14 ms·

USPS loses millions each year on local delivery of mail from abroad (2014)

151 points by acjohnson55 9y ago

yuhong 9y ago
And the fun thing is that USPS is probably often funded by government debt too. The US economy has been running a trade deficit since the 1980s at least and we went off the gold standard in 1971.
- devoply 9y ago
  They also control the currency and as a result eat up a few percentage of global gdp via signorage.
  - pc86 9y ago
    You mean seigniorage, and no they don't "eat up a few percentage of global gdp."
    - devoply 9y ago
      From Wikipedia: "Economists regard seigniorage as a form of inflation tax, redistributing real resources to the currency issuer. Issuing new currency, rather than collecting taxes paid out of the existing money stock, is then considered in effect a tax that falls on those who hold the existing currency.[4] Inflation of the money supply in the long run may cause—and, all other things being equal, will cause—a general rise in prices due to the reduced purchasing power of the currency."
      - Dylan16807 9y ago
        Yes, that's the definition. The problem is the amount. Going by this page[1], there's a net production of less than 30 million dollars per day. Let's round up to 11 billion per year. The M2 estimate[2] of US money supply is 13495 billion dollars. That's a seigniorage tax of less than a tenth of a percent per year. It's also less than a tenth of a percent of US GDP alone. [1] https://www.factmonster.com/math/money/facts-about-us-money https://www.factmonster.com/math/money/facts-about-us-money [2] https://tradingeconomics.com/united-states/money-supply-m2 https://tradingeconomics.com/united-states/money-supply-m2
- thebooktocome 9y ago
  The USPS' profit margin is aggressively controlled by Congress, which makes sense considering that they're a Constitutionally mandated monopoly. However, it also means the Republicans can inflict their "starve the beast" strategy on it at will.
- c0nducktr 9y ago
  > The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations. https://about.usps.com/who-we-are/postal-facts/top-10-things-to-know.htm https://about.usps.com/who-we-are/postal-facts/top-10-things...
  - s73ver 9y ago
    Not to mention, they are required to prefund pensions for their employees, something no other entity is required to do. They also are required to take a letter from anywhere in the country, and deliver it to anywhere else in the country, within a couple days, for less than 50 cents.
  - josinalvo 9y ago
    > for operating expenses that raises some eyebrows :P Why this qualifier? What do they receive tax dollars for?
    - oicu812 9y ago
      They receive $100 million in tax dollars per year to subsidize blind and overseas citizens. They also get $18 billion per year in tax benefits. http://www.politifact.com/georgia/statements/2013/jul/24/american-postal-workers-union/postal-service-claim-not-fully-target/ http://www.politifact.com/georgia/statements/2013/jul/24/ame... http://fortune.com/2015/03/27/us-postal-service/ http://fortune.com/2015/03/27/us-postal-service/
  - deleted 9y ago
    [deleted]
vacri 9y ago
> The USPS inspector general’s office estimated that the USPS lost $79 million in fiscal year 2013 delivering this foreign treaty mail. $79M is governmental chickenfeed, given how much this service improves the quality of life of its citizens. For perspective, it's moderately less than the cost of one (1) F35.
- devoply 9y ago
  honestly it easily adds a few billion to the aggregate pockets of consumers who don't have to go through middle men.
  - apsec112 9y ago
    "but muh private profit? muh job creation? muh competition?" Please don't comment like this on Hacker News. It lowers the quality of discussion for everyone.
    - devoply 9y ago
      noted.
    - hfern 9y ago
      > Don't comment like this on Hacker News. Why not? I think he is correct -- the benefits to the average american are far more than $75m. > "but muh private profit? muh job creation? muh competition?" There is no need to be rude.
      - apsec112 9y ago
        "muh private profit" etc. is the comment I was replying to
        icebraining 9y ago
        Just to make it clearer for people reading now, the (now flagged) post was edited after the reply.
basicplus2 9y ago
In Australia it seems that USPS is charging us millions on imports from The US to discourage us buying anything from the US Small items can be a fraction of the cost of the freight from the US.
csydas 9y ago
> All of this is little comfort to McGrath, who chafes at the thought of the Postal Service helping Chinese merchants poach his customers. “All of us sellers are selling a lot of Chinese goods in America but at least we’re creating jobs, making money, and adding to the economy,” he said. “But when people buy direct from China that’s adding nothing to the American economy.” I understand the seller's frustration - their means of supporting themselves has been taken away, but I'm not sure I buy the argument that we need the intermediary just to "add to the economy". To me it just seems like an unsustainable business model that was destined to die once global communication became much easier, not just because of the various treaties and agreements of postal services. The moment that chinese sellers could get a site available to a global audience, the need for an intermediary vanished; before you essentially paid for the connection; an extra $18 on a remote controlled toy boat was paying for access to the seller's inventory, supplied by his Chinese connections. Now, there's no need for that connection or that warehouse - the visibility for any foreign seller is much greater, even to the point that it probably would still be valuable even without the USPS trade deal. It's unfortunate, but this just seems like a model that was destined to die.
- devoply 9y ago
  All middle men are destined to be automated out by the system, if they add no value then sooner rather than later. However, people selling stuff online in niche markets are still somehow surviving, but sooner or later someone will figure out where they are hiding and get them too. It's all a matter of time.
  - jpalomaki 9y ago
    In this case small players can have advantages that big players don't. For example should I start shipping container loads of fidget spinners (latest thing among the youth here) from China to Finland I would have all kinds of things to take care of. User manuals, product safety issues, customs, local value added tax, consumer protection things etc. Small sellers operating from China can escape many of these.
