Since 1775, Americans have relied on the U.S. Postal Service to reliably deliver letter mail to any address in the country at an affordable rate. That was the original intent of what we know today as the U.S. Postal Service.
Unfortunately, the Postal Service has lost sight of its original mission. Today’s Postal Service is not as focused on letter mail delivery, but more interested in taking on services beyond their core mission like special delivery services for online retailers, flower deliveries, chocolate deliveries and fish deliveries in New York City.
With each of these new ventures, the Postal Service is more focused on volume and not the good business practice of achieving financial stability. The Postal Service has compiled over $42 billion in financial losses since 2011. In many instances they charge below market rates for a number of products and services.
Fulfilled volume is always an important factor to consider in business. But, high volume of business activity while generating less revenue compared to cost is only going to increase financial losses.
This past holiday season, the Postal Service was certainly not shy about touting all of its efforts in parcel transports. Yet for millions of mail customers, the hope was to send holiday cards to colleagues, clients, friends, and loved ones; non-profits and universities aimed to send out fundraising solicitations and thank you messages to their contributors. But judging by the USPS’s ad campaigns, the focus and push was on delivering online purchases as opposed to efficiently handling large amounts of letter mail.
Most troubling is that these new delivery services operate in markets with existing competition. The marketplace already includes an array of options to ship packages quickly and at reasonable cost. To try to increase work volume, the Postal Service is taking money from their very profitable monopoly products to subsidize ventures in competitive markets, charging financially unsustainable prices to make inroads into those markets. It is irrational and unfair to allow government-protected monopolies to operate in a free enterprise system where competition is abundant.
The Small Business & Entrepreneurship Council is equally concerned about the Postal Service’s promotion of foreign business to the detriment of U.S. businesses through the low prices they charge to ship packages from overseas to American households. A congressional subcommittee hearing last year highlighted this problem by noting that it is substantially cheaper to ship a package from Shanghai to Virginia than to ship the very same product from North Carolina to Virginia.
Through these discounted shipping rates for foreign shippers in China, American businesses that compete with them are disadvantaged due to the reduced costs charged by the Postal Service. As a U.S. government entity subsidized by the taxpayers to the tune of $18 billion annually, shouldn’t the Postal Service be doing its part to support American business, not our foreign competitors?
Small businesses and entrepreneurs could use the help, and so could our economy. Small businesses not only provide the choices in products and services that consumers seek, but they are continually shifting strategies and investments to meet their changing needs. They generate the jobs and innovations that our economy depends upon for growth. Recent data finds, for example, that small businesses and entrepreneurs produce 46 percent of our country’s GDP and were responsible for 63 percent of the net new jobs created from 1993 to 2013.
With this in mind, support of our small businesses and entrepreneurs remains paramount. And we cannot continue to prop up this uneven playing field that promotes foreign commerce over American small businesses and government supported monopolies over private enterprise. Doing so erodes entrepreneurship, economic freedom and the very market incentives that built our economy into a global powerhouse.
The Postal Service has severe financial troubles. With over $101 billion in debt and outstanding liabilities, their performance record is one that would not be long sustainable for most businesses under similar circumstances. The Postal Service is still very important to small business operations and our daily lives; they just need to get focused again on their core service of mail delivery.
Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
