photo credit: USPS OIG
According to Wall Street Journal: Some critics question whether the Postal Service is charging the delivery services like FedEx, UPS and Amazon enough for the services. The flood of these packages has begun to tax the system.
FedEx and UPS are moving more of their packages through the U.S. Postal Service, putting pressure on the quasi-governmental … The U.S. Postal Service, having lost so much first-class mail business because of the Internet, is counting more on package-delivery contract work for UPS, FedEx and others.
For FedEx alone, the post office delivers an average of 2.2 million packages a day, or about 30% of the express-mail company’s total U.S. ground segment.
UPS won’t specify how much of its shipments go through the post office, but a regulatory filing indicates those type of lightweight shipments accounted for 40%—or about 37 million packages—of its total increase in ground shipments in 2012.
PMG Donahoe is quoted in the article as saying the criticism is unwarranted. “We make money on it. We wouldn’t do it if we didn’t make money on it..”
But last year at a Senate hearing on postal reform PMG Donahoe told senators USPS does not know how much “UPS and FedEx may be saving through the Parcel Select contracts between USPS and these two companies for the provision of so-called “last mile” delivery of the companies’ parcels.” In fact in a response to a question pose by one of the senators at the hearing as to whether USPS modeled what would happen if USPS decided NOT to carry UPS and FedEx packages, the PMG said “USPS has not done such modeling, but I ‘m sure they (UPS and FedEx) have done that and they make the decisions using us based on what their prices are.” The senator responded by saying “It appears that UPS and FedEx enter into negotiations for Parcel Select contracts with USPS with far greater information than USPS about the price at which it is still profitable for them to rely on USPS for last mile delivery.”
The PMG also stated if USPS did not carry parcels from FedEx or UPS many of the delivery vehicles would be empty.
The PMG’s response prompted the following request for information from one of the Senators:
(1) The current Parcel Select contract, and any modifications. with FedEx
(2) The current Parcel Select contract, and any modifications, with UPS;
(3) The memoranda which documented the justification for the agreements with FedEx and UPS, the negotiations with FedEx and UPS, and the determination of price reasonableness (if any); and
(4) The annual costs attributable (as defined in Section 3631 of title 39, United States Code) to the Parcel Select mail class, including the percent change annually in each type of attributed cost for the previous 15 years
Read more: U.S. Mail Does the Trick for FedEx, UPS – WSJ
No one knows the exact price per piece. I asked the UPS guy the manager and the poor subcontracted FedEx drop ship driver has no idea.
TSP there you go again….Crying about management….Pathetic
you are obviously a postal manager and have never handled mail. you also have been drinking the Kool-Aid of Donahoe. throughout my 38 years I watched as the post office wasted millions to save a few cents. for you to come here and post the company line shows how ignorant you are about postal operations.
The usps should never work with the competition. They should cut out the middle man and take those customers from UPS and FedEx.
I would say the attacks on postal management here are wildly off base. The Postal Service is required by law to ensure that the agreements for last mile delivery fully cover costs and contribute 5.5% to USPS institutional costs. There are sophisticated cost models that USPS uses to determine cost and profitability on each agreement. I’m not sure any business can say with certainty how much they are saving a customer, because in reality, one business doesn’t know the cost structure of another business. In this case, its fair for PMG Donahoe to say he doesn’t know how much UPS and FedEx are saving on last mile, because he will never know confidential things like internal costs. The best he could do is make an estimate, and the Postal Service does just that. So these sorts of attacks on the USPS are off base. I would commend both USPS management and employees who have been able to weather the storm of creative destruction (internet) while having to deal with Congress, something no other business entity has to deal with.
PS – a FOIA request for confidential information the USPS has with competitors would have a huge dampening effect on USPS package volume, as both FedEx and UPS would like transfer volume away from USPS due to breach of contract, thereby reducing USPS volume and revenue. Its always better to try to think of the ramifications prior to demanding action.
Even if the senator needs to submit a FOIA request to get the information, he/she should absolutely do it. The USPS under Donahoe has been a horror show. In 20 years, I have never seen morale this low and management so grossly incompetent. It’s time he did some squirming for a change.
usps management just harasses mail carriers with more office and street observation based on volume that DOES NOT include parcels.
great article to expose exactly what is wrong with the USPS. the answer is EVERYTHING. from donahoe on down postal management is a bunch of incompetent, ignorant, pathetic fools. they have no idea of basic business practices and this leads to massive waste and fraud. how the hell can donahoe/mgmnt set a price on last-mile delivery for ups and fedex and NOT be able to answer a question as to exactly how much they make (or lose!) on these contract prices? just total incompetence because there is no actual oversight of anything postal management does. of course, donahoe and company would not be able to pull off their lies and bullshit show if congress was not as inept and incompetent (or perhaps as corrupt) as the united states postal service itself. looks like fred smith from fedex realizes what a bunch of fools and idiots he is dealing with relating to donahoe and company. fedex receives billions of dollars from the united states postal service
every year ( keeps rising) and what has the usps gotten in return? finally, regarding the clown operating the big circus tent we know as the united states postal service, of course i am speaking of pmg pat donahoe. bureaucrats love to pay for studies. one study i would help fund is a study to confirm whether postmaster general pat donahoe is
a COMPULSIVE LIAR, a HABITUAL LIAR, or a PATHOLOGICAL LIAR? i’m sure donahoe is one of the above and i feel the public and employees of the usps have a right to know the truth (which they obviously ain’t getting from donahoe).
and “TSP” says: “wah wah wah”. very insightful
Hey Donahoe, do the honorable thing and submit your resignation ASAP!
A job at Fedex or UPS beckons, for sure.
you better fire the post master!
How much more proof is needed that Dona”ho” needs to go. He is a puppet to the likes of Issa, who has every intention of destroying the USPS. Dona”ho” is far and away the worst pmg ever!
The new motto of the postal service is “Lose money on every piece every
day, make it up in volume”!
Basic negotiations 101……Someone in usps should take the course.
he wont tell anybody because hes in bed with fedex. issa is in with smith who is head of fedex smith chairs a group called a.l.e x there top priority is to take ov er postal service of course a lot lower pay scale and no unions of course
As usual, postal mgmt. has absolutely NO clue about what is occurring, or even the faintest idea of how to run a business.
Didn’t ups and fedex just complain about usps charging their customers to little? This PMG who must be Daryl Issa butt buddy doesn’t know how much they save ups & FedEx? I know! Not enough if you charge them enough their customers would use usps
The key here is the PMG is a idiot who just doesn’t know $hit.
Hey Ho!