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Maybe - but why do you think the USPS won’t just pocket the difference? Are they in a competitive market for the class of packages they ship in the US? I don’t

Maybe - but why do you think the USPS won’t just pocket the difference? Are they in a competitive market for the class of packages they ship in the US? I don’t think I understand the competitive landscape for shipping well enough to understand your assumption.

pavpanchekha 7y ago
For packages the USPS is in a very competitive market, against UPS, DHS, and Fedex. The only market they have something approaching a monopoly on is regular letters. This ruling affects (IIRC) only small packages, but that's still a place where USPS competes. Also note that where USPS has a monopoly it's often where it is required by law to sell below costs. For example, delivering mail to Alaska and Hawaii is quite expensive, but US law requires uniform postage costs. The USPS is hampered by law in other ways. The UPU decision is one example; they also have fairly strict pension laws and they cannot raise prices without agreement from overseers (a price increase to 55¢ was just struck down in court). It's not totally clear that it's possible for USPS to run in the black while also being the mailer of last resort that it is today. (That said, perhaps mail is a government service worth subsidizing, though we can debate how much, and running in the black would be preferable.)
- CountSessine 7y ago
  Are FedEx and UPS subject to the UPU? Will this decision affect them? And are they currently shipping packages at a price that is comparable to USPS? If USPS is subsidizing international shipping from China by keeping domestic shipping charges high, how are they competing with FedEx and UPS? (BTW I agree with the other responders - this was an excellent summary for those of us not in the US)
  - davchana 7y ago
    IMO, no, they are not members of UPU. USPS is cheaper for domestic packages & letters for regular time, but fastest ones are almost same price.
    - selectodude 7y ago
      FedEx transports their overnight and priority international packages, so it makes sense that they’d be about the same price.
- jhall1468 7y ago
  That last paragraph is a great summary. I wanted to add: This was done with the intent of preventing USPS from being competitive. The law that forced it to pre-fund retirement also put enormous restrictions on its ability to increase prices.
  - opo 7y ago
    USPS pension funding gets brought up quite a bit as some kind of a conspiracy, but that doesn't appear to be accurate. The issue for the postal service is that the law was changed so that the USPS would start funding their retirement health care costs since they are promised to the workers and the projected costs had exploded. This was supported by a bipartisan commission, the GAO, and the Postal Service itself: >...Although retiree health benefits are often unfunded or poorly funded, two considerations suggested the Service’s retiree health care obligations should be funded: they are as firm a commitment as the Service’s pensions, and they had become enormous (about $75 billion by 2006). In 2003, the presidential commission suggested establishing a reserve fund for these obligations, and the Postal Service itself sent Congress a proposal for creating such a fund. >Prior to 2006, the Service simply paid retirees’ health benefit premiums when they came due. The Service put aside no money when it promised the future benefits. Paying benefits when they come due rather than funding them in advance is known as the pay-as-you-go or unfunded approach. >Early this century, Congress, the Administration, the U.S. General Accounting Office (GAO), and a bipartisan presidential commission expressed concern about the lack of funding. Although retiree health benefits are often unfunded or poorly