As the United States Postal Service (USPS) navigates a complicated consolidation effort amid $5 billion in estimated cutbacks by the end of 2025, the oft-maligned government agency is still trying to keep up with its privatized competitors on delivery speed.
The USPS is introducing Next Day Priority, a new one-day delivery option designed for businesses with minimum daily shipping volumes that can meet defined cutoff windows. The agency didn’t detail the minimum volume requirements.
Next Day Priority will cover every home and business within 150 miles of USPS regional processing and distribution centers and is expected to reach 87 percent of the U.S. population, or roughly 295 million people.
Describing the service as “ideal for retail and online businesses” USPS says the option will sift packages into 200 local processing centers—where mail and parcels get sorted—before being sent out for overnight delivery to thousands of post offices.
Businesses can access the priority service by entering direct negotiated service agreements with the USPS.
The Postal Service also said in the memo that it is planning on expanding its USPS Connect ecosystem this year. The suite of services features local, regional and national shipping capabilities, and has new same-day and next-day delivery options for small- and mid-sized businesses through direct service agreements with USPS.
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The next-day push would build on the Ground Advantage offering it already launched in summer 2023. That option ships small packages in two-to-five business days, and is designed to be more affordable for e-commerce sellers since it doesn’t include residential delivery fees or fuel surcharges.
USPS is making the move ahead of its anticipated 2025 rate hikes expected to go into effect Jan. 19. Priority Mail and Priority Mail Express services will see a 3.2 percent pricing bump, while Ground Advantage will increase 3.9 percent. Its ground package delivery service, Parcel Select, will increase the most at 9.2 percent.
Comparatively, UPS and FedEx are implementing an average general net increase of 5.9 percent for the year.
As the government agency endured $6.5 billion in losses in 2024, it will also have to contend with rumblings that the incoming Trump administration could look to privatize the courier. The continued concerns about the Postal Service’s health have forced the firm to continue to try and draw away customers from UPS and FedEx via more competitive rates—particularly when the rivals are discounting themselves due to a weak parcel demand environment.
The USPS Office of Inspector General acknowledged the struggles the agency has dealt with as it sought to streamline mail processing, reduce transportation costs and make more efficient use of space.
“We found the Local Transportation Optimization initiative negatively impacted service to customers,” said a Dec. 18 audit report. “The service performance scores for First‑Class Mail declined after the implementation of LTO, more significantly impacting the rural population. Additionally, customer complaints about mail delivery delays increased after the LTO implementation.”
Veho debuts affordable shipping service
USPS isn’t the only courier looking to gain market share with a cheaper alternative, with parcel delivery platform Veho unveiling its Premium Economy service Wednesday.
The service is designed for high-volume e-commerce brands and third-party logistics providers (3PLs) that need small parcels delivered in five days or less, with the company guaranteeing delivery windows of two-to-five days across 44 markets.
Veho is launching the new service as an alternative to both the USPS Parcel Select and Ground Advantage products, as well as UPS’ low-cost, residential delivery option SurePost. SurePost has recently seen reductions in service, largely due to the expiration of deal between UPS and USPS that powered the offering.
The last-mile delivery platform estimates that 3.9 billion parcels per year weighing less than one pound will be impacted by the 2025 general rate increases across USPS, UPS and FedEx.
Orders destined for Premium Economy are automatically routed to the nearest Veho hub, processed and assigned through its platform to one of 67,000 delivery drivers in the Veho network. Veho’s dispatch and routing algorithms are built to ensure delivery within the promised window.
The Premium Economy launch comes more than a week after Veho said it expanded its partnership with warehouse management system (WMS) ShipHero.
While ShipHero’s client base of more than 5,000 e-commerce brands and 3PLs originally could only leverage Veho for parcels fulfilled by the ShipHero WMS, these users can now ship their parcels through Veho out of their own distribution centers.