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.