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UPS pushes for changes to Postal Service reform bill

As Congress deliberates on a bill to put the United States Postal Service on a better financial footing, competitor UPS is lobbying furiously to make things more difficult for its old nemesis.

The Postal Service has lost money every year since 2009, but a recent bright spot on its balance sheet is package delivery. It made about $11 billion in delivering packages in 2020, as Amazon and other delivery-dependent businesses boomed amid COVID-19.

The Postal Service did that by utilizing and expanding its existing systems and fleet for mail delivery. A bill pending before Congress called the Postal Service Reform Act of 2021 would codify this integrated way of doing business.

Section 202 of the bill is the political football that UPS wants stripped out. It states, "The Postal Service shall maintain an integrated network for the delivery of market-dominant and competitive products. Delivery shall occur, to the maximum extent practicable, at least six days a week, except during weeks that include a Federal holiday."

The Postal Service told the Washington Examiner that it is OK with this provision.

Spokesman David Partenheimer said, "We continue to support the current language of Section 202. As Postmaster General Louis DeJoy expressed in his recent letter to leadership of our Oversight Committees, we understand that the point of Section 202 is to articulate certain basic principles underlying the provision of universal service."

"If Congress wants to codify the six-day delivery requirement as an important element of our universal service obligation, then Congress should also recognize as a matter of sound public policy the equally critical importance of the Postal Service providing both mail and package delivery across an integrated postal delivery network," he added.

Partenheimer also noted that the provision "has broad bipartisan support," as does much in the Democratic-controlled House legislation. It has 61 co-sponsors, including about two dozen Republicans.

"Postal Reform Has Bipartisan Support; So Why the Opposition From UPS?" was the title of an op-ed that ran on the website Inside Sources in early August. Author John McHugh is a former Republican congressman, former secretary of the Army, and current head of the Package Coalition, supporting the Postal Service Reform Act. In the piece, he charged, "UPS is leveraging all its power, money, and connections to strip this provision out of the bill. It is the dark side of Washington that Americans despise."

According to Federal Election Commission data, UPS's political action committee disbursed over $4.7 million to candidates in the 2020 election cycle. It disbursed over $377,000 in the first quarter of this year.

McHugh further alleged that UPS has "tried for years to kick the Postal Service out of the package business to jack up rates, forcing us all to pay more for less service."

In comments filed with the Postal Regulatory Commission, UPS argued that it "strongly agrees that the Postal Service should have a clearly-stated, distinct mission. However, this mission should be the delivery of hard-copy information — not packages."

On the company's lobbying efforts to rewrite or kill section 202, UPS spokeswoman Kara Ross would only say on the record that "the provision isn't simple, and there is more to it." She also pointed the Washington Examiner to a package industry insider, who provided some perspective on background.

"To the average American citizen, section 202 looks like, 'What could possibly be wrong with this, and how could anyone be against Mom and apple pie?'" the industry source told the Washington Examiner.

"We are looking for language in the bill to ensure that costs in the integrated delivery network are fairly and efficiently allocated to both Market Dominant (e.g., letters and flats) and Competitive (packages) products. We want to prevent unintended consequences where in the future, due to changing volumes or conditions, this simple language of 'integrated' prevents USPS from implementing what may be most efficient due to twisting by stakeholders. The USPS's strategic plan is forecasting a 38% decline in mail volume over the next 10 years," the source added.

Austill Stuart is the director of privatization and government reform studies at the Reason Foundation. He told the Washington Examiner that while some of UPS's lobbying efforts on this bill are wrongheaded, that doesn't mean the Postal Service is in the clear.

"While forcing the USPS to use separate fleets for first-class mail and parcels would do nothing to help taxpayers — the USPS is having enough trouble replacing its existing fleet, and having to add another adds cost and complications — UPS's actions do point to a larger issue that should receive more attention: the continued existence of first-class letter delivery and mailbox use monopolies retained by the USPS. It's much easier to compete with private delivery companies in the parcel space when you already have a massive taxpayer-funded fleet of vehicles designed to deliver items to every address in the country while also being protected from any competition for fulfilling the endeavor," Stuart said.

"Many countries have moved away from the public postal service monopoly model. The U.S. should open its postal monopoly to competition, too," he added.

This article originally appeared on Washington Examiner

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