The U.S. Postal Service is losing federal government shipping business to private-sector firms such as FedEx Corp. and UPS Inc., Bloomberg News reported.
According to a report from the Postal Service’s inspector general released Jan. 18, FedEx and UPS consistently commanded more than 98% of the $337 million annual shipping spending by federal agencies last year. During the government’s fiscal 2012, which ended Sept. 30, the Postal Service got $4.8 million of that total.
The Postal Service could gain $34.8 million in revenue this year and next year if it implements recommendations from the inspector general that are aimed at capturing more of that government business, Bloomberg said.
The report noted that the government would have spent more last year to ship via the Postal Service than UPS and FedEx, both of which can undercut competitors’ prices to gain business.
Postal Service rates must cover costs as well as a share of the organization’s overhead, and are regulated by the Postal Regulatory Commission and overseen by Congress, Bloomberg said.
The Post Office is not permitted to price express and priority mail at a loss in order to attract customers, the report said.