Delivery

Gassed mile: How the USPS’s decision not to purchase more electric vehicles could collide with retailers

The USPS appears to snub the Biden administration’s climate agenda with plans to electrify only 20% of its new delivery fleet. Will carbon-reducing companies now snub the USPS?
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USPS

· 7 min read

When the USPS, which is replacing its aging fleet of delivery vehicles, announced that just 10% of the first round of vehicles it was ordering would be electric, it appeared to be in defiance of the Biden administration’s climate agenda, which wants the entire federal civilian fleet to be electric by 2035.

After the announcement caused blowback, in March, the postal service said that it would increase the portion of electric vehicles it will purchase to ~20%, with 10,019 EVs out of a 50,000-vehicle order.

But for some, that improvement still doesn’t—despite the vehicles’ purpose—deliver.

  • Officials from 16 states and Washington, DC, as well as environmental groups including the Natural Resource Defense Council and Earthjustice, are suing the USPS to block the purchase.
  • The USPS calculated the lifetime cost of gas vehicles, which will get only 8.6 miles per gallon when using air conditioning, based on prices of just $2.19 a gallon, according to EPA and White House Council on Environmental Quality regulators cited in the Washington Post.
  • Postmaster General Louis DeJoy, a “megadonor” to former-President Trump’s campaign and a Trump appointee, responded that the estimates were sound, and that the USPS had to replace the fleet within its budget constraints for the safety and comfort of delivery workers. “We have people that can’t put their trucks in reverse because they’re in such bad shape,” he told the Washington Post in April. “I needed to buy trucks.”

Part and parcel

The USPS’s biggest source of revenue is from shipping and packages ($7.87 billion in Q2 of 2022, compared to $6.27 billion for first-class mail), which means online and traditional retailers are big customers. And that raises a question: With major retailers like Amazon, Walmart, and Target championing their commitments to reduce their carbon footprints, will they ship the same volume of parcels with the USPS, which is being pilloried by environmental groups who say the new predominately gas-powered fleet will do the opposite?

As vice president of corporate social responsibility and sustainability at the National Retail Federation, Scot Case advises retailers on their carbon-reduction initiatives, and he told Retail Brew that “anyone who’s paying attention to this space will be scratching their heads” over the postal service’s gas-centric approach to its vehicles.

EVs “reduce the carbon footprint. They meet a consumer desire. They meet the retailer’s desires to go to net zero,” Case said. “That seems like a no-brainer business decision.”

Plugging in: And it’s a business decision that other major shippers and retailers have made:

  • FedEx, which has more than 200,000 vehicles in its parcel fleet, says that by 2025, half of its new vehicle purchases will be electric; by 2030, all purchases will be electric; and by 2040 the fleet will be entirely converted to electric.
  • UPS Ventures, the carrier’s VC arm, announced in 2020 that it was investing in London-based EV maker Arrival—as well as committing to an initial purchase of 10,000 of the vehicles. (UPS Ventures’s total investment hasn’t been disclosed, although the New York Times reports it represents a stake under 1%.)
  • Amazon has ordered 100,000 EV delivery vans from California-based EV maker Rivian, to be delivered by 2025, and also invested $1.345 billion in the company, giving it a 20% ownership stake. Rival Walmart recently ordered ~4,500 electric delivery vans from EV maker Canoo, on top of the 5,000 it has already ordered from GM subsidiary BrightDrop and 1,100 from Ford E-Transit.

“You might say Amazon’s a good example where they’re believing they can’t get electric vehicles fast enough for their demands, or their needs and desires around sustainability,” Mike Roeth, executive director of of the North American Council on Freight Efficiency, an organization that researches and promotes more environmentally-friendly transportation alternatives, told us.

Delivering the goods

In a statement responding to our questions about whether the USPS might in the future be at a competitive disadvantage against other parcel shippers that may have more ambitious carbon-reduction goals, Jennifer Beiro-Réveillé, USPS’s senior director of environmental affairs and corporate sustainability, emphasized the number of EVs it was purchasing.

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“As we invest in new vehicles and technology, we will champion sustainable and environmentally-focused solutions,” Beiro-Réveillé’s statement read in part. “This commitment is reflected in our recent initial production order to procure more than 10,000 electric vehicles, which are expected to be on postal routes beginning in late 2023.”

Retailers themselves may be less focused on third-party shipping's role in their carbon footprints, NRF’s Case explained, the rationale being that the impact is incurred by consumers, just as it would be if they drove to a Target instead of ordering from the Target website. Shipped orders are considered scope 3 emissions in climate-crisis parlance, as opposed to scope 1 and 2 emissions, which are tied to the impact of companies’ own vehicles and facilities.

Even some retailers who tout their carbon-reduction efforts declined to be interviewed about whether USPS’s EV plans would have any impact on their shipping with the carrier in the future.

  • Representatives for Target, Patagonia, Madewell, REI, and Reformation declined our interview requests, while representatives from Eileen Fisher didn’t respond to email requests.
  • ThredUp also declined to be interviewed, and emailed a statement from Seth Levey, ThredUp’s head of public policy and sustainability: “USPS is a small part of our logistics operations today. We are continuously exploring sustainable transportation and shipping more broadly and welcome any moves toward sustainability in the transport sector.”

Electrified consumers

One retailer that was happy to talk to us about shipping is Thrive Market. Since it was founded in 2014, the company has not only purchased carbon offsets for all the orders it ships, but also only ships via ground transportation, which it estimates uses 84% less CO2 than packages that travel by plane.

“When you ship by air, it’s an order of magnitude more carbon impact…there’s just no comparison,” Nick Green, CEO and co-founder of Thrive Market, told us. “We made a decision very early in the business similar to the carbon offsets to say, ‘We will never ship anything [by] air. Period. Full stop.’”

As for the USPS, it turns out that Thrive Market ships only via UPS and FedEx, but Green said that’s because he believes those carriers were a better solution for the large parcels his company tends to ship, and was not based on their carbon-reduction actions.

Still, Green thinks that consumers are growing more and more aware of the environmental impact of shipping.

“What’s really interesting and exciting today is that conscious-consumer attitudes are going mainstream,” he said. “Back when we first started doing carbon-neutral shipping, most of our members hadn’t even heard of that…because it just was not in the zeitgeist yet. Today, it is.”

And if retailers don’t choose the cleanest form of shipping, they may hear from consumers about it.

“There’s plenty of studies that show that consumers want to be greener in their consuming,” said Roeth, from NAFCE, the freight efficiency group. “Part of their consumption is delivery.”

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