Postal Partnerships: The Complex Role of Middlemen and Discounts in the USPS Package Business

The U.S. Postal Service grew its package business significantly between 2012 and 2017, with the number of packages delivered nearly doubling. To achieve this, the Postal Service has relied extensively on middlemen, known as “channel partners,” who work with ecommerce merchants in different ways and are in a position to give USPS visibility with shippers. The Postal Service also has dramatically increased its use of Negotiated Service Agreements (NSAs), which are custom contracts with individual shippers for discounted postage. The number of domestic NSAs soared from 66 in FY 2012 to 786 in FY 2017. This strategy of relying on middlemen and NSAs has helped USPS grow its package volume. However, some unintended consequences have resulted. Two supplemental documents to this paper are available on the USPS OIG website via the Additional Details Link.