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Mon Feb 18, 2013, 03:39 AM

 

FedEx and UPS rely on USPS for efficiencies

Without a doubt, the perception of many is that the outmoded USPS is nothing more than an inefficient drag on the economy — though the reality is far more complex. In fact, a broad swath of the private sector — including supposed competitors such as FedEx Corp. FDX -0.13% and United Parcel Service Inc. UPS +0.96% — is reliant, in many ways, on the Postal Service.

According to data obtained by attorney David P. Hendel, a partner at the law firm of Husch Blackwell, where he is a member of the Postal Service Contracting practice, FedEx was the Postal Service’s number-one supplier in fiscal 2012 — transporting Express Mail, Priority Mail, and First Class Mail, and earning a total of $1,618,197,536.71. UPS, the Postal Service’s 10th largest supplier last year, earned a lesser-but-still-quite-substantial $126,357,591 for services rendered.

Moreover, the relationship allows FedEx and UPS to maximize the efficiency of their operations.

“While the money from the USPS is good work for them, they have a lot of downtime on their planes,” Hendel tells me. “When they first started, most of the FedEx and UPS planes sat empty during the daytime; now they can get some use out of them. And they didn’t have to buy a single new plane.” (Further, while FedEx and UPS may fly large quantities of US Mail, they rely on the Postal Service for “last-mile” delivery in many areas it would cost too much to service. In fact, as UPS spokesman Norman Black said in 2009, “We believe that the government plays a role in terms of ensuring that every mailbox is reached every day.... That is not a responsibility that UPS would want.”

Beleaguered commercial carriers also benefit from contract work for the Postal Service. “The Postal Service is probably the airlines’ biggest customer,” Hendel tells me. “I can’t think of any single customer they have that pays them more than $100 million a year.”

Naturally, someone needs to maintain the trucks (Northrop Grumman, $184,363,645; Wheeler Brothers, Inc., $129,735,270.65) and keep the system running smoothly (Siemens, $167,811,740.07; Hewlett-Packard , $143,553,827; Accenture, $135,883,812.57; IBM, $125,260,869.17)...

“Unfortunately, at the direction of Congress, the Postal Service has been forced to set aside more than $45 billion to pre-fund the health care costs of its future retirees and is required to unnecessarily set aside billions more — although no other business or government agency in this country is required to pre-fund these benefits, and although the amount already accumulated will provide for retirees for decades to come,” National Association of Letter Carriers president Fredric Rolando said last fall. “By mandating these payments and refusing to allow the Postal Service to access its own pension fund surplus, Congress has turned a manageable business challenge into a nightmare of artificial deadlines and unnecessary financial burdens,” he said. Absent the pre-funding fiasco, Hendel views the 2012 USPS contractor data as evidence of a Postal Service that is, in many ways, a model of competence.

http://www.marketwatch.com/story/postal-service-is-more-modern-than-you-think-2013-02-13

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Reply FedEx and UPS rely on USPS for efficiencies (Original post)
HiPointDem Feb 2013 OP
blkmusclmachine Feb 2013 #1
bemildred Feb 2013 #2
alp227 Mar 2013 #3

Response to HiPointDem (Original post)

Mon Feb 18, 2013, 04:36 AM

1. K&R

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Response to HiPointDem (Original post)

Mon Feb 18, 2013, 07:12 AM

2. Exactly. Yet they hate USPS because they cannot compete with it.

Last edited Mon Feb 18, 2013, 08:00 AM - Edit history (1)

Unions and all.

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Response to HiPointDem (Original post)

Fri Mar 1, 2013, 12:43 AM

3. That is indeed my experience right now...

I ordered a book off Amazon.com earlier this week, and UPS.com reports the book is "In Transit by Post Office" originating from the county south of mine, far beyond the "last mile". I live in a suburban neighborhood of a major city, and whenever I've ordered books or other items online they usually come from the private delivery service truck but rarely from the USPS.

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