UPS & USPS Reach Preliminary Ground Saver Deal: What It Means for Shippers

UPS CEO Carol Tomé announced a preliminary agreement with the U.S. Postal Service (USPS) to restore last-mile delivery support for UPS Ground Saver, the low-cost, slower-speed alternative to standard ground shipping. The deal, expected to finalize in the coming weeks and months, would allow USPS to handle final-mile delivery for Ground Saver packages—reversing UPS’ 2025 decision to pull volume in-house.

At Gain Consulting, we see this as a pivotal shift in parcel network strategy with direct implications for shippers, 3PLs, and e-commerce fulfillment. While UPS works to restore density and cost efficiency, the agreement signals renewed collaboration between two logistics giants—and opportunities for shippers to optimize cost, speed, and reliability.

Key Terms of the Preliminary Agreement

Aspect	Details
Service	USPS provides last-mile delivery for Ground Saver shipments
Scope	Covers volume thresholds and rate structures
Timeline	Final details in “weeks and months”; full update at end of Q4
Goal	“Win-win-win” for USPS (revenue), UPS (density), and customers (cost/service)

“We’re excited about a renewed relationship with USPS… We just can’t seem to get more packages per stop on these residential deliveries.”— Carol Tomé, UPS CEO

Background: From SurePost to In-House to Re-Engagement

Timeline	Event
Pre-2025	UPS SurePost relied on USPS for millions of last-mile deliveries
Jan 2025	USPS (under DeJoy) overhauls agreements; UPS pulls volume in-house due to cost/reliability concerns
July 2025	David Steiner becomes USPS Postmaster General
July–Oct 2025	UPS initiates talks for new Ground Saver partnership
Oct 22, 2025	Preliminary agreement announced on Q3 earnings call

The shift was driven by density challenges:

• Q3 2025 Ground Saver volume: -32.7% YoY  

• Q2 2025 financial hit: $85 million from inefficient in-house stops

• Root Cause: Low packages per stop in residential areas

Why This Matters for Shippers

Impact Area	Implication
Cost Efficiency	USPS last-mile is cheaper than UPS residential delivery; expect lower Ground Saver rates post-agreement
Service Reliability	UPS middle-mile + USPS final-mile = best-in-class transit times for budget tier
Volume Recovery	UPS aims to rebuild Ground Saver density, potentially increasing capacity for shippers
Amazon Strategy	UPS reducing Amazon volume; more room for SMB/e-commerce shippers
Q4 Peak Readiness	Finalized deal could boost capacity during holiday surge

Gain Consulting’s Shippers’ Action Plan

As UPS and USPS align on a “win-win-win,” shippers should position now:

1. Audit Ground Saver Usage  

   • Compare current in-house rates vs. historical SurePost costs

   • Model 2-5% savings if USPS last-mile returns

2. Rebalance Parcel Mix  

   • Shift non-urgent, low-value shipments to Ground Saver

   • Reserve UPS Ground/Priority for time-sensitive loads

3. Lock in Q4 Capacity  

   • Secure early commitments before volume rebounds

   • Use 3PL aggregation for negotiated access

4. Monitor USPS Performance  

   • Track on-time delivery post-agreement (target: 95%+)

   • Build contingency via multi-carrier routing

5. Leverage Data Analytics  

   • Use zone-skipping models to maximize USPS handoff efficiency

   • Forecast fuel surcharge impact on blended rates

Client Result: One e-commerce shipper reduced residential delivery costs by 18% after reallocating 40% of volume to SurePost in 2024—similar gains expected with Ground Saver revival.

Outlook: A Smarter Parcel Ecosystem

The UPS-USPS partnership reinforces a hybrid model:

• UPS = middle-mile scale, technology, density

• USPS = unmatched last-mile reach (especially rural/residential)

For shippers, this means lower costs without sacrificing reliability—if executed well.

Stay Ahead: UPS will share full details at Q4 earnings (January 2026). Gain Consulting is tracking negotiations and modeling rate scenarios.

Source: UPS Q3 2025 Earnings Call (Oct 22, 2025), Supply Chain Dive