Keep the USPS in the Package Delivery Business

The United States Postal Service has delivered small packages since the founding of the Republic and, in 1912, Congress specifically authorized and directed the USPS to deliver all sorts of packages to our homes and our offices.

Unfortunately, thanks to recent proposals in Washington, Americans might find fewer packages coming in the mail and more coming from private companies. If that happens, expect shipping prices to jump across the board.

Some Washington policymakers are pushing the Postal Service to dramatically increase the prices it charges for package deliveries. Notably this activity is one of the only “profitable” activities the post office does.

Normally, increasing its prices might make sense as a means to increase revenue to the Postal Service, but the opposite is likely to happen.

An increase in price alone without any improvement in value or service is unlikely to bring in more revenue to the post office. Instead, a substantially higher price will mean customers — households and companies — will turn to companies like FedEx and UPS for parcel delivery.

When that happens, USPS profits will disperse as well.

Consider what you would do if you could pay $5.15 to send a present to your graduating nephew by going to the post office or pay $21.00 to send the same package via UPS. It’s a no-brainer.

However, if the post office was forced to raise its fee artificially for that parcel to $19.00 the choice becomes harder.

UPS and FedEx have tracking services, accounts set up for regular users with discounts available, a money back guarantee for late delivery, and precise time of day delivery target options even for the most casual shipper. Even with a two-dollar price differential, UPS looks pretty good — but if the post office raises prices, you can bet that will give its competitors room to increase them even more.

Do you think the post office should raise shipping prices?

So, if this proposed hike goes forward, two factors need to be considered: First, your household budget will take a hit. Spending 20 to 60 percent more on shipping will mean many small businesses and households will cut back on shipping products — or those that don’t will have to cut back on everything else. In many instances the cost of shipping will come to exceed the price of the product being delivered.

Second, package-related revenue to the Postal Service would disappear. This matters because, over the last decade, package delivery has dramatically reduced USPS losses.

The Postal Service workforce already heads out to everyone’s home and office six days a week. Thus the post office can often charge less to carry packages to the same places they are already headed than the big delivery companies can.

Over the last decade, the post office has generated more than $144 Billion in revenue and $42 billion in profit from parcel delivery. That’s $42 billion that doesn’t have to be paid for by stamp sales or taxpayer bailouts.

Forcing the Postal Service to increase prices would also mean that Americans who don’t live in highly dense urban centers would lose. Presently the USPS delivers to homes and businesses in Anchorage, Alaska, and Fargo, North Dakota, for the same price as a delivery to anywhere else in the United States.

But locations like these are considered out of the local area for Federal Express and UPS. If you have relatives in Glenbeulah, Wisconsin, or Tompkinsville, Kentucky, you’re going to pay a surcharge for delivery by a private package service.

Since most American consumers and small businesses aren’t located in New York or San Francisco, they should expect to see prices for package delivery skyrocket.

Prior to 1912, the post office was not allowed to carry packages weighing more than four pounds.

Back then that meant that the 54 percent of the population who lived in rural areas were subjected to whatever prices private delivery companies might charge.

When Congress mandated that the Postal Service accept more packages as well as letters, package delivery became a household feature.

Today American households and small businesses benefit from low cost parcel delivery from the East Coast all the way to the West Coast by the USPS.

Let’s not turn the clock back 100 years.

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25 comments

  1. I couldn’t affor higher prices

  2. No, The USPS should cut out the graft and wasting money on non-mail delivery expenses.

  3. I think if they do raise prices that people will turn to UPS, and goodbye USPS.

  4. Leave the USPS package delivery system alone. Their rates don’t have to be raised. This shipping method is a viable, reasonably priced alternative to private shippers, affording a needed level of competition that benefits consumers. At times, UPS and FedEx even utilize USPS delivery services to complete their deliveries. Th author of this article makes a sound argument for the continuance of USPS parcel deliveries.

  5. The USPS should be made into a private company. I have had nothing but trouble getting packages delivered to my P.O. box. UPS delivers to my P.O. and the P.O. then wants to charge me postage due for me picking it up.
    And we wonder why they are broke. No one with any sense or care as to how to run a business.

  6. The USPS should not be required to raise prices. This would be a disaster for its customers.

  7. I think the US Postal Service should do a more qualitative job in their work. They deliver mail and packages to wrong addresses and employees don’t appear to take any pride in their work. I think the work ethic of many of postal service employees could be significantly improved!

  8. Keep the cost the same

  9. Increase prices for businesses if necessary for USPS

  10. Like every thing else Congress thinks it !nose all.big misteak!

  11. I pray this doesn’t happen.

  12. Congress has been and always be a bunch if Idiots…..

  13. No, Trump is trying to shut the post office down in competition of UPS & fed ex. We all use the post office because it is cheaper, if post office raises prices I’m sure they will close down.

  14. The last few years Usps has really. Stepped up their game , as good as UPS,FedX and cheaper,hope this doesn’t happen but Democrats are in control so it probably will

  15. Keep USPS in the parcel business. We need the value!

  16. The fact of the matter is that while the USPS took in 20% of its revenue last year from package shipments, largely through “secret” cut-rate deals with a very few companies like Amazon, Target and Walmart, the organization still managed to loose a whopping $5 billion with significant deterioration of both normal postal and enhanced mail delivery (Express Overnight, Priority Mail and other first class mail delivery) in both rural and major metropolitan areas. This is in addition to employing a large, underpaid and overworked delivery staff (without employment benefits) devoted solely to final destination package delivery. The lack of transparency in these “strategic” package delivery contracts is a significant factor in the deterioration of normal postal operation services. These are all inconvenient facts that lobbying organizations like this would rather not have become common knowledge, hence the dramatics on package senders flocking to FedEx and the like, whose pricing has little or nothing to do with pricing pressures from the USPS. The sooner that the USPS adopts package pricing structures for big contract shippers that reflect real costs, and supports its entire range of services appropriately, the sooner it will deliver on its promises to consumers and return to a level of service that all Americans expect.

  17. The cost of the package delivery was kept low to help private companies like UPS, and FED-EX. I think the cost should be left alone. We the taxpayers can help pay our fair share, let the USPS continue as is. This was a good idea many years ago, and it’s still a good idea! The USPS is a federal business, and as such, it is not needed that they make money like a corp. they are supported by taxpayers.

  18. As a retired letter carrier, I realize exactly what you are saying. The fact that you can get something hand delivered from Florida to Alaska in a few days for about a half a dollar is amazing, No other company provides this type of service. If the carrier can drop off your package at the same time he or she is delivering your letter, what could make more sense?

  19. Keep the prices as they are. Don’t give in to private companies. Seems as if privatization is the rallying cry now, from education to the postal service. Wonder which politicians are getting scads of money from those companies?

  20. Miss Novella Adoue

    I strongly do not approve of any price increase ….. there are management issues that should and must be addressed to better the USPS services all around…..

  21. USPS once dominated the small package business until one of the PMG’s decided to give the transport of it to FDX at double the cost we were paying …good bye 2,2,2, and the end of the growth Priority had been experiencing…great deal for FDX

  22. Don’t change

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