funded, two considerations suggested the Service’s retiree health care obligations should be funded: they are as firm a commitment as the Service’s pensions, and they had become enormous (about $75 billion by 2006). In 2003, the presidential commission suggested establishing a reserve fund for these obligations, and the Postal Service itself sent Congress a proposal for creating such a fund. >In 2002-2003, it was discovered that the Service was contributing far more than necessary to fully fund its pensions, and Congress allowed the Service to contribute less. Congress decided the pension “savings” could help patch the retiree health benefit underfunding. In 2006, as part of the Postal Accountability and Enhancement Act (PAEA), the Postal Service Retirement Health Benefits Fund (RHBF) was established. Most of the Service’s contributions to the new fund could be paid using the pension “savings.” PAEA was bipartisan legislation with broad support. https://taxfoundation.org/primer-postal-service-retiree-health-benefits-fund/ https://taxfoundation.org/primer-postal-service-retiree-heal...
- saalweachter 7y ago
  The USPS also seems fairly cognizant that they need to embrace parcel delivery with the decline of first-class mail; for instance, they are continually expanding their Sunday parcel delivery.
- ineedasername 7y ago
  I don't see why the UPS should need to run in the black. It's a public service to have very accessible postal service around the country. Admittedly this was much more crucial when much communication took place this way, so it is less so today. But I think the public service aspect still stands. Many small businesses do lots of small, lightweight shipping of packages around the country that would be prohibitively expensive with UPS/FedEx. (I'm one of them: I run a small Etsy business that sells low-cost lightweight items that would be a lot harder if I couldn't ship for ~$3.50. UPS @ $11.00 would nearly double the cost of many items, and I don't sell enough for any sort of volume discount with FedEx or UPS)
- vageli 7y ago
  > (That said, perhaps mail is a government service worth subsidizing, though we can debate how much, and running in the black would be preferable.) It's also possible to run local fire departments, etc in the black as well. Whether that is preferable or not is a subject of debate :D
romwell 7y ago
>Are they in a competitive market for the class of packages they ship in the US? Fedex and UPS, in unison: am I a joke to you? The short answer is yes, they are.
- CountSessine 7y ago
  If USPS is subsidizing international shipping from China by overcharging for domestic shipping, as some here are suggesting they are, how do they successfully compete with UPS and FedEx? Or are UPS and FedEx also subject to the UPU?
  - ineedasername 7y ago
    I don't think they subsidize through other rates. They tend to lose money every year, and their rates for packages under 1 lb are significantly better than UPS or FedEx.
    - jigglesniggle 7y ago
      They do subsidize through rates. The UPU is set up so that the last mile of a receiving country is charged to the sender as if it were in the sender's country. This is made up from other revenue the carrier in the receiving country makes.
      - ineedasername 7y ago
        I mean I don't think they increase other rates to cover those costs, because they don't actually cover their costs at all. They spend more than they take in and their rates are still, for lighter packages anyway, significantly better than either FedEx or UPS.
        deleted 7y ago
        [deleted]
        jigglesniggle 7y ago
ineedasername 7y ago
Unless you do incredible volume, USPS is very competitive on package pricing for items under 1 lb. For an item going from the east coast to the west, UPS is about twice the price for such packages. Closer destinations are a little cheaper, but not less than USPS.