    - 9y ago
jlebrech 9y ago
I often thought the postal service SHOULD be a public service but it's publicly funded at a loss then no.
- pizza234 9y ago
  This isn't an obvious conclusion; what if a public service yearly loses a certain amount of money, in order for the public to save twice as much? This is a reasonable interpretation of this case, which would make the isolated loss advantageous in the big picture. Of course, this is a separate concept from seller losing jobs.
- Brotkrumen 9y ago
  Think of it this way: every one of the 350 million americans chip in 0.22$ a year to get their iPhone cable for 1.80$ instead of 40$. Still sound bad?
  - chx 9y ago
    To me this sounds an amazing deal. 78M a year is not a lot of money on a federal yearly scale. It's pocket change, in fact. The savings to everyone who orders anything is quite big so it seems like a fantastic investment. USPS revenue yearly is over 70 billion aka a thousand times more. Their problem is the six billion accrual of unpaid mandatory retiree health payments. 80M is irrevelant.
  - danellis 9y ago
    Why do some people write the dollar sign after the number? Similarly, why do some people write the percent sign before the number? I initially thought it might be a locale thing (like swapping commas and decimal points), but I've seen a lot of Americans doing it too.
    - soneil 9y ago
      For currency, I think it's just a mental consistency. I type 1%, I say one percent. I type $1, I say dollar one? I understand it's not correct at all. But I can internally justify why people type "1$" when they're thinking "one dollar".
andrewf 9y ago
Australia Post has long had the same problem with shipments from the US. They've recently opened a warehouse in Oregon, where they'll receive domestic US shipments, and deliver to you in Australia for a separate fee. https://shopmate.auspost.com.au https://shopmate.auspost.com.au
- prawn 9y ago
  And shipments from Asia. I recently found something for sale in Australia: $15 plus $10 shipping within Australia. I bought the exact same product direct from China/HK and it was under $4 including international shipping. I imagine the labour cost is one contributor within Australia. Without volume, no one wants to be doing runs to the post office for a dollar. With products from the US, I've routinely bought things from Amazon and shipped US-AU and saved money easily - hard drives, memory cards, and even things for which the shipping should make it cost prohibitive like a full-size baby pram.
  - distances 9y ago
    It's the same in Europe. Local online merchants have no way to compete since just the national delivery costs multiple times the net price of a foreign import product. It's good for consumers, but also means the domestic e-commerce is severely underdeveloped.
    - consp 9y ago
      Not quite, some goods have very high tariffs and added import taxes and are checked upon heavily like (where I live) bicycles, anything containing a flat screen and non-consumer electronics (parts). If you get caught (and you will at one time) you pay the VAT, import taxes and sometimes a fine for not reporting which amounts to more than what you would have payed locally. It is by no means a fix but the government is not always making it as easy as you would like to skip on duties added to level the playing field. Postage aside, which is skewed by treaties, the main purpose of import tariffs is to offset labor costs which they do pretty well in my opinion. I do have to say that in my experience buying from both China and local (Europe) the European product are always of higher quality if you buy cheap, even if the country of origin was China in the first place. Since that is not always needed, you buy China, otherwise local.
kita99 9y ago
So the Postal Service are willing to operate at a loss just to ride the e-commerce boom and grow its Asia presence? Why? Am I missing something here?
- jakob223 9y ago
  They have to offer reduced price mail through this treaty, and they'd rather do the ePacket thing which is less of a loss.
- Zarath 9y ago
  The government, by definition, operates at a loss. It isn't a business.
Const-me 9y ago
> In most cases, however, postal services still charge each other less than they would charge their own citizens for moving a package across the country. Very likely, it costs them less. Own citizens don’t drop their packages at cargo hubs, already sorted and payed for by wire transfer. Pickup, sorting and processing payments have costs.
- kuschku 9y ago
  Actually, with DHL in Germany, that’s exactly what many people do. The cheapest version is paying by wire and getting the code to put on the package via their website, and dropping the parcel at a package hub, the second cheapest version s paying by wire and getting the code to put on the package via their website, then dropping off at a DHL store, the third cheapest version is getting it stamped and dropping it off at a DHL store, and the most expensive option (about 20$ more per parcel!) is getting it picked up by the delivery guy. Which is why DHL can offer prices such as 4€ for a cross-Europe 1kg 30x30x60 package.
Freak_NL 9y ago
This is a global phenomenon by the way. European postal services have the same 'problem'. The way international postal agreements work mean that China's postal system is effectively being subsidised by the postal services in (at least) the US and the EU¹. Interestingly, this volume of shipping offers chances as well for (former) national postal services. In the Netherlands the privatised former national postal service is partnering with AliBaba to deliver goods in as little as two weeks from China to your (Dutch) doorstep (currently three to four weeks is common). 1: http://fortune.com/2015/03/11/united-nations-subsidy-chinese-shipping/ http://fortune.com/2015/03/11/united-nations-subsidy-chinese...
Brotkrumen 9y ago
Like every good entrepreneur McGrath wants globalization for (only his) company and isolationism for the consumer. Economically, getting goods for as fraction of the former price to consumers for just 78million a year sounds like a fantastic deal.
salimmadjd 9y ago
I've ordered very small camera accessory stuff on Ebay that arrived from China. I could never understand how they would be able to manufacture, package, ship this across half the world for less what I pay on postage to send my tax returns to IRS.
