USPS Plans To Move Connect Local From Experimental To Market Dominant Product In 2025
USPS has filed a request with the Postal Regulatory Commission to add a new product to the market dominant product list based on the experimental product “Connect Local Mail”, effective January 1, 2025.
The Connect Local market test was initially authorized by the Commission on January 4, 2022 (later extended through January 9, 2025) as a "derivative of First-Class Mail that functions as an alternative to long-distance, end-to-end mailing for use by business mailers who wish to send mail locally with regular frequency."
Since then USPS has expanded the service to more areas to provide expected same-day & next-day local delivery options for many small businesses.
In the request filed in the Federal Register, the Postal Service says it's now ready to turn Connect Local into a permanent product offering, arguing it should be considered a Market Dominant product since it is currently subject to the letter monopoly and the pricing and speed differences make it not a direct competitor to more expensive guaranteed overnight options from other carriers or services offered by traditional locally-based couriers.
Connect Local Mail is properly classified as a market dominant price category under chapter 36 of title 39 of the United States Code and is consistent with the applicable criteria of the chapter.
Firms offering products similar to Connect Local Mail are sufficiently distinguishable that the Postal Service believes Connect Local Mail operates largely in a distinct market unto itself. Moreover, Connect Local Mail is currently subject to the letter monopoly, and hence must be categorized as market dominant for that reason.
Connect Local Mail is designed for the local delivery of documents, fitting into the definition of “letter” under 39 CFR 310.1 as a “message directed to a specific person or address and recorded in or on a tangible object.”
A private express established for the conveyance of such documents for compensation at the established price point would be prohibited under 18 U.S.C. 1696(a). Therefore, Connect Local Mail, like the other price categories under First-Class Mail, is covered by the postal monopoly reserved to the Postal Service under 18 U.S.C. 1696.
The Postal Service views potential substitutes for Connect Local Mail to be local couriers and messengers delivering documents, overnight and/or 2-day delivery services offered by large national competitors, and smaller companies that deliver documents on an expedited basis.
Connect Local Mail will not create an unfair or inappropriate advantage for the Postal Service compared to other small businesses in this space, such as local courier services. Local courier services typically build in pick-up on demand services, which justify a higher price and differentiate their services from Connect Local Mail.
Connect Local Mail is in line-of-travel for pick-up and drop-off; there is no direct end-to-end transport offered by Connect Local Mail, and it is therefore not as responsive or customizable as a local courier service.
In many ways, Connect Local Mail also offers same-day delivery on a more limited basis than a local courier service. It is better suited to businesses who regularly schedule local deliveries (such as mailing bills to their customers), allowing them to plan to meet the requirements for Connect Local Mail (e.g., drop-off at a designated entry unit by the Critical Entry Time, mail prepared in time for carrier pick-up in their line-of-travel). It is not as well suited to the type of ad hoc document delivery that courier services specialize in.
The move comes as Postmaster General Louis DeJoy is looking for ways to boost postal revenues by ending discounts for shipping consolidators and discontinuing use of Dual Labels to encourage more shippers to use USPS products like Ground Advantage rather than hybrid services like UPS Surepost, DHL Ecommerce, or FedEx Ground Economy/Smartpost that have traditionally leveraged USPS for last mile delivery.
Liz Morton
Have you used USPS Connect Local as either a shipper or receiver? I'd love to hear about your experiences! Leave a comment below or contact VAR.
