28 February 2012 by Published in: Don't understand, rants 6 comments

I consider myself a pretty smart person, but there are some things that I don’t understand.  One of these things is USPS.

You may or may not know that USPS is granted a government monopoly on delivering mail and also has exclusive access to mailboxes.  This means that FedEx and UPS effectively cannot compte on the mail front.

But let’s talk about packages for a minute.  Amazon 2-days something to my house at least once a week.  They use UPS.  Presumably, somebody at Amazon is thinking about shipping costs.  I grabbed a random package, and keyed the details into Shipping Sidekick to see what it would cost me to send myself that package:

USPS is blue, UPS is brown, FedEx is purple.  Now, I’m sure Amazon gets some kind of crazy pricing from UPS, and there’s some special backroom deal that makes UPS the right choice for Amazon.  But if I am shipping an arbitrary package, it is always, almost without exception, cheaper and faster to ship USPS.  You can see in the screenshot that USPS will get it here by Thursday for $6.15, and UPS will get it  here the following day for $15.53.  Plus, UPS charges extra for pickups, whereas USPS does it for free (if you’re not too particular about when).  Plus, USPS throws in free boxes if you’re using Priority Mail, which I often do.

This whole thing is a mystery to me because Amazon, NewEgg, Apple, and basically everybody that I receive packages from use UPS or FedEx, every time.  I can count on one hand the number of times I’ve gotten a USPS package from these guys.  But I can also count on one hand the number of times it has made sense to ship with FedEx or UPS, because USPS is always more economical.

So I don’t get the whole shipping industry.  How can UPS and FedEx stay in business charging literally double what USPS does?  I mean, I get that the private companies are less of a bureaucracy and their tracking system is less terrible, but is that really worth 2x the shipping rate?  Or is there some secret club I’m not a member of in which UPS cuts their prices in quarters?


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Comments

  1. Tue 28th Feb 2012 at 10:04 pm

    All that, and USPS is closing over half it’s processing centers and killing overnight first-class mail in May.

  2. Adam
    Tue 28th Feb 2012 at 10:11 pm

    I don’t know if for a fact, but I’ve heard that USPS subsidizes its mail through junk mail (bulk and local advertisements).

    It could also easily be something like, USPS subsidizes its small, consumer-level shipping by some other means, like (I’m just guessing) charging more for commercial customers, or using government money / tax breaks / whatever. Not to mention the low-cost benefits a government-forced monopoly gets.

    I am impressed by their international shipping rates. I’m able to send a large delivery envelope to Europe in under a week for like $10-20.

  3. Rob
    Wed 29th Feb 2012 at 8:34 am

    Everyone but USPS offers package tracking. USPS will only eventually tell you if it was delivered. To Amazon, NewEgg, Ebay, and their customers, that’s a feature worth a non-trivial amount.

  4. Wed 29th Feb 2012 at 8:35 am

    What’s with the range of shipping rates? I can ship a package by Thursday for anywhere from $6.15 to $54.60?

  5. Karen
    Fri 14th Sep 2012 at 4:34 pm

    I can tell you why UPS and FedEx are getting the business and not USPS.

    I have been shipping with FedEx because my company shipped internationally, and they are business documents that have to go through the authentication, notary and the State Department so we don’t just toss it into the mail and hope that they get there in one piece.

    FedEx and UPS will give a confirmation number that you can track online. USPS will give you a number also, but it only tells you something like, “in transit.”

    Not only that, using USPS print and ship, and you will find out how many times they double charged your account and won’t refund you for up to 6 weeks.

    No thank you.

    That’s why I use FedEx or UPS.

  6. John Costello
    Sun 28th Jul 2013 at 10:59 am

    FedEx and UPS can’t compete on mail delivery anyway, because USPS basically has to deliver to every rural house in the entire US.

    In many places, UPS / FedEx rely on USPS for last-mile delivery — they deliver things all the way up to their closest distribution center, walk it over to the post office, and toss it in.

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