Public or private? Shipping industries accuse USPS of unfair advantages
When the Steve Miller Band rolls out “Fly Like an Eagle” on countless TV screens, Americans are being treated to a fascinating twist on capitalism.
The United States Postal Service, perhaps the most storied government agency, uses a famous rock ‘n’ roll tune and a bald eagle logo to drum up demand for a variety of services.
As American as apple pie. Or is it?
The answer is no, say a few mammoth companies and thousands of small businesses, if the playing field isn’t level.
From the back offices of courier services in Manatee County to the hulking corporate headquarters of Federal Express and UPS, a nagging question keeps cropping up:
Is the Postal Service a government agency in a limited venture or a private enterprise with a limitless competitive advantage?
Most local business owners in the shipping industry balk at criticizing the agency because the Postal Service is often a business partner.
But they’re intrinsically part of a years-long national debate about the agency’s role in businesses that go beyond its congressional charter to deliver first-class mail.
The competitive side of the symbiotic relationship between private shippers and the USPS became clear five years ago when the agency introduced its “Pack and Send” business plan.
It would have put the government squarely into a growing private enterprise, the packaging of goods for customers prior to shipment. The USPS eventually dropped the plans after protests from companies.
“We have organized against having the Post Office compete with us,” said Ginger Moore, owner of the Mail Boxes Etc. at 4501 Manatee Avenue West.
Even though such franchises ship using the Postal Service, they don’t like seeing the agency reach into other areas of business. “They have advantages private industry doesn’t have,” Moore said.
The Postal Service isn’t subsidized by tax dollars. But it does enjoy a distinct edge in the marketplace for several reasons:
It has a monopoly on the delivery of first-class mail.
It doesn’t pay common business levies such as sales, property and income taxes.
The agency can borrow money at low rates from the U.S. government.
As a public-sector operation, it doesn’t have to pay dividends or any return on invested capital.
Its vehicles are government-registered and exempt from parking fines.
But the Postal Service also faces some unique disadvantages. For example, it has to go before a politically appointed board, the Postal Rate Commission, simply to adjust prices.
The process takes 10 months. A private company could make the same decision in 10 minutes.
That’s just fine with two of the largest private-sector shipping companies, Federal Express and UPS, who say the Postal Service ought to function as a government entity.
If the agency expands from its congressional charter and acts like a private business, they argue, it shouldn’t have a competitive edge.
“They have a number of built-in advantages not available to anyone else,” said Norman Black, corporate spokesman for Atlanta-based UPS.
The argument doesn’t wash with the agency, which frequently reminds the public that it operates independently.
“The Postal Service operates without taxpayer subsidies and is solely supported by the revenue from its products and services,” said Monica Hand, a USPS spokesperson in Washington.
The agency also finds itself rebuffing a common complaint from private companies – that its control of first-class delivery works to a market advantage in other businesses.
“Our products are individually priced to cover costs and cross-subsidization is prohibited by the law,” Hand said.
But that issue is widely contended.
“We believe the USPS is improperly and illegally competing with private industry,” Black said, “and is subsidizing the cost of the operations of its package delivery with revenues from its first-class monopoly.”
For its part, Federal Express agrees with its private-sector rival.
“A govern
