USPS ends discounts to shipping consolidators, likely raising consumer costs – Washington Examiner
The U.S. Postal Service (USPS) is ending discounts for shipping consolidators like UPS and DHL as part of a strategy to improve its revenue amid significant financial losses. This decision may lead to higher costs for consumers, as these consolidators are expected to pass on the price increases. The USPS has faced an 80% decline in first-class mail volume since 1997 and has accumulated over $87 billion in losses from 2007 to 2020. Postmaster General Louis DeJoy indicated that this move aims to enhance the agency’s financial viability and efficiency while encouraging shippers to utilize USPS services, such as Ground Advantage. He clarified that the intent is not to dominate the shipping market but to preserve the mail business. Changes include renegotiating some agreements with consolidators and limiting access to USPS’s shipping network to about 500 large hubs, affecting how many locations consolidators can use for deliveries. Notably, this change will not impact Amazon, which has direct dealings with the Postal Service.
USPS ends discounts to shipping consolidators, likely raising consumer costs
The U.S. Postal Service is ending discounts for shipping consolidators, such as UPS and DHL, in an effort to shift money back to the agency. However, it will likely result in consolidators passing on the price increase to consumers.
The move will help USPS as it has dealt with an 80% drop in first-class mail since 1997 and amassed more than $87 billion in losses from 2007 through 2020, according to the Associated Press.
Specifically, the change will boost postal revenues and efficiencies while encouraging shippers to simply use USPS services such as Ground Advantage, Postmaster General Louis DeJoy told the outlet.
DeJoy emphasized that the move is not to allow the Postal Service to dominate shipping markets but to keep the agency viable in the years to come.
“I’m not trying to take over the package business. I’m just trying to save the mail business,” he said.
He added that some consolidator agreements have already been renegotiated, while others have sought to initiate the process with expiring contracts.
“Reevaluating these business arrangements is the right thing to do for the Postal Service and the American people. And, of course, we will make agreements with consolidators who are willing to negotiate deals based upon a more rational use of our network in a fashion that is mutually beneficial,” he said.
The changes are integral to the Postal Service’s own Ground Advantage package shipments, and it seeks to eliminate cheap access to the agency’s vast shipping network.
The move won’t affect Amazon because it deals directly with the Postal Service. However, it will affect consolidators who drop off packages at thousands of locations across the country, which DeJoy said will now be reduced to about 500 large hubs.
Election officials recently warned DeJoy that mail delivery problems and inadequate staff training could disenfranchise voters as municipalities prepare for the 2024 election.
“Over the course of the last year, election officials across the country have raised serious questions about processing facility operations, lost or delayed election mail, and front-line training deficiencies impacting USPS’s ability to deliver election mail in a timely and accurate manner,” the state and local officials wrote in a Wednesday letter to DeJoy obtained by the Washington Examiner.
“We implore you to take immediate and tangible corrective action to address the ongoing performance issues with USPS election mail service,” the officials added. “Failure to do so will risk limiting voter participation and trust in the election process.”
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