dis-sys 9y ago
Now this is boring. People keep complaining about the fact that China's cheap stuff is flooding the US market. How about exporting some expensive US made stuff to China to close the gap of trading? Oh, you can't. Chinese living in China are not even allowed to buy Intel Xeon Phi cards, export license is required to safeguard your nation. Maybe make the US short term visa more accessible to Chinese tourists so they can spend more cash in the US? Oh, you can't. tens of millions Chinese with science/engineering degrees will have to go through the mantis check managed by FBI to make sure they won't steal your nuke techs when visiting the casinos in Vegas. It can take up to several years to get a US tourist visa. https://en.wikipedia.org/wiki/Security_Advisory_Opinion https://en.wikipedia.org/wiki/Security_Advisory_Opinion
- chrinic726 9y ago
  The job of the US government is to vehemently scrutinize and analyze Chinese (and non US) nationals when they enter the country. The job of the US government is to protect US citizens. If a Chinese citizen is inconvenienced by these policies, well, too bad. They can visit a different country. But in the end, they will still visit New York.
  - Murkin 9y ago
    AFAIK the OP means that this hurts US more than Chinese tourists as the Chinese money is spent somewhere else and not in US.
  - JumpCrisscross 9y ago
    > But in the end, they will still visit New York New Yorker here. No they won't. These policies end up with me having to fly to Hong Kong to oversee a Hong Kong team that deals with clients who got tired, over the past 15 years, with flying to the United States.
  - 77pt77 9y ago
    > But in the end, they will still visit New York. Guess you haven't travelled much.
  - 9y ago
phlo 9y ago
These costs were related to the terminal dues that USPS (and other postal services around the world) charge each other in exchange for distributing parcels in their respective countries. [1] The system dates back to the 1960s and was implemented to ensure people could exchange letters internationally -- and the massive increase in small international parcels from e-commerce transactions is now overwhelming it. Things will change starting next year. The Universal Postal Union (UPU) has adopted a new revision of the terminal dues system [2] that classes bulky letters and small parcels differently from normal mail. [1] https://en.wikipedia.org/wiki/UPU https://en.wikipedia.org/wiki/UPU [2] http://news.upu.int/no_cache/nd/member-countries-adopt-new-terminal-dues-system/ http://news.upu.int/no_cache/nd/member-countries-adopt-new-t...
- mistermann 9y ago
  > Countries are currently classified by their level of development, meaning those in the most developed groups pay contributions into the Quality of Service Fund on top of terminal dues to those in the less developed group. This mark up goes toward development projects in the recipient country. Does this mean "less developed" China will end up being subsidized even more?
  - phlo 9y ago
    The change to the regime for bulky letters and parcels is not the same as the group mergers. I was referring mostly to the former, which will increase the dues for bulky letters and small parcels to a higher per-kg-rate than the current rate that applies to all mail. The latter change merges some groups but will, to my understanding, not affect China. Groups 1.2 and 2 (countries which joined the terminal dues target system in 2010 and 2012, respectively) will get merged; as will the countries in groups 4 and 5, which are currently transition into the target system. China appears to remain in group 3. [1] [1] http://www.upu.int/uploads/tx_sbdownloader/listCountryClassificationEn.pdf http://www.upu.int/uploads/tx_sbdownloader/listCountryClassi...
    - mistermann 9y ago
      To keep it simple: will China finally have to pay more (because they are also shipping across the sea) to ship a package to middle America than an American at <wherever the port is where the Chinese goods are unloaded>? Or will it just be less of a subsidy.
phkahler 9y ago
The US postal service has had an inaccurate price model forever. Bulk mail (junk mail) has always been way cheaper to send than first class. It's for the same reason - they act like delivery is almost no-cost. They assume the system is already in place, that someone will swing by your home daily to drop stuff off and pick stuff up. Then adding an item to the pile is really of little consequence. The reality though (for a time at least) became that the mail was largely junk being subsidized by the high price of a few first class pieces of mail. They've needed to fix the pricing model for a very long time.
- mcbauer 9y ago
  Actually I think the article is just PR. While the post offices in north America and Europe deliver Chinese goods at no cost, at the same time Chinese people send millions of very expensive packages to China. For example Chinese parents who are well off want to have genuine baby food from western countries since the milk powder scandal that hit China a few years ago. They pay tremendous surcharges for a package of baby food and it must be sent from the west. The same goes for luxury goods. You want to be sure to get a genuine Louis Vuitton bag? Get someone you know to buy it in France and have it shipped to you. The French postal office will cash in 50€ while the costs are certainly far below that.
Shivetya 9y ago
I see this with many auctions which are direct from China. Incredibly low auction prices and similar shipping. Do a search for antique Chinese porcelain and sort by lowest ship/price. You will find many items starting at one cent. I have won a few at a dollar or lower and always received the item. so I have to assume there is no real ship cost to the sender. even the packaging if done here would cost more than what I have paid; usually custom styrofoam that perfectly encloses the item but just remove tape and it opens. Considering their dollar a package deal with Amazon for last mile I figure they have many ways to lose money
ykler 9y ago
It seems like it would have been good for them to mention that the white paper they cite giving the estimate of $79 million dollars lost on delivery of inbound international mail at artificially low treaty prices in 2013 also estimates savings of $136 million on delivery of outbound mail at artificially low treaty prices in 2013 for a net profit of $57 million. Also, it estimates that the inbound rates will increase 13% per year between 2014 and 2017, while the rates the US pays foreign countries will only increase 3% a year over this period.
