By David Shepardson
WASHINGTON, Dec 17 (Reuters) – The U.S. Postal Service said on Wednesday it is seeking to boost revenue from its “last-mile” delivery network to major retailers and shippers as it warned of a looming financial crunch and said it could run out of cash as soon as early 2027.
U.S.
Postmaster General David Steiner told Reuters he hoped Amazon.com and others would participate in a process that is seeking bids to open 18,000 USPS delivery destination units for “last-mile” deliveries to a broader range of customers.
This could potentially add billions of dollars in much-needed revenue to USPS, Steiner said in his first interview since taking the helm.
The Postal Service delivers to more than 170 million U.S.
addresses six days a week, with the last-mile the most expensive part of deliveries. It is also hugely expensive for companies like FedEx, UPS and Amazon, Steiner said.
“We certainly have a precarious cash position.
You know, within probably 12 to 24 months, we are out of cash,” he said.
“It was clear to me that you couldn’t save your way to prosperity,” Steiner said, adding that given USPS’ free cash and its spending rate “we’re basically out of cash in early 2027”.
Steiner, who took over in July after the White House pushed out the prior postal leader, reiterated that USPS needs significant administrative and legislative reforms after reporting a $9 billion yearly loss in November.
One priority is to convince Congress to lift the current $15 billion borrowing cap that it hit many years ago, Steiner said.
The Government Accountability Office said on Wednesday USPS net losses have totaled $118 billion since 2007 as first-class mail — its most profitable product — has fallen to its lowest volume since 1967.
Congress in 2022 approved legislation providing USPS with about $57 billion in financial relief.
POSTAL SERVICE DOES NOT HAVE ‘LUXURY OF TIME’
Amazon, which did not immediately comment on Wednesday, said earlier this month it is in discussions with USPS about its future relationship and considering its options before its current contract expires in October, but expressed concerns about the auction process after nearly a year of negotiations.
“We are currently in negotiations to extend that contract.
I told them that we were going to go out to the market, that we had to test the market,” Steiner said.
“There’s only one thing I am absolutely certain of — if we continue to do things the way we’re doing it today, we’re dead in about a year, and so I have got to go out and test the market on this price to find out if it’s a fair price.”
USPS is currently selling about 1.7 billion units of capacity from its last-mile distribution, but has capacity for 3.5 to 4 billion and currently generates $5.5 billion to $6 billion in annual revenue from those deliveries.
USPS is seeing significant interest from a wide range of companies.
“We had to do something dramatic and fast. We do not have the luxury of time,” Steiner said.
He added USPS fate is tied to Amazon and vice versa and said Americans get Amazon packages delivered by the Postal Service 1.7 billion times a year.
“There is absolutely no doubt that without the U.S.
Postal Service Amazon wouldn’t be what it is today … We would love to continue that relationship. We just want to make sure we continue at a fair price,” Steiner said.
(Reporting by David Shepardson in Washington, Editing by Franklin Paul and Alexander Smith)