pavpanchekha 7y ago

For packages the USPS is in a very competitive market, against UPS, DHS, and Fedex. The only market they have something approaching a monopoly on is regular letters. This ruling affects (IIRC) only small packages, but that's still a place where USPS competes. Also note that where USPS has a monopoly it's often where it is required by law to sell below costs. For example, delivering mail to Alaska and Hawaii is quite expensive, but US law requires uniform postage costs. The USPS is hampered by law in other ways. The UPU decision is one example; they also have fairly strict pension laws and they cannot raise prices without agreement from overseers (a price increase to 55¢ was just struck down in court). It's not totally clear that it's possible for USPS to run in the black while also being the mailer of last resort that it is today. (That said, perhaps mail is a government service worth subsidizing, though we can debate how much, and running in the black would be preferable.)

CountSessine 7y ago
Are FedEx and UPS subject to the UPU? Will this decision affect them? And are they currently shipping packages at a price that is comparable to USPS? If USPS is subsidizing international shipping from China by keeping domestic shipping charges high, how are they competing with FedEx and UPS? (BTW I agree with the other responders - this was an excellent summary for those of us not in the US)
- davchana 7y ago
  IMO, no, they are not members of UPU. USPS is cheaper for domestic packages & letters for regular time, but fastest ones are almost same price.
  - selectodude 7y ago
    FedEx transports their overnight and priority international packages, so it makes sense that they’d be about the same price.
jhall1468 7y ago
That last paragraph is a great summary. I wanted to add: This was done with the intent of preventing USPS from being competitive. The law that forced it to pre-fund retirement also put enormous restrictions on its ability to increase prices.
- opo 7y ago
  USPS pension funding gets brought up quite a bit as some kind of a conspiracy, but that doesn't appear to be accurate. The issue for the postal service is that the law was changed so that the USPS would start funding their retirement health care costs since they are promised to the workers and the projected costs had exploded. This was supported by a bipartisan commission, the GAO, and the Postal Service itself: >...Although retiree health benefits are often unfunded or poorly funded, two considerations suggested the Service’s retiree health care obligations should be funded: they are as firm a commitment as the Service’s pensions, and they had become enormous (about $75 billion by 2006). In 2003, the presidential commission suggested establishing a reserve fund for these obligations, and the Postal Service itself sent Congress a proposal for creating such a fund. >Prior to 2006, the Service simply paid retirees’ health benefit premiums when they came due. The Service put aside no money when it promised the future benefits. Paying benefits when they come due rather than funding them in advance is known as the pay-as-you-go or unfunded approach. >Early this century, Congress, the Administration, the U.S. General Accounting Office (GAO), and a bipartisan presidential commission expressed concern about the lack of funding. Although retiree health benefits are often unfunded or poorly funded, two considerations suggested the Service’s retiree health care obligations should be funded: they are as firm a commitment as the Service’s pensions, and they had become enormous (about $75 billion by 2006). In 2003, the presidential commission suggested establishing a reserve fund for these obligations, and the Postal Service itself sent Congress a proposal for creating such a fund. >In 2002-2003, it was discovered that the Service was contributing far more than necessary to fully fund its pensions, and Congress allowed the Service to contribute less. Congress decided the pension “savings” could help patch the retiree health benefit underfunding. In 2006, as part of the Postal Accountability and Enhancement Act (PAEA), the Postal Service Retirement Health Benefits Fund (RHBF) was established. Most of the Service’s contributions to the new fund could be paid using the pension “savings.” PAEA was bipartisan legislation with broad support. https://taxfoundation.org/primer-postal-service-retiree-health-benefits-fund/ https://taxfoundation.org/primer-postal-service-retiree-heal...
saalweachter 7y ago
The USPS also seems fairly cognizant that they need to embrace parcel delivery with the decline of first-class mail; for instance, they are continually expanding their Sunday parcel delivery.
ineedasername 7y ago
I don't see why the UPS should need to run in the black. It's a public service to have very accessible postal service around the country. Admittedly this was much more crucial when much communication took place this way, so it is less so today. But I think the public service aspect still stands. Many small businesses do lots of small, lightweight shipping of packages around the country that would be prohibitively expensive with UPS/FedEx. (I'm one of them: I run a small Etsy business that sells low-cost lightweight items that would be a lot harder if I couldn't ship for ~$3.50. UPS @ $11.00 would nearly double the cost of many items, and I don't sell enough for any sort of volume discount with FedEx or UPS)
vageli 7y ago
> (That said, perhaps mail is a government service worth subsidizing, though we can debate how much, and running in the black would be preferable.) It's also possible to run local fire departments, etc in the black as well. Whether that is preferable or not is a subject of debate :D

romwell 7y ago

>Are they in a competitive market for the class of packages they ship in the US? Fedex and UPS, in unison: am I a joke to you? The short answer is yes, they are.

CountSessine 7y ago
If USPS is subsidizing international shipping from China by overcharging for domestic shipping, as some here are suggesting they are, how do they successfully compete with UPS and FedEx? Or are UPS and FedEx also subject to the UPU?
- ineedasername 7y ago
  I don't think they subsidize through other rates. They tend to lose money every year, and their rates for packages under 1 lb are significantly better than UPS or FedEx.
  - jigglesniggle 7y ago
    They do subsidize through rates. The UPU is set up so that the last mile of a receiving country is charged to the sender as if it were in the sender's country. This is made up from other revenue the carrier in the receiving country makes.
    - ineedasername 7y ago
      I mean I don't think they increase other rates to cover those costs, because they don't actually cover their costs at all. They spend more than they take in and their rates are still, for lighter packages anyway, significantly better than either FedEx or UPS.
      - deleted 7y ago
        [deleted]
      - jigglesniggle 7y ago

ineedasername 7y ago

Unless you do incredible volume, USPS is very competitive on package pricing for items under 1 lb. For an item going from the east coast to the west, UPS is about twice the price for such packages. Closer destinations are a little cheaper, but not less than USPS.