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Uber UBER-N is adding a new task to its list of services: mailing consumers’ return packages.

The ride-hailing and delivery company said Wednesday that its drivers will collect up to five prepaid and sealed packages and drop them off at a local post office or at UPS or FedEx stores. Uber will charge a flat fee of $5 for the service or $3 for its Uber One members.

The San Francisco-based company said the service will be available in nearly 5,000 U.S. cities to start.

Uber said customers will be able to choose package drop off locations within its app. Only locations open for at least the next hour will be listed. Drivers will provide visual confirmation once a package has been dropped off.

While the service is expected to be used primarily to return packages, Uber drivers will also mail new packages that are sealed and have prepaid labels.

The new service gives Uber a vast opportunity.

FedEx FDX-N and UPS UPS-N deliver 31 million parcels each day, while the U.S. Postal Service delivers 25 million, said Satish Jindel, a shipping and logistics consultant and president of ShipMatrix.

Much of that volume involves delivery to businesses that do not return packages often, Jindel said, and he believes many people will continue to return packages themselves, rather than pay Uber $5 to do it.

Yet Jindel estimates demand for Uber’s return package service could be around 574,000 parcels on business days. That would rise about 25 per cent in January because of holiday returns, he said.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 25/04/24 11:22am EDT.

SymbolName% changeLast
UBER-N
Uber Technologies Inc
-0.62%68.93
FDX-N
Fedex Corp
-0.92%263.62
UPS-N
United Parcel Service
-0.65%145.66

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