Special Delivery: Automakers Will Get to Bid on a Huge USPS Contract

Source:  Joe Raedle/Getty Images

Source: Joe Raedle/Getty Images

Have you ever thought to yourself, “the postal service sure could use some sexier rigs”? Well, your silent prayers have been answered, because the federal government has put the wheels in motion to get the nation’s postal workers exactly that.

Per a report from Automotive News, the United States Postal Service is seeking bids from the world’s automakers to replace its aging fleet of small, boxy trucks with something new. The Postal Service says it needs a new fleet to replace its old trucks, which are becoming increasingly expensive to maintain and are too small to handle the influx of packages that are the result of the growth of online shopping. The government hopes to get the new trucks in service by 2018.

“I don’t think there is any area of the Postal Service where investment is more needed,” Brian Renfroe, director of city delivery at the National Association of Letter Carriers union, told Automotive News.

Potential vendors are set to descend on Washington, D.C. to meet with the postal service’s leadership and bang out the details, where bids will also be put in. The winning bidders will be chosen this summer, and the contract will ultimately be awarded in 2017 after a year of testing. Automotive News says that the contract will be huge — encompassing more than 180,000 vehicles that would cost between $25,000 and $35,000 per vehicle, ultimately making the contract worth as much as $6.3 billion.

Source: Tim Sloan/AFP/Getty Images

Source: Tim Sloan/AFP/Getty Images

The old, boxy trucks of yesteryear are probably due for an upgrade, and even though there will be a high cost out of the gate, the USPS should expect to see the investment pay off in the long run. Newer trucks would eat through less fuel, be able to take more deliveries and mail out, requiring less trips, and new hybrid-electric technology could be incorporated for even greater efficiency. Auto News says that the Postal Service’s current fleet of vehicles chews through an incredible 154 million gallons of fuel per year, highlighting the need for more efficient vehicles.

Even so, the price tag that starts at $4.5 billion is a tough pill to swallow from the the USPS’ management’s perspective, especially for a government entity that has been notoriously unprofitable for some time. Despite that fact, the aging fleet of trucks currently in use is reaching the end of its usefulness, and needs to be replaced. “At some point, the fleet has to be dealt with,” Tom Day, chief sustainability officer at the Postal Service, said at a 2014 hearing of the U.S. Postal Regulatory Commission, via Automotive News. “The wheels are just going to fall off at some point in time. Whether we refurbish it or replace it, something has to be done.”

It’s important to point out here that taxpayers will not be on the hook to foot the bill for the fleet upgrade. The USPS is self-funded through the sale of goods and services, and all operations, including the new vehicle development project, will be paid for at the Postal Service’s expense.

The large contract will be, on the other hand, a boon for whichever company secures it, possibly leading to a spike in hiring and wages for workers. But the hang-up is that large commercial contracts, especially for the government, are typically pretty hard on manufacturers. Due to the contract’s huge value, it’s likely that manufacturers will overlook the past and jump into the competition. The favorites out of the gate include GM with the commercial vans offered by both Chevy and GMC, and Ford with its new Transit line, which recently replaced the E-Series. Ram could also get into the ring, with its Promaster vans making for a solid starting point.

The Postal Service needs vendors to work with them in creating a new vehicle that fits its needs. That could mean the all-out retirement of the “Iron Duke” drivetrain.

While we won’t actually get a hint as to what the new Postal Service fleet will look like for probably a year at the very least, its a safe bet that the new trucks will be sleeker, longer, and have a much higher capacity for cargo. In fact, cargo capacity may be the most important improvement the government is looking to get out of its new fleet, as the older trucks have been seriously hindered by their lack of size. A report last summer from Government Executive says that the Postal Service spends up to $39 million every year to rent trailers to compensate for the lack of cargo room.

And this is part of a larger issue that has stretched back for several years: The USPS needs to be modernized, but there just simply isn’t the money to do it. An article from The Washington Post from 2011 highlighted the problem even back then, but cites a government report stating that it would cost too much — around $6 billion — to do it. That price hasn’t changed, but perhaps the shifting economic landscape has allowed for the Postal Service to finally get the go-ahead to initiate bidding.

The issue itself seems to be caught in a flux between governmental bodies, which has left the Postal Service’s needs in limbo until now. Even back in 2011, it was obvious that steps needed to be taken to remedy the USPS’s needs, but government officials could even see that it was the actions of the same government that were preventing it.

“it’s unacceptable that the Postal Service has no official plans to date to begin replacing its aging fleet, perhaps with more fuel efficient and cost effective vehicles,” said Sen. Thomas Carper (D-Del.), who requested a Government Accountability Office report to identify the organization’s needs. “But it’s also unacceptable that the Postal Service has been placed in this position financially, in part due to acts of Congress.”

To take an optimistic view, at least the government has recognized and sorted out the Postal Service’s vehicle needs, at the very least. It will also be a great chance for the world’s auto companies — those that plan to bid for the contract, anyway — to innovate and create an all-new commercial class vehicle. Hey, at least manufacturers are getting a chance, and postal employees aren’t simply getting hand-me-down MRAPS from the Department of Defense, right?

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