Companies & Industries

The Postal Service's Biggest Advantage Over FedEx: Free Parking


Undeterred by snow, rain, heat, gloom of night—and cheaper than ever. The U.S. Postal Service is slashing prices for big retailers in a bid to wrest a pile of holiday shipments from FedEx (FDX) and UPS (UPS).

For customers shipping at least 50,000 packages a year, Uncle Sam’s mailing service will charge up to 58 percent less for its accelerating “Priority” service, in some cases undercutting its for-profit rivals. The Wall Street Journal has a nifty graphic showing how the new prices will stack up.

FedEx and UPS are none too happy about this. The Postal Service has a monopoly on letters, they argue, and is raising prices on some customers unfairly to subsidize big retailers. The Postal Service, however, has another huge advantage they are past griping about: It doesn’t have to pay traffic tickets.

UPS spokesman Dan McMackin said fines are a cost of doing business. “When there aren’t enough parking spots or loading zones for us, we have to double-park,” he said. “And when we double-park, we get tickets.”

Neither company breaks out how much it pays in municipal fines, but a look at New York public records show the tab must be sizable. FedEx was paying almost $2 million per quarter to the city of New York last year, according to Crain’s. That’s almost $8 million a year just in one city, enough to cover about two-thirds of the pay package for Chief Executive Fred Smith and enough to pay Postmaster General Patrick Donahoe 18 times over.

UPS’s tab was similar. In recent years, UPS has become creative in its attempts to dodge the parking police. In New York, where it gets more tickets than anywhere else, the company rents spaces in parking garages on busy routes. It also sends supervisors to scout for open spots and maps out seemingly secret nooks, like alleyways where traffic police don’t wander.

“We do what we can,” McMackin said. “But the tally doesn’t really change much year to year.”

FedEx, meanwhile, has signed up for New York City’s “Delivery Solutions” program, which reduces fines in exchange for a company waiving its right to contesting tickets.

Federal mail carriers, meanwhile, don’t have similar concerns. The City of East Cleveland tried to collect some $700 in traffic fines from Uncle Sam last year, only to get a letter from a Postal Service lawyer reminding the municipality that the organization has “federal immunity from state and local regulation.”

Thus the old-fashioned Postal Service can spend time tinkering with its pricing, rather than its parking strategies. It’s also cozying up to Amazon.com (AMZN). It worked out a deal to deliver its packages on Sundays in 20 cities, and in San Francisco, federal mail-carriers are schlepping Amazon.com (AMZN) groceries.

Amazon doesn’t plan to pay parking tickets either; that’s what the drones are for.

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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Companies Mentioned

  • FDX
    (FedEx Corp)
    • $178.18 USD
    • 3.10
    • 1.74%
  • UPS
    (United Parcel Service Inc)
    • $109.92 USD
    • 2.94
    • 2.67%
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