WhiteOwlLion 9y ago
Your competitive advantage is that you can deliver the same product within a more predictable window. Getting something from China by surface can take 7 days to 8 weeks. If you use USPS service domestically, you get quasi-tracking with a shorter delivery window of 1 to 3 days (usually).
hellbanner 9y ago
Wow, if they charged foregin deliveries as much as domestic deliveries, then maybe they could stop spam in mailboxes. Does anyone know how to stop junkmail? Postal workers have told me they can't not deliver it - even if you pay for a PO Box.
- Sebguer 9y ago
  https://dmachoice.thedma.org/register.php https://dmachoice.thedma.org/register.php Is recommended by the FTC.
  - hellbanner 9y ago
    News to me, thanks.
- ErikVandeWater 9y ago
  There was a startup that had a subscription model but I think they got in trouble with USPS/some regulator - because of lobbying by spammers.
- undersuit 9y ago
  >Does anyone know how to stop junkmail? Allow USPS to raise their prices?
- jonknee 9y ago
  > Does anyone know how to stop junkmail? It's the vast majority of mail and keeps the USPS in business. I guess we could ban it and jack the price of stamps way up, but I have a feeling that would be unpopular.
treebeard901 9y ago
> “But when people buy direct from China that’s adding nothing to the American economy.” Wait a minute... This argument doesn't make any sense. The post office is delivering to a US citizen that supports said postal services through paying taxes. If they choose to purchase from China, Amazon, or eBay that is their choice. Maybe people who are not citizens and have not paid any taxes benefit from this but I suspect those are extreme edge cases.
- dustinblake 9y ago
  The postal service is not taxpayer funded! Yes, they are indicated in the Constitution, and they must service each and every little town, and they must go to Congress to gain approval for rate increases, but they are not supported by any tax revenue. https://about.usps.com/who-we-are/postal-facts/top-10-things-to-know.htm https://about.usps.com/who-we-are/postal-facts/top-10-things...
  - treebeard901 9y ago
    Yes, I was mistaken. Thank you for the clarification. In a way, that makes the original complaint even more ridiculous because it is literally a business transaction between two private entities and a private intermediary.
  - oicu812 9y ago
    This is not true, but a common debunked claim from the postal union. The postal service gets $18 billion per year in tax benefits including exemption from property taxes and vehicle registrations as well as below-market borrowing costs. http://fortune.com/2015/03/27/us-postal-service/ http://fortune.com/2015/03/27/us-postal-service/ http://www.politifact.com/georgia/statements/2013/jul/24/american-postal-workers-union/postal-service-claim-not-fully-target/ http://www.politifact.com/georgia/statements/2013/jul/24/ame...
pg_bot 9y ago
We should follow the lead of Sweden, Germany, Japan, and Great Britain and begin to privatize the US postal service. There is no need for the Federal Government to control pricing, delivery, or market entry for postal services.
devy 9y ago
This is another example of WaPo's overly sensational piece. To be fair, USPS loses BILLIONS on retirement funding, reduced mailing due to the dominance of Internet age with emails and other competitions. [1] $79 million in fiscal year 2013 loss due to this type of shipments is a drop in the bucket comparing to the mishaps in operations and reduced volumes at $3B/quarter in 2011. [1]: https://en.wikipedia.org/wiki/United_States_Postal_Service#Revenue_decline_and_planned_cuts https://en.wikipedia.org/wiki/United_States_Postal_Service#R...
- gervase 9y ago
  To be fair, the USPS is only "losing billions" on retirement funding due to the pre-funding obligations imposed by Section 8909a of the Postal Accountability and Enhancement Act of 2006, not obligations owed to current employees or retirees. [0] There was some speculation at the time that this was a regulatory attempt to "tie their hands" on investments to address the online shopping market, which has more than offset the decline in carriage due to email. For example, during the 10 year period covered by the pre-funding obligation, UPS managed to increase revenues on domestic shipping by ~45%. [1] Excluding these mandatory payments, the USPS is actually slightly profitable, to the tune of (conservatively) $92M as of 2015 [2]. In this context, a $79M loss is a major portion of their annual profits, although still a drop in the bucket compared to their gross revenue. [0]: https://www.govtrack.us/congress/bills/109/hr6407/text https://www.govtrack.us/congress/bills/109/hr6407/text [1]: http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-reportsannual http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-re... [2]: https://about.usps.com/who-we-are/financials/annual-reports/fy2015.pdf https://about.usps.com/who-we-are/financials/annual-reports/...
gumby 9y ago
Nice case of peering agreements in the real world! (Of course these peering agreements come from a postal union treaty rather that individual 1:1 agreements among private parties, but really they are the same thing). The number of routes is small enough that there's no need for postal BGP :-)
icetoad 9y ago
I simply don't buy from Chinese sellers on ebay. I sort by location distance and then work my way through that list or lowest price and skip china entries. I am not waiting 3-6 weeks for something just to save $2. Lets be honest, something that cheap, isn't even worth shipping back if its broken ( and most of the time they will just ship another ).
Hasz 9y ago
When you buy from a US seller, you're buying time. A typical ePacket is about 7 to 14 days from shipment, while first class mail is generally about 3 days from shipment. China Post is worse, anywhere from 30 to 60 days is common. Yanwen economic mail is similar, as are the litany of other carriers used to exploit shipping restrictions on batteries and other items. Is it a great model? Maybe not, especially for more expensive items. But for low cost, low value items shipped only via china post, there will always be a US based box-shifter willing to collect that 20% premium on time.
allan_golds 9y ago
Bad link.

