Postal Service Wrapping Up Testing of New Mail Truck Prototypes

Prototypes from Karsan, left, and Mahindra are among those competing for the U.S. Postal Service's new-truck contract, worth an estimated $6.3 billion. (Photos: Brian Williams/Trucks.com)

The U.S. Postal Service said it expects to wrap up mail truck prototype testing for its Next Generation Delivery Vehicle program in the coming months and then will seek bids for an estimated $6.3 billion contract to produce the new mail truck.

“Most likely early 2019,” said Kim Frum, a spokesperson for the federal agency, recently.

The Postal Service is testing 50 prototypes from five companies as it looks to replace its aging fleet of Grumman Long Life Vehicles, or LLVs. The old mail trucks lack modern safety features, have poor fuel economy and have been plagued by fires and increasingly expensive repairs. At least six burned up last month.

They were also built to handle mostly letters, not packages, which make up more of today’s mail volume.

A mix of powertrains

The prototypes include a mix of alternative fuel and hybrid technologies, including all-electric options.

Awarding a manufacturing contract for the 180,000 new mail trucks it wants would be the next step, if the agency follows its original plan. The contract is worth up to $6.3 billion over five years.

Prototype testing, which began 15 months ago, has been a mix of real-world road work and in-lab durability trials. It was expected to take six months, according to the original timeline the Postal Service published for the program.

Once testing is complete, the agency will determine when to release a request for proposal, or RFP, to actually manufacture the vehicles, Frum said.

Despite the delays and the agency’s target price of $25,000 to $35,000 per mail truck, the companies that survive the prototype stage are likely to bid on the production phase, according to one industry expert.

‘Huge showcase’

“This is a huge showcase for whoever gets it,” said Antti Lindstrom, the truck analyst at IHS Markit.

And the Postal Service may pick more than one team’s design, he said, so it has vehicles suited to the different weather and terrain conditions its daily-delivery drivers face.

There are still plenty of potential bumps before the new mail trucks hit the road, Lindstrom said. The Postal Service’s request for prototype proposals was issued in 2015, with designs approved in 2016. Since then, technology has changed rapidly, particularly for alternative fuel and electric powertrain options.

Political headwinds are also likely, he said. The “America first” mantra of the current administration may make it hard for the agency to choose a foreign automaker for the contract, even if the vehicles would be produced here.

And it’s no secret President Donald Trump already is unhappy with Postal Service finances and how the agency does business with commercial package shippers like Amazon.

Will agency proceed?

Then there’s the cost. It’s not clear the agency’s price range for the new mail trucks is still realistic. And it’s not clear if the Postal Service, which is in the red due in part to having to prepay employee pensions, will immediately go ahead with the multibillion-dollar, multiyear purchase.

In a November financial report, the agency did not appear to include money to pay for the production of new mail trucks in fiscal 2019, which ends Sept. 30. It projected capital spending commitments of $100 million for vehicles. That is less than the $400 million it listed for the prior year. But the agency did note in its report that the figure for this year could increase sharply if certain projects are approved by its Board of Governors.

“The FY 2019 Commitment Plan may have up to $4.5 billion in additional capital added based on additional individual project BOG approvals,” the agency said in its report. The board is scheduled to meet Friday, Feb. 8.

The five companies competing to win the prototype design phase are:

AM General LLC: a mail truck with an internal combustion engine with stop-start technology for improved fuel efficiency.

AM General is a defense and automotive company based in South Bend, Ind., known for its Humvee military trucks. Its prototypes will “seek to provide fuel efficiency and zero emission capability,” according to a September 2016 company press release.

AM General has not said it is working with a partner on the contract. But a previously unknown participant, London EV Co. USA, which has said it teamed with AM General on an electric option, has said it will withdraw after the testing phase. LEVC USA was previously known as Emerald Automotive, which was one of the 15 companies preapproved by the Postal Service to bid on the prototype contracts. AM General has not responded to requests for comment.

Karsan Otomotiv/Morgan Olson: A fully electric mail truck.

Karsan, based in Turkey, specializes in contract-based production of light and heavy commercial vehicles. It has teamed with longtime postal service supplier Morgan Olson LLC of Sturgin, Mich., on mail truck prototypes.

Two years ago the companies announced a broad alliance. Morgan Olson, known for its aluminum commercial van bodies and step-vans, will provide assembly, production, sales and after-sales service for Karsan vehicles designed for the North American market. The deal could allow Karsan to produce Buy America-compliant vehicles.

Morgan Olson has a long history with the Postal Service. It was part of Grumman when that company won the Postal Service contract to build today’s boxy mail trucks. It built the bodies and did the final assembly with General Motors chassis and engines. Morgan Olson also won a large contract in 2015 to supply the Postal Service with walk-in-body delivery trucks.

Oshkosh Corp./Ford Motor Co.: A modified Ford Transit Cargo van.

Oshkosh, a defense contractor based in Oshkosh, Wisc., is working with Ford on mail truck prototypes.

Mahindra: a mild hybrid option.

Mahindra North America, a unit of India’s Mahindra Group, sells tractors and utility vehicles in America and operates the Mahindra North American Technical Center in Troy, Mich. Mahindra produced the Willys jeep under license in India after World War II.

VT Hackney/Workhorse: A battery-electric mail truck with a range extender.

VT Hackney is a commercial truck and van body manufacturer based in Washington, N.C. It is owned by Singapore Technologies Engineering Ltd., a global technology, defense and engineering company. Workhorse is a relatively new builder of electric trucks. Workhorse also supplies electric vans to UPS.

All of the companies are prevented from commenting on their prototypes or the program by their contracts with the Postal Service. And the agency has not released details about the testing or the program.