Report says bypass mail is major cost burden to Postal Service

Alaska’s bypass mail program has been identified as one of five major cost burdens to the U.S. Postal Service, according to an inspector general’s report.

“Current estimates of the annual direct loss to the Postal Service are 50 million USD to 60 million USD,” according to the June 22 report to Postmaster General John Potter.

Bypass mail is an Alaska-only program that lets rural residents send bulk items through the mail system, usually on small air carriers, at parcel post rates. Everything from groceries to auto parts to pallets of dog food can be shipped by air at affordable rates.

Under the program, which has changed little over the years, the U.S. Postal Service pays air carriers to deliver the mail, dividing up shipments among the eligible carriers along the route, and charging shippers third and fourth class postal rates for what is essentially first class service.

Bypass mail is so called because the shipments bypass the post office and go straight to the carrier.

“It operates at a significant loss, which postal ratepayers must cover,” the inspector general’s report says. “There are also restrictions preventing the Postal Service from implementing the service in the most businesslike manner.”

Among those is the Postal Service’s inability to negotiate rates with air carriers, instead having to pay the rates set by the U.S. Department of Transportation.

The report suggested ways to reduce the burden on postal ratepayers, including charging priority mail rates, contracting directly with air carriers, seeking permission from Congress to operate more efficiently and seeking additional federal money to cover the system.

The report says bypass mail and four other burdens – including DOT-set rates to fly international mail – cost the Postal Service about 5.2 billion USD a year.

Removing those unique burdens “would be equivalent to avoiding a three-cent increase in the first class stamp price,” the report says.