Evolving Market Dynamics in Last-Mile Delivery and USPS’s Path Forward
The U.S. last-mile delivery landscape is undergoing a shift away from traditional carriers, including the U.S. Postal Service. For the first time in 2025, the Postal Service was not the nation’s largest parcel carrier by volume. In addition, “alternative” carriers captured almost 11 percent of parcel volume, nearly tripling their market share over the last five years.
This paper explores the characteristics and comparative advantages of emerging alternative carriers. It highlights their technologies, labor and pricing models, and external investments, and seeks to understand the impacts of the evolving last-mile market on the Postal Service.
Alternative carriers can offer flexible services at aggressive rates by utilizing asset-light business models powered by crowdsourced gig labor, automated sorting, and dynamic routing platforms powered by AI. At the same time, these low-cost operating models bring significant operational trade-offs and risks that have increasingly drawn legal and regulatory scrutiny.
As it navigates these evolving dynamics, USPS is working to strengthen its market position by expanding its commercial partnerships, seeking higher-margin parcels, and modernizing its operational infrastructure. The Postal Service also maintains key structural advantages, including its extensive geographic reach, universal service, and a vetted career workforce, which alternative providers cannot replicate.
Brooke Hobbie, Lauren Yeom, John Althen, and JP Ducasse contributed to this report.
One of the quickest fixes for USPS is to change
the delivery of millions of addresses??
You need to make delivery easier???
You can’t have routes where carriers walk for
miles all day long. Walking from house to house spread out
with huge distances between them.
You are pushing away new hires. You are destroying
the bodies of current employees??
Take some of that PFP money and go around
installing BOP for addresses around the country??
You don’t wonder why rural carriers work until
they are 70 years old??
While City retire as soon as they can???
USPS is not difficult to fix, I don’t think they want to fix it???
They tout their last mile strength, but numerous OIG reports have demonstrated that rural America is paying a high price under DFA. The USPS is apparently attempting to balance the books by relegating rural America, who essentially is the majority of last mile deliveries, to an afterthought. Congressional representatives who represent these folks have been inundated with constituents calls about poor service and Steiner has pretty much told them “too bad.” That is the true state of the last mile, which typifies the USPS today; lie and deflect.