FedEx, UPS top post office on government shipping

WASHINGTON — The U.S. Postal Service, required to send congressional letters at reduced rates, can’t win regular business from the federal government, according to an inspector general’s report.

Private-sector competitors led by FedEx and United Parcel Service “consistently” have more than 98 percent of the $337 million annual shipping spending by federal agencies, according to the Jan. 18 report.

“The Postal Service faces challenges to growing its share of this market,” the Postal Service’s inspector general said in the report. “Major challenges include pricing flexibility and the lack of 2- and 3-day guaranteed express delivery products.”

Having lacked a sales force, the Postal Service was late to enter bidding for U.S. General Services Administration contracts for federal agencies. UPS, based in Atlanta, and FedEx, based in Memphis, Tenn., have been official suppliers since 2001, while the Postal Service only began participating in 2009, according to the report.

Another handicap is the preference the Defense Department gives to carriers that have their own planes and participate in the Civil Reserve Air Fleet program, the report said. The Postal Service primarily contracts its air shipping to FedEx and doesn’t own cargo planes. The FedEx contract expires in September.

In fiscal 2012, which ended Sept. 30, the Postal Service got $4.8 million of the almost $337 million that U.S. agencies spent through GSA contracts on shipping, the report shows.

The Postal Service could gain $34.8 million in revenue this year and next year if it implements the inspector general’s recommendations to capture more of the U.S. government market, the report said.

The government would have spent more to ship via the Postal Service than UPS and FedEx, both of which can undercut competitors’ prices to gain business, according to the report. Postal Service rates must cover costs as well as a share of the organization’s overhead, and are regulated by the Postal Regulatory Commission and overseen by Congress. The service can’t price express and priority mail, the fastest two ways to ship through the system, at a loss in order to attract customers, the report shows.

Lawmakers in the House and Senate held hearings in the previous legislative session calling on the Postal Service to improve its finances. The service lost $15.9 billion in fiscal 2012, and has said the losses will mount until Congress lets it cut costs faster and restructure a required payment for future retiree health benefits.

Senate Majority Leader Harry Reid, D-Nev., said Tuesday that postal legislation is one of the proposals he plans to take up this year.

David Partenheimer, a Postal Service spokesman, referred to the agency’s comments in the inspector general’s report and declined to comment further.

The service, according to the report, said it’s “addressing” its pricing with GSA and looking at more user- friendly payment methods to help boost government shipping business. The service “did not agree” that it could gain $34.8 million in revenue this year and next, saying it’s “nearly impossible” to predict a revenue gain.

bc-postal

More in Local News

Herald photos of the week

A weekly collection of The Herald’s best images by staff photographers and… Continue reading

This week’s Herald Super Kid is Nathan Nicholson of Snohomish High School. (Dan Bates / The Herald)
‘The future is biotech,’ but for now he’s busy with everything

Snohomish senior Nathan Nicholson is a student leader and media master.

Longboarders from near and far hit the trail in Arlington

The Centennial Sk8 Festival was serious competition for some and just for fun for others.

Council passes six-month moratorium on safe injection sites

Proposal by County Councilman Nate Nehring passed unanimously.

Crews recover body of man who fell over Wallace Falls

The area where the man fell is called Sky Valley Lookout, 2.4 miles from the parking lot.

Big fire destroys building on Broadway in Everett

A person was rescued, but there were no immediate reports of injuries.

Luring attempt reported in Mountlake Terrace

The driver allegedly instructed a boy to get in the truck and help grab a scooter he was giving away.

A place to live: Clearing a barrier for former sex workers

A nonprofit’s house “will be a safe place” for former prostitutes and sex-trafficking victims.

A customer walks away after buying a hot dog from a vendor on 33rd St and Smith Street near the Everett Station on Friday. The Everett Station District Alliance pictures the area east of Broadway and south of Hewitt Avenue as a future neighborhood and transit hub that could absorb expected population growth. (Andy Bronson / The Herald)
How can Everett Station become a vibrant part of city?

A neighborhood alliance focused on long-term revitalization will update the public Tuesday.

Most Read