUs and deliveries to every address six days a week, and this move suggests they see last-mile access as a revenue-generating asset rather than just a cost of universal service,” said Yaussy. “That said, the real impact will depend entirely on execution. Pricing structure, minimum volume requirements, tender time flexibility, and how granular access can be at the DDU level will determine whether this is viable beyond a handful of very large shippers. In theory, this could create new options for retailers looking to optimize same-day or next-day delivery, particularly in dense or hard-to-serve markets. In practice, if pricing or operational constraints mirror traditional postal agreements, adoption could be limited.”

From a market perspective, Yaussy said this likely puts USPS in a more direct competitive posture with UPS, FedEx, and regional last-mile providers, and he observed it also reflects the broader reality that all carriers are under pressure to find new revenue streams as parcel economics tighten.

“For shippers, it’s another signal that last-mile strategy is becoming more fragmented and more negotiable, but it’s not yet clear whether this materially lowers costs or simply reshuffles how last-mile capacity is sourced,” he said. “Traditionally, NSA's with the post office are difficult to negotiate. The USPS does not traditionally show much urgency in those negotiations. As an example, I have a client that took almost two years to negotiate an NSA and only got it across the finish line because of true grit and determination.”