USPS Expansion into Last-Mile Delivery: Competitive Impact & Investment Implications

Based on current market data and recent developments, the USPS’s expansion into last-mile delivery services represents a significant strategic shift that will reshape the competitive landscape for traditional logistics companies. Here’s a comprehensive analysis:

The U.S. Postal Service under Postmaster General David Steiner is dramatically reversing previous strategy by aggressively pursuing last-mile delivery contracts from large retailers and shippers [1]. This move aims to address USPS’s substantial revenue decline and operating losses by better monetizing their extensive national network. Unlike the previous approach that limited access to a few high-volume customers, USPS now seeks partnerships “big and small” for expanded last-mile services, including same-day and next-day delivery capabilities [2].

UPS and FedEx currently trade at premium valuations (UPS P/E: 15.59x, FedEx P/E: 16.63x) but face potential margin compression as USPS leverages its universal service obligation and existing infrastructure to offer lower-cost alternatives [0]. The postal service can undercut competitors on price due to its existing network coverage and government-mandated service areas.

The $6 billion potential breakup between Amazon and USPS could create significant market fragmentation [3]. As Amazon becomes one of several major buyers rather than the dominant partner, smaller carriers gain new access to USPS’s reach, potentially increasing competitive pressure across the entire ecosystem [3].

UPS has already begun tentatively reuniting with USPS for last-mile delivery of budget shipments [2], suggesting a strategic accommodation rather than pure competition. This hybrid approach may become more common as carriers balance premium services with cost-conscious market segments.

UPS and FedEx maintain strong on-time delivery performance (98.9% and 98.3% respectively during holiday rush) compared to USPS’s 97.2% [4], but this premium advantage may be challenged as USPS improves service quality through new partnerships.

• UPS shows concerning long-term performance (-20.70% over 1 year, -43.41% over 3 years) [0]
• FedEx has performed better (+2.41% over 1 year, +68.33% over 3 years) [0]
• Both face pressure on high-margin B2B and residential delivery segments

• UPS’s $95,000 average driver wages from the 2024 Teamsters contract create cost disadvantages versus USPS [4]
• Both carriers are accelerating technology investments: route-sequencing software, electric vehicles, and automation to offset labor costs [4]
• FedEx’s Network 2.0 initiative targets $2 billion in efficiencies by merging pickup, sort, and delivery functions [4]

• Amazon benefits from diversification of delivery partners, reducing dependency risk [3]
• Shopify and other e-commerce platforms gain more delivery options, potentially improving service levels and reducing costs
• The global same-day delivery market is expected to grow from $9.90 billion in 2024 to $29.82 billion by 2030 (20.6% CAGR) [6]

• Companies providing logistics technology, warehouse automation, and delivery management software stand to benefit from increased competition and complexity

Smaller carriers gain new opportunities through USPS’s expanded partnership model [3], potentially creating attractive investment targets in the mid-cap space as they can now access national coverage without massive capital investment.

The Industrials sector (which includes logistics companies) is currently performing well (+1.24% on December 17, 2025) [5], suggesting positive sentiment around transportation and logistics stocks.

1. Revenue per delivery stop
   - critical for measuring efficiency under competitive pressure
2. Capital efficiency
   - UPS’s higher P/B ratio (5.42x vs FedEx’s 2.48x) suggests market expectations of superior returns on capital [0]
3. Operating margins
   - current levels (UPS 9.30%, FedEx 6.80%) face compression risk [0]

Investors should favor companies with strong technology moats and diversified revenue streams. FedEx’s better recent performance and efficiency initiatives make it relatively more attractive than UPS in this evolving landscape.

The last-mile logistics market is projected to grow from $32.67 billion in 2024 to $288 billion by 2028 (12.6% CAGR) [5], creating opportunities across:

• Logistics technology providers
• Electric vehicle manufacturers for delivery fleets
• Warehouse automation and robotics companies

• Regulatory changes affecting USPS operations
• Labor disputes in the logistics sector
• Economic recession impacts on e-commerce growth
• Technology disruption from autonomous delivery systems

USPS’s expansion represents a fundamental restructuring of the U.S. logistics landscape rather than simple competition. Traditional carriers must evolve from pure delivery providers to integrated logistics solutions partners. Investment success will depend on identifying companies that can leverage technology, maintain service differentiation, and adapt to a more fragmented but potentially larger overall market opportunity.

The key investment insight is that while UPS and FedEx face immediate challenges, the overall e-commerce delivery ecosystem is expanding rapidly, creating opportunities for well-positioned players across the logistics value chain.

[0] 金灵API data - Company financial and stock information
[1] FreightWaves - “US Postal Service makes U-turn on last-mile delivery”
[2] Yahoo Finance - “Amazon-USPS Breakup Rumors Intensify Ahead of 2026 Contract”
[3] LinkedIn - “How a $6 Billion Breakup Could Rewrite U.S. Last-Mile Logistics”
[4] FreightWaves - “Parcel carriers score 98% for on-time delivery during holiday rush”
[5] Mordor Intelligence - “United States Express Delivery Market Size & Share Analysis”
[6] Yahoo Finance - “DASH vs. AMZN: Which E-Commerce Delivery Stock Is the Better”