USPS losing money by undercharging for last mile

USPS has been undercharging its competitors for last mile deliveries in rural areas, and this apparently is one of the major factors in its eye watering annual losses that it reported recently according to US Sen Claire McCaskill. She suggested that the US postal operator “may be losing money by under-charging competitors such as UPS and Fedex to carry mail to those areas”.

The Senator is a senior member of the Senate Homeland Security and Governmental Affairs Committee, that has jurisdiction over the USPS.

In a statement issued on Thursday (21 April), Senator McCaskill, “We are giving a really good deal to our competitors. I’ve never seen another business entity who says, because we are so starving for volume, we’re going to take the most expensive part of our architecture, which is the last mile, and we’re going to give our competitors a deal on that last mile.

“And I have yet to have anyone give me the analysis that shows me that they have, in fact, at the Postal Service, considered what price they’re giving to UPS and FedEx for that last mile of delivery as it relates to our costs.”

She recently backed the Rural Postal Act, a bill sponsored by Senator Heidi Heitkamp of North Dakota that would restore overnight delivery, return a faster First-Class mail standard, make six-day delivery permanent, and enact strict criteria the Postal Service would have to meet before closing a post office.

As a general rule people who go into the civil service operations such as the USPS have not always come from big business, and as such decisions made by bureaucracies such as the postal operator are not those that would have been made by their business competitors…