USPS budget cuts will squeeze contractors big and small

Right wing commentators have been positively gleeful lately about the prospect of the US Postal Service going bust. What many seem to forget, however, is that in addition to paying its unionized workforce, the USPS buys billions of dollars worth of goods and services from private sector firms. FedEx, for example, that darling of free market true believers, gets $1.4 billion of its revenue from the USPS. And the relationship works both ways: FedEx Ground reported last year that most of its growth came from its Smartpost product, which uses USPS letter carriers to deliver its shipments. UPS also has a two way arrangement with the USPS.

Bloomberg Government reports today that part of the Postmaster general’s “major announcement” now scheduled for September 15, will be an initiative to slash USPS contracting costs. FedEx will be impacted by the USPS’s moves to send more mail via ground transportation, but it won’t end there:

Companies at risk of losing postal revenue range from Northrop Grumman Corp. and Siemens AG, which supply sorting equipment including barcode readers; to FedEx Corp., the largest contractor; to closely held trucking company Pat Salmon & Sons, which doesn’t list any business line on its website other than hauling mail.

Companies like Pat Salmon may well see some increase in business as volumes shift from air to ground, but they may not like the terms- the Bloomberg article notes that the USPS will no longer pay for round trips when a truck carries mail one way and returns empty.

Read more at Bloomberg

  • Linda

    If the unions had supported
    Saturday closure we would not
    be in such dire condition !

  • Ronnie

    Not sure all right wing commentators are being gleeful…is postal news a left wing commentary?…I’m a conservative , but support the USPS and it’s viability…I believe it is a vital part of the US marketplace….

  • Eddie

    Remember that the USPS employs thousands of Veterans, who served this country and deserve a fair shake. Many of those are also disabled.

  • soontogo

    Ronnie, Those conservatives are the ones in power who are backed by the ultra rich ( aka the Koch Brothers ) to hand all the profits to the private sector. and Fedex is one of them.

  • kat

    To Linda, The Unions never support the loss of jobs. If the Postal Service eliminates Saturday delivery it will lose a minimum of 1/6 of its work force.

  • brian

    Linda- the unions have no say about Saturday delivery one way or the other- it’s required by law. And as kat points out, unions aren’t in the business of trying to get their members laid off. Beyond that, even the most optimistic estimates of the savings from five day delivery wouldn’t make up for the trust fund charges.

  • brian

    Ronnie- sorry, but right wingers hate the idea of a unionized government agency that provides good wages and benefits. I seriously doubt that you can name one “conservative” politician who supports the continued existence of a government owned unionized postal service. They want a privatized part-time minimum wage service. Postalnews isn’t “left wing”- it just supports middle class working people- the right wing ideologues who now run the Republican Party don’t.

  • J C

    Besides trying to gut the hardworking employees of the po this will affect far beyond just us. The unemployment will increase across the board. Nowhere have I heard any talk of the generous benefits of the members of Congress who are helping us go under. Come on Congress, if you are willing to break our contracts be prepared to have your salaries and benefits cut. Maybe even join the ranks of unemployed next election.

  • moe

    Maybe next April 15th we should all refuse to pay our taxes since it’s all being wasted anyway. Is the government going to arrest 200 million people? If we don’t send our government a message of this magnitude
    things will never change. A national boycot of taxes is needed now.

  • Robert

    Since we are delivering a very large amount of UPS parcels we should be making a lot of money on the deal. Is it possible we got a bum deal???

  • Too Intelligent

    Problem, is the postal managers think that contractors can do a better job than what we can do. I told one postal manager, if that was true, then how bout we get some contractors to teach you all how to be real managers.