UPS has long sought higher postal rates for packages, but it faced a setback this week when the Supreme Court declined to hear its appeal in a case it brought against the Postal Regulatory Commission (PRC).
Shipware summed up the news in a tweet that linked to a Bloomberg article: “The U.S. Supreme Court rejected a UPS appeal aimed to force the U.S. Postal Service to raise its prices for delivering packages. The rebuff is a victory for Amazon, which relies on the Postal Service for deliveries and backed it in the court case.”
SaveThePostOffice.com explained the case in depth in this April 5th article. The following excerpt is helpful in understanding the argument UPS made in its lawsuit – and the consequences of a UPS win:
“UPS believes that the Postal Service has been using a method for allocating its costs that allows the Postal Service to charge unfairly low prices on parcels. If UPS were to prevail in the case, more of the Postal Service’s costs would be assigned to competitive products (which include parcel shipping), and that in turn would lead to higher prices for the services with which UPS competes. UPS could then raise its rates as well, or at least be in a better competitive position to increase its market share.”
Amazon filed an opposition brief. In part it said the PRC had revised its costing methods and increased the portion of institutional costs allocated to competitive products, showing that the Commission was responsive to the policy concerns UPS had raised.
Amazon plays an interesting role as both customer and competitor of both UPS and the USPS as it rolls out its own logistics capabilities.
Shipping costs are a crucial concern for online sellers in an age when shoppers believe there is such a thing as “free shipping,” with many sellers relying on the US Postal Service. Many of them are likely to consider the High Court’s decision a win, at least for now.