December 20, 2013 (Report Number RARC-WP-14-004)

2013 marks the 100-year anniversary of Parcel Post, now known as Standard Post. When Parcel Post came to America in 1913, it was a deliberate government effort to inject competition into the parcel delivery market. At the time, four express delivery companies, closely tied to the railroads, had come to dominate the market for parcel delivery, but in most cases they offered delivery only to the railroad depot. They kept prices high and confusing, and an investigation by the Interstate Commerce Commission revealed a pattern of abuse that the press attributed to collusion. The introduction of Rural Free Delivery in 1902 suggested that the Post Office could use this new infrastructure to expand into parcel delivery. When Parcel Post service was established, it was an immediate success and transformed the commercial marketplace, particularly in rural areas.

Today, the way goods are bought and sold is changing again because of the Internet. The rapid growth of e-commerce is bringing expansion and disruption to the parcel delivery market. As this transformation continues, questions about the U.S. Postal Service’s role as both a competitor in this marketplace and part of the government may logically arise. Should the Postal Service primarily provide last mile delivery for other carriers or should it complete vigorously with them on end-to-end service? What is the Postal Service’s obligation to customers in hard-to-serve areas? The story of Parcel Post’s introduction may offer some useful insights to answer these questions.