USPS
First100-040521
Only 10 percent of the new vehicles that the U.S. Postal Service has contracted are intended to be electric.
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The Chief
The American Jobs Plan, the first half of Joe Biden’s effort to rebuild America, is actually kind of a confounding document for news outlets. It’s so comprehensive and packed with policy that any attempt to describe it as a whole would just fall into summary. And yet there’s so much to cover that the fact sheet doesn’t have the space to go into a ton of detail. Little asides or brief descriptions could merit an entire article.
So that’s what we’re planning to do. The Prospect is aiming to cover every policy in the American Jobs Plan, and the forthcoming American Families Plan, the social welfare portion of the package, which will be announced in a couple weeks. We already kicked this off with Gabrielle Gurley’s piece on installing 500,000 electric vehicle charging stations across the country, and the challenge of making them all compatible with all the proprietary plugs and adapters that EV companies have created.
This is going to be the major legislative product of the Biden first year, and maybe the first term. The American Rescue Plan was notable but temporary; this is a much more enduring set of policies. So it’s worth diving in. All this week I’m going to choose one policy and pick it apart.
What I want to know is whether the legislative reality will live up to the concept. One line in a fact sheet does not preordain an effective policy, and there are a bevy of little decisions and trade-offs that will determine the outcome. Take for example the provision I will tackle today: the mention in the AJP fact sheet to “utilize the vast tools of federal procurement to electrify the federal fleet, including the United States Postal Service.”
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For years, electrifying the postal fleet has been one of the easiest wins to improve public health, the environment and the fiscal outlook of the struggling U.S. Postal Service. FedEx, UPS, and Amazon have all recognized the value of electric vehicles in ground shipping, not only for greenwashing PR value but to eliminate a major unpredictable cost center: fuel. But even these deep-pocketed giants are taking their sweet time with electrification: FedEx has only committed to an all-electric fleet by 2040, Amazon will have its ballyhooed 100,000 clean vehicles on the road by 2030, and UPS is just testing out replacing a subset of its fleet.
So it was very much in line with this hesitancy when Postmaster General Louis DeJoy (remember that guy? Still in office with no end in sight?) announced granting the USPS fleet contract to Oshkosh, a small defense company in Wisconsin, with only 10 percent of the fleet guaranteed as electric, even though the Postal Service’s recent ten-year plan envisions a fully electric fleet by 2035. The Oshkosh vehicles are those cute-looking ones you’ve seen so much of, but what’s not so cute in most of them is the internal combustion engine. The prototype runs on diesel; Oshkosh has never built an electric car.
This was a huge missed opportunity. The Postal Service manages around 229,000 vehicles, and the average age of the standard postal trucks, developed by Grumman Aerospace back before it merged with Northrop and became defense giant Northrop-Grumman, is 28 years. Maintenance alone costs $2 billion a year, and fueling costs about $500 million, more than any other agency in the government.
Electricity is a much cheaper fuel than gas or diesel, saving hundreds of millions in fuel costs. Electric vehicles have fewer parts, so the enormous maintenance costs would drop too. And beyond cost savings, this investment would cause a huge reduction in greenhouse gas emissions, literally in every community in the nation. That means cleaner air and fewer respiratory complications. Especially as the Postal Service’s 10-year plan calls for more ground rather than air transportation, the agency will be using more potentially carbon-burning fuel in the near future, increasing the urgency to electrify the fleet.
Given that daily postal routes are relatively centralized, even in rural areas all charging could likely be done back at postal depots, and since the trucks sit overnight, you wouldn’t even need particularly fast charging equipment, meaning you could maintain the current 120V wiring in every postal facility.
The Oshkosh contract was long overdue, but to not then make it electric defies logic. Unless there were other considerations. The day before the contract announcement, there was an anonymous $54 million trade in Oshkosh shares. The contract terms are confidential, and the House Oversight Committee has been asking for it, with a deadline of March 26. There’s no indication that the USPS met that deadline.
For his part, DeJoy said in recent testimony that the USPS could electrify the fleet quickly for $8 billion. It’s unclear why there would be higher lifetime costs from electric vehicles rather than gas-powered ones, as DeJoy claims. But again, those contract terms are secret.
Fortunately, the American Jobs Plan aims to spend $2.25 trillion, of which $8 billion is a pittance. It’s something lawmakers like Rep. Jared Huffman (D-CA) have been calling for since at least 2014. However, doing so under the existing contract with Oshkosh, which again has never made an electric vehicle and has no supply chain for it, might be a huge mistake. Workhorse, an Ohio-based company that was a finalist for the contract, makes electric vehicles. Having Oshkosh make a custom vehicle from scratch, on fairly low volume (165,000 trucks tops over 10 years), will be more expensive than necessary, and more important, risks being inefficient or poorly made by a novice firm.
Oshkosh has also talked about converting the vehicles from internal combustion engines to electric down the road, which I’ve seen small bespoke companies do on classic cars like VW Bugs, but not en masse to tens of thousands of them. That would add funding and it’s no guarantee that process would be smooth.
So while it’s a great idea, the bid to electrify the fleet is coming into contact with a live process to upgrade postal trucks, and the two decisions do not mesh well. That will have to be worked out almost immediately, before the Biden plan passes months down the road. You’d think Biden would want to have a postmaster general he trusts in place to make that decision, rather than a holdover from the Trump years who has accompanied a severe decline in the quality of the institution.
What Day of Biden’s Presidency Is It?
Day 76.
Today I Learned
- This broke late Friday: there’s a pathetic attempt afoot to disqualify Jonathan Kanter from running the DOJ Antitrust Division because he opposed Google. Which is something DOJ Antitrust has an active case on right now! (Politico)
- Biden tossed AstraZeneca out of the Baltimore vaccine manufacturing plant, making it exclusive to Johnson & Johnson. (New York Times)
- A decent explanation of Bidenomics. I’d foreground investment, as that’s the real break from the Reagan/neoliberal era. (Noah Smith)
- A big problem Biden will have to deal with on the economy going forward is long-term unemployment. (HuffPost)
- Locking in the taxes on this infrastructure and jobs plan is going to be a slog. (Wall Street Journal)
- Janet Yellen’s diplomacy on a global minimum tax rate is a critical part of the legislative path of the administration. (Axios)
- Gitmo being consolidated, at least. (New York Times)
