The long-running saga that is the U.S. Postal Service’s next-generation delivery vehicle (NGDV) continues to generate controversy, almost a year after the agency issued a contract for the program.
On Feb. 23, the Postal Service concluded the final regulatory hurdle to set in motion delivery of what could ultimately be 165,000 vehicles from Oshkosh Truck Corp. (NYSE: OSK) over 10 years. The first of the vehicles are expected to arrive in 2023 and replace the agency’s current long-life vehicles, many of which have been in service for 30 years or more and do not include modern driver amenities, including air conditioning.
The Postal Service has completed an evaluation of the contract — which calls for a mix of at least 10% battery electric vehicles (BEVs) — as required by the National Environmental Protection Act (NEPA). That evaluation, which measured potential environmental impacts of the NGDV program, concluded that the agency would follow its “proposed action” regarding deployment of the vehicles. The evaluation included a look at an entirely internal combustion engine (ICE) fleet, an entirely BEV fleet and a mix of the two power sources.
That preferred alternative calls for the initial deployment to be ICE vehicles with an initial mix of 10% BEVs with that possibly growing to a larger percentage in the future.
“As we have reiterated throughout this process, our commitment to an electric fleet remains ambitious given the pressing vehicle and safety needs of our aging fleet as well as our fragile financial condition,” Louis DeJoy, postmaster general and CEO of the Postal Service, said in a statement. “As our financial position improves with the ongoing implementation of our 10-year plan, Delivering for America, we will continue to pursue the acquisition of additional BEV as additional funding — from either internal or congressional sources — becomes available.”
No time to wait
The Postal Service can’t wait for that funding to become available, DeJoy added.
“The process needs to keep moving forward,” he said. “The men and women of the U.S. Postal Service have waited long enough for safer, cleaner vehicles to fulfill on our universal service obligation to deliver to 161 million addresses in all climates and topographies six days per-week.”
The decision was rendered in a record of decision (ROD) filed with the Federal Register. The ROD is a response to the EPA’s criticism of the contract with Oshkosh, which has said it could provide electric vehicles from the start.
A Postal Service spokesperson told The Associated Press that the initial vehicle order will include 5,000 BEVs, but for many who had hoped the agency would make a more aggressive push into zero-emission electric vehicles, and thereby help fulfill a Biden administration executive order to purchase 100% zero-emission light-duty vehicles by 2027, the news was disappointing.
“An alternative analysis shows that USPS leadership would save the agency billions in avoided fuel and maintenance costs over the life of the fleet by electrifying the next generation delivery vehicle,” Ben Prochazka, executive director of the Electrification Coalition, said in a statement. “Despite those findings, Postmaster DeJoy has decided to embrace outdated technology and unstable gas prices. Instead of delivering huge benefits to public health, national security, and efforts to combat climate emissions, Postmaster DeJoy and the USPS board of governors seem determined to miss their EV moment.”
The Postal Service has committed to reaching 70% fleet electrification within the decade.
Prochazka urged Congress to revisit the contract.
“We hope that leaders in Congress step up to return this flawed plan to sender and ensure the NGDV is all-EV. With our national and energy security hanging in the balance, there is no time to delay in the reversal of this contract,” he said.
Activists delaying safety?
Paul Steidler, a senior fellow with public policy think tank Lexington Institute, was among those who had a different view on how to fund the transition.
“Looking for a symbol of how decrepit, combustible, and gridlocked the federal government has become? Consider the U.S. Postal Service’s delivery vehicles,” he wrote in a posting on Monday for RealClear Energy. “The busted, old, dangerous contraptions need to be replaced as soon as possible. Yet some environmental and union activists are willing to put that at risk for narrow political objectives.”
President Joe Biden’s Build Back Better legislation included $6 billion in additional funding for the Postal Service to fully electrify its fleet, but with that legislation dead on arrival in Congress, the funding for the higher-priced EVs is short and the need for new vehicles great. Steidler argued that if the agency wanted electric vehicles it could raise parcel rates on shippers to cover the cost.