151 points by acjohnson55 9y ago

And the fun thing is that USPS is probably often funded by government debt too. The US economy has been running a trade deficit since the 1980s at least and we went off the gold standard in 1971.

devoply 9y ago
They also control the currency and as a result eat up a few percentage of global gdp via signorage.
- pc86 9y ago
  You mean seigniorage, and no they don't "eat up a few percentage of global gdp."
  - devoply 9y ago
    From Wikipedia: "Economists regard seigniorage as a form of inflation tax, redistributing real resources to the currency issuer. Issuing new currency, rather than collecting taxes paid out of the existing money stock, is then considered in effect a tax that falls on those who hold the existing currency.[4] Inflation of the money supply in the long run may cause—and, all other things being equal, will cause—a general rise in prices due to the reduced purchasing power of the currency."
    - Dylan16807 9y ago
      Yes, that's the definition. The problem is the amount. Going by this page[1], there's a net production of less than 30 million dollars per day. Let's round up to 11 billion per year. The M2 estimate[2] of US money supply is 13495 billion dollars. That's a seigniorage tax of less than a tenth of a percent per year. It's also less than a tenth of a percent of US GDP alone. [1] https://www.factmonster.com/math/money/facts-about-us-money https://www.factmonster.com/math/money/facts-about-us-money [2] https://tradingeconomics.com/united-states/money-supply-m2 https://tradingeconomics.com/united-states/money-supply-m2
thebooktocome 9y ago
The USPS' profit margin is aggressively controlled by Congress, which makes sense considering that they're a Constitutionally mandated monopoly. However, it also means the Republicans can inflict their "starve the beast" strategy on it at will.
c0nducktr 9y ago
> The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations. https://about.usps.com/who-we-are/postal-facts/top-10-things-to-know.htm https://about.usps.com/who-we-are/postal-facts/top-10-things...
- s73ver 9y ago
  Not to mention, they are required to prefund pensions for their employees, something no other entity is required to do. They also are required to take a letter from anywhere in the country, and deliver it to anywhere else in the country, within a couple days, for less than 50 cents.
- josinalvo 9y ago
  > for operating expenses that raises some eyebrows :P Why this qualifier? What do they receive tax dollars for?
  - oicu812 9y ago
    They receive $100 million in tax dollars per year to subsidize blind and overseas citizens. They also get $18 billion per year in tax benefits. http://www.politifact.com/georgia/statements/2013/jul/24/american-postal-workers-union/postal-service-claim-not-fully-target/ http://www.politifact.com/georgia/statements/2013/jul/24/ame... http://fortune.com/2015/03/27/us-postal-service/ http://fortune.com/2015/03/27/us-postal-service/
- deleted 9y ago
  [deleted]

vacri 9y ago

> The USPS inspector general’s office estimated that the USPS lost $79 million in fiscal year 2013 delivering this foreign treaty mail. $79M is governmental chickenfeed, given how much this service improves the quality of life of its citizens. For perspective, it's moderately less than the cost of one (1) F35.

devoply 9y ago
honestly it easily adds a few billion to the aggregate pockets of consumers who don't have to go through middle men.
- apsec112 9y ago
  "but muh private profit? muh job creation? muh competition?" Please don't comment like this on Hacker News. It lowers the quality of discussion for everyone.
  - devoply 9y ago
    noted.
  - hfern 9y ago
    > Don't comment like this on Hacker News. Why not? I think he is correct -- the benefits to the average american are far more than $75m. > "but muh private profit? muh job creation? muh competition?" There is no need to be rude.
    - apsec112 9y ago
      "muh private profit" etc. is the comment I was replying to
      - icebraining 9y ago
        Just to make it clearer for people reading now, the (now flagged) post was edited after the reply.

basicplus2 9y ago

In Australia it seems that USPS is charging us millions on imports from The US to discourage us buying anything from the US Small items can be a fraction of the cost of the freight from the US.

csydas 9y ago

> All of this is little comfort to McGrath, who chafes at the thought of the Postal Service helping Chinese merchants poach his customers. “All of us sellers are selling a lot of Chinese goods in America but at least we’re creating jobs, making money, and adding to the economy,” he said. “But when people buy direct from China that’s adding nothing to the American economy.” I understand the seller's frustration - their means of supporting themselves has been taken away, but I'm not sure I buy the argument that we need the intermediary just to "add to the economy". To me it just seems like an unsustainable business model that was destined to die once global communication became much easier, not just because of the various treaties and agreements of postal services. The moment that chinese sellers could get a site available to a global audience, the need for an intermediary vanished; before you essentially paid for the connection; an extra $18 on a remote controlled toy boat was paying for access to the seller's inventory, supplied by his Chinese connections. Now, there's no need for that connection or that warehouse - the visibility for any foreign seller is much greater, even to the point that it probably would still be valuable even without the USPS trade deal. It's unfortunate, but this just seems like a model that was destined to die.

devoply 9y ago
All middle men are destined to be automated out by the system, if they add no value then sooner rather than later. However, people selling stuff online in niche markets are still somehow surviving, but sooner or later someone will figure out where they are hiding and get them too. It's all a matter of time.
- jpalomaki 9y ago
  In this case small players can have advantages that big players don't. For example should I start shipping container loads of fidget spinners (latest thing among the youth here) from China to Finland I would have all kinds of things to take care of. User manuals, product safety issues, customs, local value added tax, consumer protection things etc. Small sellers operating from China can escape many of these.
  - 9y ago

jlebrech 9y ago

I often thought the postal service SHOULD be a public service but it's publicly funded at a loss then no.

