Will Postal Service Benefit from UPS Christmas Delivery Fiasco?

The U.S. Postal Service is having a couple of good weeks right now.

For one thing, the USPS delivered all its Christmas packages on time without fanfare, outshining its biggest private competitors United Parcel Service and Fedex which ruined the Christmases of untold millions of people by shipping their packages late.

Christmas presents late? To call them the grinches is an understatement and calls into question assertions that private enterprise is always better than public entities.

UPS blamed this fiasco on a surge in last-minute orders and bad weather, according to the New York Daily News http://www.nydailynews.com/news/national/ups-fails-deliver-xmas-presents-article-1.1558214

Yeah, yeah. The postal service delivered under the same conditions.

But even before this happened, the USPS finally got an exigent rate increase after many years of trying.  The Postal Regulatory Commission, which supervises the postal service, granted this hike to make up for losses the USPS took during the recession of 2008 and 2009. In January, postage prices will go up an average of 6%. This translates into the price of first class stamps going up by three cents http://prc.gov/prc-docs/home/whatsnew/Exigent%20Rate%20Increase%202%2024%2013%20%282%29_3428.pdf

This increase is only expected to last for a year or two although the USPS reportedly wanted these hikes to be permanent.

Under the 2006 postal reform law, the postal service was scheduled to receive annual small rate increases tide to the rate of inflation, which is pretty low now. But that law also called for “exigent” rate increases if economic and financial conditions warranted.

Nearly every year since the law, the Postal Accountability and Enhancement Act went into effect, the USPS has asked for such an increase. Each time, the PRC turned down the postal service’s request, generally pooh-poohing its arguments of dire financial necessity, despite a track record of losses, which were only slowed down in the year ended Sept. 30  http://about.usps.com/news/national-releases/2013/pr13_087.htm.

In its decision, the PRC cited Congress’s failure to pass any legislation that would relieve the USPS of its financial burdens. One of those is the more than $5.8 billion that postal service must pay each year to cover the healthcare expenses of future retirees, an obligation no other federal agency must carry.

Will the Christmas delivery disasters translate into more business for the USPS, especially during the holidays?

Probably not. That’s because this whole fiasco will blow over and the postal service—which actually does business with UPS–may be loath to name names. But the USPS could well end up taking away some business away from Big Brown. And the additional money from its rate increase may end up strengthening the postal service.

Nevertheless, the GOP and other forces of mindless greed will continue their doctrinaire efforts to privatize the postal service, heedless of what ordinary people might want or the disastrous Christmas performance of the two largest private delivery outfits.

One thing’s for sure. The USPS was there for Christmas when people needed it.

This entry was posted in Congress, Government Accountabiliy Office, postal finances, U.S. Postal Service, Uncategorized. Bookmark the permalink.

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