The coronavirus pandemic has certainly not been easy on the US Postal Service (USPS), which was bleeding red ink even before the start of the crisis. Now, agency leadership is shaking its tin cup on Capitol Hill for a $75 billion taxpayer bailout in a potential “Phase 4” relief package. As lawmakers argue over how much relief (if any) the agency should be given, some commentators—notably Vox’s David Roberts—have embraced some wacky ideas for getting America’s mail carrier back on firmer footing.
Electric Dreams
Roberts suggests that electrifying mail trucks would actually save the agency money while leading to “improved public health, more efficient public services, and lower climate pollution.” In reality, the last thing the USPS needs right now is a pie-in-the-sky proposal that would pile on more debt at the worst possible time.
Roberts is certainly not wrong in declaring that, “Postal trucks are old and janky.” The good news is that the USPS is ready to replace more than 140,000 of its 30-year-old trucks. The agency is slated to award a $6 billion contract this year to one of four finalist bidders to build more than 180,000 new mail trucks. This replacement process could turn disastrous, though, if the agency embraces an all-electric fleet as suggested by the Vox writer. Roberts claims that going “green” would actually save money for the beleaguered USPS, since, “on a full life-cycle basis, electric vehicles are absolutely a better value.” This claim was hard to justify even before the new normal of near-negative oil prices.
Research conducted by the Argonne National Laboratory and the Georgia Institute of Technology finds that in certain “niche” applications (i.e. urban settings), electric trucks can outperform their conventional counterparts. However, “for electric trucks to definitely outperform other options [i.e. petroleum diesel with idle reduction] in typical operating conditions, beyond the niche application, current electric truck capital costs must drop by 30 – 50%; diesel fuel prices must be in the range of 6.5 – 8.1 $/gallon; or carbon emissions reduction must be credited by $300 – $2,000 per metric ton of carbon dioxide.” That’s a tough sell, particularly at a time when diesel is in the $2-$3 range per gallon. The implied social cost of carbon that would be required for electric trucks to break even against the competition is more than double the upper estimate given by former President Obama’s Environmental Protection Agency.
Increased Costs
The researchers note that a better case could be made for an urban electric fleet, but rural routes continue to be the main cost driver for the USPS. A December 2019 analysis by the Government Accountability Office (GAO) found that from 2014-2018 last mile delivery costs shot up 16 percent on rural routes versus ten percent on city routes. The gap was even wider from 2008-2014, when rural delivery costs skyrocketed by 18 percent compared to three percent for urban deliveries. The truth is, city delivery costs are easier to keep under control; deliveries can be consolidated via clustered mailboxes for multiple addresses in close proximity. The USPS has and will continue to consolidate delivery routes to make for more efficient routing, but the GAO notes that this is mainly an urban phenomenon.
Rural routes pose a unique cost problem that can’t easily be fixed by more efficient routes and solutions such as clustered mailboxes. And life-cycle analysis suggests that electric vehicles would simply add to these cost problems on rural deliveries. These problems have already played out in real life where electric buses fade after less than 80 miles on the road. This performance would prove disastrous on America’s rural mail routes, some of which run nearly 200 miles.
The USPS needs to pursue cost-conscious fleet purchases that won’t break the bank and lead to a $75 billion taxpayer bailout. Congress and the Treasury must work together to ensure that USPS management cuts delivery costs and doesn’t squander the $10 billion in loans they already received through the CARES Act.
USPS can turn around its fiscal ship, but only by rejecting costly green pipe dreams.