pizza234 9y ago
This isn't an obvious conclusion; what if a public service yearly loses a certain amount of money, in order for the public to save twice as much? This is a reasonable interpretation of this case, which would make the isolated loss advantageous in the big picture. Of course, this is a separate concept from seller losing jobs.
Brotkrumen 9y ago
Think of it this way: every one of the 350 million americans chip in 0.22$ a year to get their iPhone cable for 1.80$ instead of 40$. Still sound bad?
- chx 9y ago
  To me this sounds an amazing deal. 78M a year is not a lot of money on a federal yearly scale. It's pocket change, in fact. The savings to everyone who orders anything is quite big so it seems like a fantastic investment. USPS revenue yearly is over 70 billion aka a thousand times more. Their problem is the six billion accrual of unpaid mandatory retiree health payments. 80M is irrevelant.
- danellis 9y ago
  Why do some people write the dollar sign after the number? Similarly, why do some people write the percent sign before the number? I initially thought it might be a locale thing (like swapping commas and decimal points), but I've seen a lot of Americans doing it too.
  - soneil 9y ago
    For currency, I think it's just a mental consistency. I type 1%, I say one percent. I type $1, I say dollar one? I understand it's not correct at all. But I can internally justify why people type "1$" when they're thinking "one dollar".

andrewf 9y ago

Australia Post has long had the same problem with shipments from the US. They've recently opened a warehouse in Oregon, where they'll receive domestic US shipments, and deliver to you in Australia for a separate fee. https://shopmate.auspost.com.au https://shopmate.auspost.com.au

prawn 9y ago
And shipments from Asia. I recently found something for sale in Australia: $15 plus $10 shipping within Australia. I bought the exact same product direct from China/HK and it was under $4 including international shipping. I imagine the labour cost is one contributor within Australia. Without volume, no one wants to be doing runs to the post office for a dollar. With products from the US, I've routinely bought things from Amazon and shipped US-AU and saved money easily - hard drives, memory cards, and even things for which the shipping should make it cost prohibitive like a full-size baby pram.
- distances 9y ago
  It's the same in Europe. Local online merchants have no way to compete since just the national delivery costs multiple times the net price of a foreign import product. It's good for consumers, but also means the domestic e-commerce is severely underdeveloped.
  - consp 9y ago
    Not quite, some goods have very high tariffs and added import taxes and are checked upon heavily like (where I live) bicycles, anything containing a flat screen and non-consumer electronics (parts). If you get caught (and you will at one time) you pay the VAT, import taxes and sometimes a fine for not reporting which amounts to more than what you would have payed locally. It is by no means a fix but the government is not always making it as easy as you would like to skip on duties added to level the playing field. Postage aside, which is skewed by treaties, the main purpose of import tariffs is to offset labor costs which they do pretty well in my opinion. I do have to say that in my experience buying from both China and local (Europe) the European product are always of higher quality if you buy cheap, even if the country of origin was China in the first place. Since that is not always needed, you buy China, otherwise local.

kita99 9y ago

So the Postal Service are willing to operate at a loss just to ride the e-commerce boom and grow its Asia presence? Why? Am I missing something here?

jakob223 9y ago
They have to offer reduced price mail through this treaty, and they'd rather do the ePacket thing which is less of a loss.
Zarath 9y ago
The government, by definition, operates at a loss. It isn't a business.

Const-me 9y ago

> In most cases, however, postal services still charge each other less than they would charge their own citizens for moving a package across the country. Very likely, it costs them less. Own citizens don’t drop their packages at cargo hubs, already sorted and payed for by wire transfer. Pickup, sorting and processing payments have costs.

kuschku 9y ago
Actually, with DHL in Germany, that’s exactly what many people do. The cheapest version is paying by wire and getting the code to put on the package via their website, and dropping the parcel at a package hub, the second cheapest version s paying by wire and getting the code to put on the package via their website, then dropping off at a DHL store, the third cheapest version is getting it stamped and dropping it off at a DHL store, and the most expensive option (about 20$ more per parcel!) is getting it picked up by the delivery guy. Which is why DHL can offer prices such as 4€ for a cross-Europe 1kg 30x30x60 package.

Freak_NL 9y ago

This is a global phenomenon by the way. European postal services have the same 'problem'. The way international postal agreements work mean that China's postal system is effectively being subsidised by the postal services in (at least) the US and the EU¹. Interestingly, this volume of shipping offers chances as well for (former) national postal services. In the Netherlands the privatised former national postal service is partnering with AliBaba to deliver goods in as little as two weeks from China to your (Dutch) doorstep (currently three to four weeks is common). 1: http://fortune.com/2015/03/11/united-nations-subsidy-chinese-shipping/ http://fortune.com/2015/03/11/united-nations-subsidy-chinese...

