Sonecon Chairman Robert Shapiro Examines U.S. Postal Service Special Rights and Duties, and the Vast Subsidies Connected to Them
Analysis highlights the range of monopoly-based advantages that involve $18 billion in annual subsidies
WASHINGTON, March 26, 2015 /PRNewswire/ -- Robert Shapiro, Chairman of Sonecon, released "The Basis and Extent of the Monopoly Rights and Subsidies Claimed by the United States Postal Service." The report examines the size and scope of the United States Postal Service (USPS) special subsidies associated with its monopoly over letter mail, and the related potential to skew an increasingly competitive market in package delivery. According to the study, the USPS receives below-market loans from the Treasury, pays no state or local sales, fuel or property taxes, and the Treasury reroutes the USPS's federal tax payments on profits from its competitive operations back to the USPS. The largest subsidy involves the USPS's exclusive monopoly access to residential and business mailboxes (both curbside and in central mailrooms), which saved the Postal Service an estimated $14.9 billion in 2013 compared to the costs borne by private delivery companies that must leave all their deliveries at the front doors of residences and businesses.
The analysis also shows that the USPS's monopoly position is accompanied by much lower productivity than its private counterparts: From 1987 to 2012, USPS productivity rose at an average annual rate of 0.7 percent, compared to 2.5 percent per-year by private firms in shipping, delivery, warehousing and storage. Thus, if the USPS had been as productive as its private-sector counterparts, its higher productivity by 2014 would have reduced its annual costs in 2014 by some $20 billion – eliminating the need for its current, estimated $18 billion in annual subsidies.
"Beyond these direct subsidies and special savings, the USPS's monopoly arrangements produce valuable economies of scope and scale in its operations," writes Dr. Shapiro. "These economies generally should help contain costs for the system's monopoly lines of business. However, the USPS leverages these economies to reduce its costs in competitive operations, such as shipping and delivering packages and express mail. In this way, the USPS's monopoly rights and associated subsidies may well impair healthy competition in this large and growing market."
The full report is available here.
For more information or to arrange an interview with Dr. Shapiro, contact Brandon Bigler: [email protected]; 202-393-2228.
Robert Shapiro is the Chairman of Sonecon, LLC, a private firm that advises U.S. and foreign businesses, governments and non-profit organizations on economic and security-related issues. Dr. Shapiro is a former U.S. Under Secretary of Commerce and has advised President Clinton, Prime Minister Tony Blair, numerous members of the Obama cabinet and White House staff, members of Congress, senior government officials in Europe and Asia, and many Fortune 500 companies. He founded Sonecon in 2001, and it has earned the trust of policy and decision makers around the world.
To learn more about Sonecon, visit www.sonecon.com.
SOURCE Sonecon
Related Links
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article