The United States Postal Service Takes Another Hit: 25 Federal Agencies Contract with UPS and FedEx Instead

by LJM Group

The financially strapped United States Postal Service (USPS) has taken another hit, this time by the federal government as 25 federal agencies have chosen other postal companies such as FedEx and UPS for their mailing and delivery needs.

This comes after Congress’ decision in April 2013 to prohibit a new national delivery schedule for mail and packages that would have generated approximately $2 billion in annual cost savings.

For years the federal government has had the majority of their contracts with the USPS, which received approximately $29.3 million in revenue. According to a Washington Times article, “a review of records shows that the federal government is relying on UPS more heavily. There were 358 contracts awarded to UPS by federal agencies in 2008. That number had increased to 925 contracts by 2012. Through the first six months of 2013, 635 contracts have been awarded to UPS.”

The reason as to why the federal government is relying more heavily on FedEx and UPS is unclear. Whether these agencies offer more competitive and affordable pricing is left unanswered. What is fact is that the USPS is losing $25 million a day.

According to the President of the National Association of Letter Carriers Fredric Rolando, “The red ink people hear about has little to do with mail volume, the Internet, online bill-paying, or anything related to the mail. Instead, it results chiefly from the mandate by a lame-duck Congress in 2006 that the USPS pre-fund future retiree health benefits for decades into the future and pay for it all within 10 years.”

A House Oversight and Government Reform Committee spokesperson said in a statement, “While chairman [Tom] Carper [(D., Del.)] believes that the postal service should have the freedom and flexibility it needs to compete and succeed in the 21st century, he also believes it is important that the federal government use taxpayer dollars prudently and to that end he feels that federal agencies should have the flexibility to determine which shipping service best meets their needs in the most cost effective and efficient manner.”

What will become of the USPS in upcoming years is becoming a serious and valid question.

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