Brotkrumen 9y ago

Like every good entrepreneur McGrath wants globalization for (only his) company and isolationism for the consumer. Economically, getting goods for as fraction of the former price to consumers for just 78million a year sounds like a fantastic deal.

salimmadjd 9y ago

I've ordered very small camera accessory stuff on Ebay that arrived from China. I could never understand how they would be able to manufacture, package, ship this across half the world for less what I pay on postage to send my tax returns to IRS.

dis-sys 9y ago

Now this is boring. People keep complaining about the fact that China's cheap stuff is flooding the US market. How about exporting some expensive US made stuff to China to close the gap of trading? Oh, you can't. Chinese living in China are not even allowed to buy Intel Xeon Phi cards, export license is required to safeguard your nation. Maybe make the US short term visa more accessible to Chinese tourists so they can spend more cash in the US? Oh, you can't. tens of millions Chinese with science/engineering degrees will have to go through the mantis check managed by FBI to make sure they won't steal your nuke techs when visiting the casinos in Vegas. It can take up to several years to get a US tourist visa. https://en.wikipedia.org/wiki/Security_Advisory_Opinion https://en.wikipedia.org/wiki/Security_Advisory_Opinion

chrinic726 9y ago
The job of the US government is to vehemently scrutinize and analyze Chinese (and non US) nationals when they enter the country. The job of the US government is to protect US citizens. If a Chinese citizen is inconvenienced by these policies, well, too bad. They can visit a different country. But in the end, they will still visit New York.
- Murkin 9y ago
  AFAIK the OP means that this hurts US more than Chinese tourists as the Chinese money is spent somewhere else and not in US.
- JumpCrisscross 9y ago
  > But in the end, they will still visit New York New Yorker here. No they won't. These policies end up with me having to fly to Hong Kong to oversee a Hong Kong team that deals with clients who got tired, over the past 15 years, with flying to the United States.
- 77pt77 9y ago
  > But in the end, they will still visit New York. Guess you haven't travelled much.
- 9y ago

phlo 9y ago

These costs were related to the terminal dues that USPS (and other postal services around the world) charge each other in exchange for distributing parcels in their respective countries. [1] The system dates back to the 1960s and was implemented to ensure people could exchange letters internationally -- and the massive increase in small international parcels from e-commerce transactions is now overwhelming it. Things will change starting next year. The Universal Postal Union (UPU) has adopted a new revision of the terminal dues system [2] that classes bulky letters and small parcels differently from normal mail. [1] https://en.wikipedia.org/wiki/UPU https://en.wikipedia.org/wiki/UPU [2] http://news.upu.int/no_cache/nd/member-countries-adopt-new-terminal-dues-system/ http://news.upu.int/no_cache/nd/member-countries-adopt-new-t...

mistermann 9y ago
> Countries are currently classified by their level of development, meaning those in the most developed groups pay contributions into the Quality of Service Fund on top of terminal dues to those in the less developed group. This mark up goes toward development projects in the recipient country. Does this mean "less developed" China will end up being subsidized even more?
- phlo 9y ago
  The change to the regime for bulky letters and parcels is not the same as the group mergers. I was referring mostly to the former, which will increase the dues for bulky letters and small parcels to a higher per-kg-rate than the current rate that applies to all mail. The latter change merges some groups but will, to my understanding, not affect China. Groups 1.2 and 2 (countries which joined the terminal dues target system in 2010 and 2012, respectively) will get merged; as will the countries in groups 4 and 5, which are currently transition into the target system. China appears to remain in group 3. [1] [1] http://www.upu.int/uploads/tx_sbdownloader/listCountryClassificationEn.pdf http://www.upu.int/uploads/tx_sbdownloader/listCountryClassi...
  - mistermann 9y ago
    To keep it simple: will China finally have to pay more (because they are also shipping across the sea) to ship a package to middle America than an American at <wherever the port is where the Chinese goods are unloaded>? Or will it just be less of a subsidy.

phkahler 9y ago

The US postal service has had an inaccurate price model forever. Bulk mail (junk mail) has always been way cheaper to send than first class. It's for the same reason - they act like delivery is almost no-cost. They assume the system is already in place, that someone will swing by your home daily to drop stuff off and pick stuff up. Then adding an item to the pile is really of little consequence. The reality though (for a time at least) became that the mail was largely junk being subsidized by the high price of a few first class pieces of mail. They've needed to fix the pricing model for a very long time.

mcbauer 9y ago
Actually I think the article is just PR. While the post offices in north America and Europe deliver Chinese goods at no cost, at the same time Chinese people send millions of very expensive packages to China. For example Chinese parents who are well off want to have genuine baby food from western countries since the milk powder scandal that hit China a few years ago. They pay tremendous surcharges for a package of baby food and it must be sent from the west. The same goes for luxury goods. You want to be sure to get a genuine Louis Vuitton bag? Get someone you know to buy it in France and have it shipped to you. The French postal office will cash in 50€ while the costs are certainly far below that.

Shivetya 9y ago

I see this with many auctions which are direct from China. Incredibly low auction prices and similar shipping. Do a search for antique Chinese porcelain and sort by lowest ship/price. You will find many items starting at one cent. I have won a few at a dollar or lower and always received the item. so I have to assume there is no real ship cost to the sender. even the packaging if done here would cost more than what I have paid; usually custom styrofoam that perfectly encloses the item but just remove tape and it opens. Considering their dollar a package deal with Amazon for last mile I figure they have many ways to lose money

ykler 9y ago

It seems like it would have been good for them to mention that the white paper they cite giving the estimate of $79 million dollars lost on delivery of inbound international mail at artificially low treaty prices in 2013 also estimates savings of $136 million on delivery of outbound mail at artificially low treaty prices in 2013 for a net profit of $57 million. Also, it estimates that the inbound rates will increase 13% per year between 2014 and 2017, while the rates the US pays foreign countries will only increase 3% a year over this period.

