Despite the dramatic failure of a pilot same-day delivery program in San Francisco, the United States Postal Service is planning to unveil the same plan in Washington, D.C. area this week.
According to the Postal Regulatory Commission, the D.C. Metro Post program is scheduled to begin on Thursday, Jan. 15, and is designed to give the USPS a competitive edge in parcel delivery relative to private carriers that already offer same-day service.
Through Metro Post, USPS will collaborate with online retailers to allow customers who place orders by 2:00 p.m. to receive delivery between 4:00 p.m. and 8:00 p.m. the same day. (RELATED: Struggling US Postal Service to Launch New Apparel Line)
An analysis of the market for same-day delivery conducted by the USPS Inspector General last March found that while there is strong growth potential, “consumer response is tepid,” and providers face steep “economic and logistical hurdles.”
Nonetheless, a number of companies have already begun offering same-day deliveries, including Amazon, Wal-Mart, Google, and Barnes and Noble.
Although “there is little evidence to suggest that UPS and FedEx have officially entered the market,” the IG report describes the entry of new carriers as “a potential disruption among the traditional parcel shippers.”
To ensure that it would be positioned to compete in this emerging market, the USPS approved a Metro Post pilot program for San Francisco in December 2012 with six retail partners.
USPS set a daily minimum target of 200 deliveries for the San Francisco pilot, but according to an assessment by the USPS IG, “only 95 packages were sent by the six participating retailers over a five-month period.” Total revenues for the pilot program amounted to a paltry $760, but expenses came to $10,288, leaving the Postal Service with a net loss of $9,528.
The report concluded that, “The Postal Service did not properly implement the pilot,” largely because it failed to secure the participation of large retailers. Only one large retailer agreed to participate in the pilot, and later withdrew prior to implementation due to other operational priorities, leaving the USPS with “small local retailers that could not produce the target daily package volume.”
Metro Post is the Postal Service’s latest attempt to improve its fiscal outlook by mimicking the service offerings of its private competitors. Last year, the USPS began another pilot program—also in San Francisco—to provide customized grocery delivery. (RELATED: USPS Getting Into the Business of Delivering Groceries)
David Williams, president of the Taxpayers Protection Alliance, said at the time that, “Efforts by the USPS to enter into a new, private market is simply another way for the agency to expand their reach without instituting real reform.”
Rather than trying to compete with private companies, Williams argued, the USPS should re-focus on “its mandate of delivering the mail on time to its customers anywhere in the country.” (RELATED: The Postal Service Needs Structural Reform, Not a Bailout)
Officials suspended the San Francisco Metro Post program in March, but have indicated that they plan to restart it once they are able to secure the participation of more large retailers.
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