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“If USPS needs more funds for electric vehicles, it can easily raise package rates on large retail shipping companies which get discounted rates from USPS through negotiated service agreements,” Steidler wrote. “In other words, they pay less per package than small businesses and individuals do. Packages account for seven times as much vehicle space as mail.”
The Postal Service has said it will commit to 10% BEVs over the life of the contract, and perhaps more as funding becomes available, but the need to incorporate ICE vehicles is dictated by the urgency to replace current vehicles and funding availability.
“The proposed action is the most achievable given the Postal Service’s financial condition as the BEV NGDV has a significantly higher total cost of ownership than the ICE NGDV, which is why the proposed action does not commit to more than 10% BEVs. The proposed action was drafted to permit the Postal Service the flexibility to increase the percentage of BEVs should additional funding become available,” the agency wrote in the 340-page ROD.
Interestingly, in its evaluation, the Postal Service studied two additional alternative purchases and deployments: 100% right-hand-drive ICE vehicles and 100% left-hand-drive BEVs. It concluded that these alternatives “would not meet the Postal Service’s purpose and need as neither would provide the same operational or ergonomic benefits as the purpose-built NGDV.”
The current vehicles are right-hand drive — as are the new Oshkosh vehicles — to allow carriers to easily deposit mail in mailboxes without leaving the vehicle or driving against traffic.
‘Dirty, polluting’ vehicles win the day
The National Resources Defense Council also had a negative reaction to the latest news.
“Neither rain, nor sleet, nor financial good sense will stop the leaders of the U.S. Postal Service from trying to buy dirty, polluting delivery trucks. For the sake of clean air and cost savings, it’s time to return this plan to sender,” Patricio Portillo, transportation analyst for the group, said in a statement. “Congress and the White House should also step in and ensure that Trump-holdover Louis DeJoy and the current board of the post office don’t lock in decades of use of dirty vehicles under the gloom of night.”
The EPA, too, found fault with the process, saying the Postal Service had failed to consider the NEPA process prior to awarding the contract and that the agency’s final environmental impact statement (EIS) “failed to consider a single feasible alternative to the proposed action.”
“Specifically, the final EIS does not disclose essential information underlying the key analysis of total cost of ownership (TCO), underestimates greenhouse gas emissions, fails to consider more environmentally protective feasible alternatives, and inadequately considers impacts on communities with environmental justice concerns. These deficiencies render the final EIS inconsistent with the requirements of NEPA and its implementing regulations,” EPA said.
Oshkosh prepared for whatever Postal Service wants
Oshkosh Corp. CEO John Pfeifer, speaking on a Q2 2021 analyst call last April, said his company was prepared and fully capable of producing electric vehicles for the Postal Service.
“We can do 100% electric vehicles from day one,” Pfeifer said. “If the U.S. Postal Service came to us tomorrow and said, ‘We’ve got the funding to do 100% electric from 2023,’ we can do it.”
He reiterated that sentiment at the Advanced Clean Transportation Expo in Long Beach, California, in September, but did note that charging infrastructure could be an issue.
“It’s really going to be gated by the ability to put the charging infrastructure in place to support 165,000 vehicles,” Pfeifer said. “[The Postal Service] will accelerate adoption of electric vehicles in accordance with their ability to charge them.”
Even before the latest dustup, the Postal Service contract for its next vehicle has been bogged down in lengthy delays and lawsuits. Initially begun in January 2015, the process included several bidders for the contract, which could ultimately be valued at close to $6 billion when all the vehicles are built. The initial contract is for $482 million. In the end, Oshkosh Defense won the contract, announced in February 2021, besting Workhorse Group (NASDAQ: RIDE), which was proposing a fully electric vehicle. Oshkosh didn’t commit to an all-electric fleet but said it could build BEVs should the Postal Service require them.
Workhorse filed a complaint with the U.S. Court of Federal Claims in Washington alleging it was discriminated against in the selection process. The company wanted the court to reopen the bidding process. Ultimately, Workhorse dropped its complaint, and Oshkosh is moving forward with the initial design and retooling of a South Carolina factory to build the vehicles.
Even that last part has brought complaints, as the United Auto Workers wants the vehicles to be built in Wisconsin at a union facility rather than in South Carolina.