New USPS delivery trucks may bring change for LT tire market

WASHINGTON—Pending multi-billion-dollar acquisitions of delivery vehicles by the U.S. Postal Service (USPS), with changes in vehicle design motivated by e-commerce and other considerations, could mean big changes in the postal service's light truck tire purchases.

Precisely what those changes will be, however, is anybody's guess.

"The Postal Service is in a multi-year process of conducting research and testing as a part of our efforts to operate a future class of delivery vehicles that will incorporate new technology to accommodate a diverse mail mix, enhance safety, improve service, reduce emissions and produce operational savings," a USPS spokeswoman said.

The agency completed testing in March on New Generation Delivery Vehicle prototypes from five potential suppliers, and it expects to award the contract for vehicle production later this year, according to the spokeswoman.

USPS cannot comment on the suppliers or on any potential subcontractors, including tire makers, she said. Among those known to have submitted prototypes for testing are AM General L.L.C., Oshkosh Corp. and Mahindra Automotive North America.

Most of the prototypes competing for the NGDV contract are larger than the ubiquitous "Long Life Vehicles" that USPS has been using for nearly 30 years, outfitted with tires larger than the 14- and 15-inch rim diameter tires used now.

Among the design/performance criteria the USPS has outlined for the new-generation delivery vehicles are a service life of 18 to 20 years, right-hand steering with two-wheel drive, a van-style body with integral cargo and cab compartment, sliding side doors and a minimum 1,500-pound payload capacity with 330 to 400 cubic feet of cargo space.

A July 2018 report from the U.S. Government Accountability Office said that the Postal Service projects expenditures of roughly $821 million annually from fiscal year 2018 through 2028 on vehicles, primarily new delivery vehicles starting in fiscal year 2019.

The USPS operates a fleet of more than 200,000 vehicles throughout the U.S. and its territories, approximately 163,000 of which are LLVs purchased between 1987 and 2001. In addition to LLVs, the USPS uses vans, 2-ton vehicles, alternative fuel vehicles and tractor trailers.

The USPS is looking to replace up to 180,000 aging mail trucks, according to various sources.

"(The) USPS plans to take a number of steps to ensure that the vehicles best meet the organization's needs," the GAO report said. It designed the multi-year acquisition partly to avoid large cash outlays in any given year and partly to take advantage of technological changes such as advanced fuel technologies, it said.

USPS officials told the GAO that they were considering vehicles that enhance operational efficiency, such as taller vehicles that would allow carriers to better handle packages and trays of mail. They also may consider different vehicle designs for different market needs.

The agency estimated its total capital outlay for new delivery vehicles at about $5.7 billion, the GAO said.

LT sales flat

E-commerce outlets such as Amazon.com increasingly depend on USPS to deliver goods ordered online. If USPS delivery vehicles have had any noticeable impact to date on replacement light truck tire sales, it isn't apparent from the most recent available figures from the U.S. Tire Manufacturers Association.

Projected replacement LT tire shipments in the U.S. in 2019 are 31.8 million, 1 percent above the 31.5 million shipped in 2018, the USTMA said in March. The bulk of the tires used by the USPS for its LLV delivery vans are in the 14- and 15-inch size range and wouldn't show up in the LT tire category.

Retreading systems supplier Oliver Rubber Co., a Michelin North America Inc. subsidiary that has the exclusive contract to supply the USPS with retreaded tires, said it has seen no change in the tires it supplies to that market.

Michelin, however, said it anticipates a number of changes emanating from the e-commerce delivery market.

"Consumer retailers and transportation companies must be able to quickly deliver packages in urban, suburban and rural environments, leading to the need of new transit options for distributors," Coy Jones, senior operational marketing manager, business-to-business regional and small fleet for Michelin North America, said.

The Amazon Prime program, which promises delivery of all goods within two business days, is a good example of the delivery model set by e-commerce, Jones said.

"This model will be dependent on the adaptation of the current trucking industry models and drive a new reliance on smaller fleets to help quickly shuttle products through inner cities all the way to a rural address," he said.

"The new distribution vehicle will include box trucks, sprinter vans and transit vans to allow agility in moving the products to the end user," Jones said. "This will require new product developments by the manufacturers to handle the weight and various environments in which these vehicles will traverse.

"This will also require additional changes to the product lineup as it related to tire and wheel sizes for these vehicles," he said.

Growth area

To address this demanding application, Michelin recently launched the Agilis CrossClimate tire, Jones said, which the company claims provides 19 percent more mileage than three leading competitive commerce tires.

The Agilis CrossClimate is available in 21 sizes covering 15- to 20-inch rim diameter sizes, he added.

"This has not had a drastic impact on sales to date, but the expectation is that this will be the future growth area to watch," he said.

Advancements in technology further are changing the very concept of e-commerce, according to Jones.

"For the tire manufacturer and supplier, this would include a level of tire monitoring leveraging future technologies to include the internet of things and artificial intelligence," he said.

"This will leverage data efficiency and provide a completely new level of convenience for businesses within the transportation industry."