UPS Says Postal Service Wields Unfair Advantage
If you’re going to compete like a private business, you shouldn’t also have the advantages of a federal agency.
That’s the message United Parcel Service is sending to Congress. Earlier this month, the U.S. Postal Service submitted a financial transformation plan to Congress that would allow it to operate more in the manner of a for-profit business.
“They want to go in and offer negotiated service agreements that target larger shippers that we already does business with,” UPS spokesman Bruce D.D. MacRae said. “They also subsidize their first-class mail to offset pricing flexibility for their package delivery.” The government agency is UPS’s biggest competitor, MacRae said, and the federal agency already operates with inherent advantages.
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“The post office doesn’t have to pay registration fees on their vehicles and they don’t pay taxes, except payroll taxes,” he said. “They are exempt from local, state and federal taxes and they don’t get parking tickets.” UPS, by contrast, must deal with significant restrictions, according to MacRae.
“We have to charge double what the postal service does for second-day air delivery for letters, as required by the federal government,” he said.
“They feel we’re infringing on their air service, but we think they are discriminating against small businesses.” U.S. Postal Service spokesman David Mazer says that’s clearly not the case.
“Our priority and express mail rates are are actually going up, which is good for UPS,” he said. “We’re doing that because we have to pay our employees’ cost of living, and we don’t have the pricing flexibility that UPS does.” Last year, the U.S. Postal Service lost $1.68 billion and a similar loss is predicted for this fiscal year. The agency plans to cut $5 billion in costs over next five years, officials said.
When gas prices are high, UPS can immediately add a surcharge on their fuel costs, Mazer said, but the U.S. Postal Service must submit such proposals to the Postal Rate Commission — a slow-moving process at best.
“They’ll take it under advisement for 10 months, and during that time the competition gets to come in and talk about it,” he said.
“And at the end of that 10 months, they’ll still only give us what they (decide).” Mazer said the U.S. Postal Service hopes to offer discounts to snag more business during slack times.
The agency also wants to implement smaller, more predictable rate increases to offset cost-of-living needs.
“UPS deals essentially with big business and we mostly deal with two- or three-person law firms or Joe’s business down the street,” he said.
“They have their niche and we have ours.”
