New Castle News

September 12, 2012

Our Opinion: Delivery arrangement with customer causes problems

By Staff
New Castle News

NEW CASTLE — Suppose you walk into a post office to buy a first-class stamp for a letter.

You are told the stamp costs 50 cents. You pay for the stamp and step to the side to attach it to the letter.

Then the next person approaches the counter and asks for the exact same postage. However, this customer is told the stamp will cost only a quarter.

How would you respond? Would you consider this treatment fair?

In reality, the United States Postal Service charges a standard fee for all first-class mail. The only difference comes with the weight of the item being shipped. A letter you mail to New Castle costs the same as a similar one to California.

This reflects the “service” aspect of the postal service. It exists not to make money, but mainly as a means of allowing Americans to send material elsewhere in cost-efficient fashion.

But these days, the postal service has all sorts of mechanisms and fee schedules that apply different rates for services. These vary depending on the weight of packages and the distances they must be shipped.

In addition, there are flat-rate services, that charge the same amount regardless of distance shipped or weight. And there are overnight and next-day delivery mechanisms that demand higher fees for expedited action.

But the overarching theme of these services is that customers are treated equitably. No special favors, no unique deals that have one customer subsidizing another.

Yet one recent deal involving the postal service and a customer is raising eyebrows — and prompting legal action. We refer to what’s called a “negotiated services agreement” with Valassis Direct Mail. Under this accord, Valassis — which sends out packages of advertising — will receive rebates from 22 to 36 percent of any “new mail” involving national retailers of assorted goods.

Basically, it’s a way for the post office to drum up business, but it’s done in a fashion that means other mail customers are helping to foot the bill.

And, in the interest of full disclosure, the National Association of Newspapers has gone to court in an effort to block the agreement. The arrangement is viewed as unfair competition, where newspapers cannot match the monopoly system the postal service has with home delivery.

While the move is presented as a way to help the postal service deal with its well-known financial crisis, the newspaper association believes it will backfire. If the arrangement is allowed to proceed, a survey of the nation’s newspapers indicates they eventually will pull back on the use of the postal service to deliver some of their products. In short, this deal will cost the postal service more than it makes.

We recognize the postal service has financial difficulties to address — including those Congress has allowed to fester. But the solution is not to create a system where some postal customers are subsidizing others, while the concept of fair competition in the marketplace is abandoned. The postal service must end this practice, or else the courts should order them to do so.