The U.S. Postal Service plans to test same-day delivery in the New York metropolitan area for the next year, expanding a pilot program it started a year ago in San Francisco to win business from online retailers.
The Postal Service disclosed its intention to expand the same-day distribution test to the biggest U.S. metropolitan area in a regulatory filing yesterday. The move comes three weeks after it struck a deal with Amazon.com Inc. (AMZN:US) to deliver the retailer’s shipments on Sundays in New York and Los Angeles.
The Postal Service is looking for ways to expand its share of express and package deliveries in competition with United Parcel Service Inc. (UPS:US) and FedEx Corp. (FDX:US), and compensate for a steady decrease in the volume of first-class letter mail, its most profitable operation.
The service announced an agreement with 1-800-FLOWERS.com in December 2012 to try same-day deliveries in San Francisco, and UPS and FedEx have also tested them.
David Partenheimer, a Postal Service spokesman, had no immediate comment.
UPS has 51 percent of the U.S. small-package shipping market, followed by 34 percent for FedEx and 15 percent for the Postal Service, according to a Bloomberg Industries report.
The Postal Service reported an annual loss of $5 billion in its last fiscal year while increasing its revenue for the first time since 2008.
While the Amazon arrangement will offer a limited financial boost, Postmaster General Patrick Donahoe said in an interview last month that he wants to expand the service to other retailers.
“We are certainly, as we always do, talking with other people in this market,” Donahoe said. “We think we offer very reasonable prices and assurances with scanning that customers like.”
The service has sought legislation from Congress to alter its business model and cut costs. It may gain some flexibility to reduce costs -- most notably by ending Saturday mail delivery -- under a U.S. budget accord being discussed by congressional negotiators, according to an aide close to the talks. Those talks are still under way.
The Postal Service already offers a Sunday delivery option for Priority Mail Express, its fastest service. The Postal Service doesn’t deliver regular mail on Sundays and has been rebuffed in attempts to end that service on Saturdays.
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