“By sharing some of its revenue, the USPS has been highly successful in attracting a significant number of companies to focus their businesses around driving USPS growth.”Įven as the business of parcel delivery booms, the Postal Service has run deficits for 10 years in a row, including $5.6 billion in losses in 2016. “Like many other businesses, the USPS allocates a part of that discount to be shared with the customers, and the remainder is to be retained by its partners in order to help fund their sales, marketing, support, IT infrastructure and product development,” said in response to written questions. These companies, said in a statement to The Washington Post, essentially act as the Postal Service’s sales force, recruiting customers, selling postage and preparing deliveries in a system that has helped to dramatically increase its shipping volume amid fierce competition from FedEx and UPS. directly or through subsidiaries ShipWorks, ShippingEasy and ShipStation - provides postage for hundreds of millions of packages each year, including one-third of the roughly 1 billion Priority Mail shipments by the Postal Service. and Postal Service officials say that such negotiated service agreements are mutually beneficial, helping win customers away from private sector shipping rivals FedEx and United Parcel Service. Several current and former industry officials say they believe that, through several subsidiary companies, has gotten particularly lucrative discount postage deals from the Postal Service and is using them in novel ways that give an unfair competitive advantage over other companies. The details of these deals, and even the identities of companies receiving them, are not public because of the Postal Service’s broad exemption from public disclosure laws when it comes to its dealings with private businesses, leaving rivals to guess at who is getting better terms and why.
“Everybody’s getting cannibalized, and they don’t know what to do,” said Bert Hamilton, founder of Harvey Software, a developer of shipping software and a rival of, who has brought his concerns to the Postal Service, the Office of Inspector General and his representative in Congress - all to no avail.Īt the heart of this dispute is the Postal Service’s use of discount deals, called negotiated service agreements, that allow some companies to sell postage for less than others even though the underlying service - having the Postal Service deliver a package to a particular address within a specified period of time - is identical. And it is this point that has generated sharp controversy within the industry, with officials at several companies complaining that the Postal Service has tipped the scales against them while wasting money in the process. But the Postal Service’s dire finances underscore the importance of maximizing the agency’s revenue. The package-shipping business that and its rivals compete in is not the reason for these losses, which are driven largely by fixed personnel costs such as medical insurance and retirement. This comes at a time when the Postal Service has run deficits for 10 years in a row, including $5.6 billion in losses in 2016. It was up by more than 40 percent last week alone, following yet another sterling earnings report Wednesday. And several of them argue that a single company,, is getting unusually good deals from the Postal Service, allowing it to undercut the prices of rivals and reap profits that should be going to the government.Īs exhibit one, these competitors and other critics within the shipping industry point to a run of astonishing quarterly profit reports for - with gross margins often topping 80 percent - and a skyrocketing stock price that has increased by more than 500 percent over the past three years.
Private companies compete fiercely to sell postage, prepare labels and help retailers find the best deals for shipping their products. Postal Service, which is delivering packages at a historic pace - and reaping revenue that helps offset billions of dollars of losses elsewhere in the agency’s budget.īut the Postal Service isn’t the only one making money when a mail carrier brings a new pair of shoes or a school backpack to your door. The boom in Internet retailing has provided a rare bit of good news to the beleaguered U.S. Postal Service letter carrier loads mail.