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Penniless Postal Service Promotes Discounted Rates For Chinese Merchants

Already under fire after posting a $5.5 billion lost in fiscal 2014, the U.S. Postal Service is now facing criticism over its handling of foreign packages.

Because the USPS is an independent government agency, it is not subject to many of the regulations that apply to private shipping companies like FedEx or UPS, including requirements that all packages must be “locatable” at any point in the shipping process, and that both the sender and receiver be identified.

This means that a cash-strapped USPS can spend less on package inspection compared to private shipping companies, but it also has implications for both security and Customs enforcement. (RELATED: Postal Service Loss Swells to $1.9 Billion in Second Quarter)

“If there are not stringent controls, there is concern about what can get by the post office,” David Williams, president of the Taxpayers Protection Alliance, told The Daily Caller News Foundation. “At this point,” he added, “we have been lucky that we haven’t had a problem.”

In addition, under the terms of a 1969 UN agreement, “national postal services give each other discounted rates on international mail under a certain size and weight,” often charging “less than they would charge their own citizens for moving a package across the country,” according to The Washington Post.

However, Williams told TheDCNF that “the rates that the UN sets don’t make any sense,” because they cost the postal service money and harm American businesses by undercutting domestic rates.

The bottom line, he said, is that the USPS is a “government entity, because they have been borrowing money from the Treasury,” and if they are unable to pay it back, “taxpayers will have to pick up the tab.” (RELATED: USPS Getting Into the Business of Selling Groceries)

For now, international shipping is still profitable for the USPS, yielding $57 million in FY 2013, according to a March report from the USPS Inspector General’s office. Just three years earlier, though, profits were $274 million, the difference coming from a steadily rising costs and decreasing revenue.

In an effort to reverse that trend, the USPS created the “ePacket” letter class in a deal with the Chinese postal service, which was later expanded to include Hong Kong, Singapore, and South Korea.

The program offers full delivery tracking and faster shipping, but remains subject to UN rate limits, making it extremely popular with Chinese sellers, but prompting an outcry from U.S. online retailers that it gives their largest foreign competitors a huge cost advantage.

The Post tells the story of Skip McGrath, a former Fortune 500 executive who built a business selling goods on eBay and has struggled to compete against Chinese sellers who can ship their products to his American customers more cheaply than he can.

In one case, he discovered that remote-controlled boats he sold for about $35 were being offered by Chinese merchants for only $18. “Just the mailing cost would put him way past that price,” the Post says.

Williams noted that, “Congress wants to protect the USPS,” but added, “I haven’t seen any proposals that address these issues” in any of the postal reform bills that Congress is considering. (RELATED: Harry Reid Questions the Legality of Ending Saturday Mail Service)

He did, however, predict that, “the Post Office would probably go ahead with these sorts of reforms if Congress would let them.”

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