LCC for Freight Carriers

[SDF2BUF2MCO]

Impact of Menlo

Just wanted to hear opinions of the impact of UPS buying Menlo Worldwide Forwarding. Think with all the trade coming FROM China it will certainly help the international side of things. Also think that it gives UPS the inside track being the provider for shipments (whether by land, sea, or air). This may allow them to head off any potential threat from a LCC freight company. Cetainly makes them a competitor with other companies besides FedEx.

 

[Big Beer Belly]

Illegal Public Subsidies Harm Private Transportation Companies

An interesting aspect to this discussion that no one has yet keyed on is the monopoly abuse of first-class postage profits used to cross-subsidize money-losing package operations by quasi-governmental agencies. What the ....??? you say. I have read estimates that it COSTS the USPS a mere 10 cents to actually deliver a first class letter and the rest goes to subsidizing their money-losing package operation that competes with the likes of UPS, FedEx, and DHL (errrr... the German Post Office ....errrr ... Deutsche Post .... errrr.... DHL Again). Think about that the next time the USPS pushes through another first-class postage hike! It's all BS!

Many independent studies have been performed to highlight this. One I recall ... the study company mailed packages from the left coast to the whacked out Kerry-lovin east coast and the USPS charged say $40.00 and its competitors charged about that or slightly less. Same package was then mailed the same distance (but this time NY across the Pond to London and the USPS charged a ridiculously low $10.00 or some such figure, while all its private competitors (UPS, FedEx) charged approx $40.00. Bottom line ... the USPS uses monopoly earned first class profits to cross-subsidize their money losing competitive package operation. UPS has successfully sued (and won substantial judgments against) The German Post Office and the Canadian Post Office for this exact scheme. All UPS and FedEx are saying is separate the books and keep monopoly profits on the monopoly side and make your competitive package business compete against private companies fairly without a public subsidy.

What say you?

 

[Clyde]

BBB,

Great post. I remember reading something like that, but I didn't have the numbers to go ahead and post on here. I'm glad you did.

The USPS has a lousy reputation regarding package delivery. Overnight to them usually translates to several overnights before a package arrives. I know several people (family and friends) who will pay more to ship on UPS or FedEx because they know it will get there. Some of the same people refuse to ship on DHL too. Their service isn't much to brag about and most people have never even heard of Duey Huey and Louie.

The USPS reminds me a lot of Amtrack. Some will be quick to say the USPS is not a government-run or government-subsidized business, but it is. It depends how you are reading the books. I would love to see how the USPS would do if it had to stand alone without ANY government assistance. Being cheap is one thing, but people understand they get what they pay for. And people are willing to pay a little more for good service.

 

[UPSer]

Some aircraft here are leased, but UPS is one of the few places that OWNS their assets, including the majority of it's fleet.

What Clyde failed to mention is that of the few aircraft that are leased, UPS owns the leasing company.

 

[klhoard]

Now if I could just do that with my truck. . . .