By David Shepardson
WASHINGTON, May 28 (Reuters) – The U.S. Postal Service said Thursday it had reached a multi-year deal with DHL eCommerce, expected to be worth more than $10 billion, to handle the German company’s last-mile parcel delivery services in the U.S.
DHL eCommerce, a U.S. unit of German logistics giant DHL Group, said the deal will help it grow in the U.S. market over the next several years.
Under the deal, DHL eCommerce will handle pickups and sorting across its 19 U.S. hubs before USPS will complete the final mile for all deliveries.
The deal is critical to the financially strapped USPS, which has warned it could run out of cash as soon as February. Last month, Amazon.com said it had reached a new agreement with USPS on package deliveries.
Postmaster General David Steiner said in an interview that only the USPS delivers to 170 million U.S. households six days a week, and the deal gives DHL “the opportunity to play in the largest market in the world.”
Steiner said DHL would either have “to invest a ton of capital to build out an end-to-end network, or they need to partner with someone that has that last-mile capability” like USPS. “We have a total win-win.”
DHL eCommerce Americas CEO Scott Ashbaugh said the deal would help the company grow in the U.S. and target slightly heavier parcels.
“A company our size literally has every option at its disposal for last mile,” Ashbaugh said, adding DHL eCommerce could have acquired a company to make those last-mile deliveries or built its own network.
He said the company could add more U.S. hubs or expand the existing ones. “We expect to roughly double our business by the 2030 horizon,” Ashbaugh said, saying USPS was the most effective choice.
USPS plans to raise the price of first-class mail stamps to 82 cents from 78 cents effective July 12 after it won approval for a temporary 8% price hike for priority mail and package deliveries to deal with rising transportation and fuel costs.
The postal service has reported net losses of $118 billion since 2007 as first-class mail, its most profitable product, has fallen to its lowest volume since the late 1960s.
(Reporting by David Shepardson; Editing by David Gregorio)
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