WhiteOwlLion 9y ago

Your competitive advantage is that you can deliver the same product within a more predictable window. Getting something from China by surface can take 7 days to 8 weeks. If you use USPS service domestically, you get quasi-tracking with a shorter delivery window of 1 to 3 days (usually).

hellbanner 9y ago

Wow, if they charged foregin deliveries as much as domestic deliveries, then maybe they could stop spam in mailboxes. Does anyone know how to stop junkmail? Postal workers have told me they can't not deliver it - even if you pay for a PO Box.

Sebguer 9y ago
https://dmachoice.thedma.org/register.php https://dmachoice.thedma.org/register.php Is recommended by the FTC.
- hellbanner 9y ago
  News to me, thanks.
ErikVandeWater 9y ago
There was a startup that had a subscription model but I think they got in trouble with USPS/some regulator - because of lobbying by spammers.
undersuit 9y ago
>Does anyone know how to stop junkmail? Allow USPS to raise their prices?
jonknee 9y ago
> Does anyone know how to stop junkmail? It's the vast majority of mail and keeps the USPS in business. I guess we could ban it and jack the price of stamps way up, but I have a feeling that would be unpopular.

treebeard901 9y ago

> “But when people buy direct from China that’s adding nothing to the American economy.” Wait a minute... This argument doesn't make any sense. The post office is delivering to a US citizen that supports said postal services through paying taxes. If they choose to purchase from China, Amazon, or eBay that is their choice. Maybe people who are not citizens and have not paid any taxes benefit from this but I suspect those are extreme edge cases.

dustinblake 9y ago
The postal service is not taxpayer funded! Yes, they are indicated in the Constitution, and they must service each and every little town, and they must go to Congress to gain approval for rate increases, but they are not supported by any tax revenue. https://about.usps.com/who-we-are/postal-facts/top-10-things-to-know.htm https://about.usps.com/who-we-are/postal-facts/top-10-things...
- treebeard901 9y ago
  Yes, I was mistaken. Thank you for the clarification. In a way, that makes the original complaint even more ridiculous because it is literally a business transaction between two private entities and a private intermediary.
- oicu812 9y ago
  This is not true, but a common debunked claim from the postal union. The postal service gets $18 billion per year in tax benefits including exemption from property taxes and vehicle registrations as well as below-market borrowing costs. http://fortune.com/2015/03/27/us-postal-service/ http://fortune.com/2015/03/27/us-postal-service/ http://www.politifact.com/georgia/statements/2013/jul/24/american-postal-workers-union/postal-service-claim-not-fully-target/ http://www.politifact.com/georgia/statements/2013/jul/24/ame...

pg_bot 9y ago

We should follow the lead of Sweden, Germany, Japan, and Great Britain and begin to privatize the US postal service. There is no need for the Federal Government to control pricing, delivery, or market entry for postal services.

devy 9y ago

This is another example of WaPo's overly sensational piece. To be fair, USPS loses BILLIONS on retirement funding, reduced mailing due to the dominance of Internet age with emails and other competitions. [1] $79 million in fiscal year 2013 loss due to this type of shipments is a drop in the bucket comparing to the mishaps in operations and reduced volumes at $3B/quarter in 2011. [1]: https://en.wikipedia.org/wiki/United_States_Postal_Service#Revenue_decline_and_planned_cuts https://en.wikipedia.org/wiki/United_States_Postal_Service#R...

gervase 9y ago
To be fair, the USPS is only "losing billions" on retirement funding due to the pre-funding obligations imposed by Section 8909a of the Postal Accountability and Enhancement Act of 2006, not obligations owed to current employees or retirees. [0] There was some speculation at the time that this was a regulatory attempt to "tie their hands" on investments to address the online shopping market, which has more than offset the decline in carriage due to email. For example, during the 10 year period covered by the pre-funding obligation, UPS managed to increase revenues on domestic shipping by ~45%. [1] Excluding these mandatory payments, the USPS is actually slightly profitable, to the tune of (conservatively) $92M as of 2015 [2]. In this context, a $79M loss is a major portion of their annual profits, although still a drop in the bucket compared to their gross revenue. [0]: https://www.govtrack.us/congress/bills/109/hr6407/text https://www.govtrack.us/congress/bills/109/hr6407/text [1]: http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-reportsannual http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-re... [2]: https://about.usps.com/who-we-are/financials/annual-reports/fy2015.pdf https://about.usps.com/who-we-are/financials/annual-reports/...

gumby 9y ago

Nice case of peering agreements in the real world! (Of course these peering agreements come from a postal union treaty rather that individual 1:1 agreements among private parties, but really they are the same thing). The number of routes is small enough that there's no need for postal BGP :-)

icetoad 9y ago

I simply don't buy from Chinese sellers on ebay. I sort by location distance and then work my way through that list or lowest price and skip china entries. I am not waiting 3-6 weeks for something just to save $2. Lets be honest, something that cheap, isn't even worth shipping back if its broken ( and most of the time they will just ship another ).

Hasz 9y ago

When you buy from a US seller, you're buying time. A typical ePacket is about 7 to 14 days from shipment, while first class mail is generally about 3 days from shipment. China Post is worse, anywhere from 30 to 60 days is common. Yanwen economic mail is similar, as are the litany of other carriers used to exploit shipping restrictions on batteries and other items. Is it a great model? Maybe not, especially for more expensive items. But for low cost, low value items shipped only via china post, there will always be a US based box-shifter willing to collect that 20% premium on time.

allan_golds 9y ago

Bad link.