Copyright 1999 Federal News Service, Inc.
Federal News Service
MARCH 4, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
887 words
HEADLINE: PREPARED STATEMENT OF
JAMES P.
KELLY
CHAIRMAN, UNITED PARCEL SERVICE
BEFORE THE HOUSE
COMMITTE ON GOVERNMENT REFORM
SUBCOMMITTEE ON THE
POSTAL SERVICE
BODY:
Good
afternoon, Mr. Chairman, Members of the Subcommittee. I am Jim Kelly -Chairman
and CEO of United Parcel Service. UPS was founded in 1907 and is the world's
largest express carrier and package delivery company, serving more than 200
countries and territories around the world. There is no single issue of greater
importance to the future of UPS and our 330,000 employees and owners than
postal reform. Thank you for inviting me to share our views
here today.
I would like to take a moment to thank you, Mr. Chairman, for
your tireless work and patience in grappling with what must often seem a
thankless task. You have always been willing to listen to all sides of this
controversial issue. Your hard work and leadership these past few years have
helped to define many of the problems and challenges at hand and to shape
possible solutions.
This is an extremely complex issue, with profound
ramifications for all postal customers as well as private competitors like UPS.
We have all listened to the arguments made by the Postal Service that they need
even greater flexibility over their prices to compete in the marketplace. They
say they must maintain their monopoly on letter mail and remove what little
oversight they now must observe. Otherwise, they say they will not be able to
deliver the mail at affordable prices. Stamp prices will go sky high, they say.
Universal service will die, they say. Rural post offices will close, they say.
The doctrine of a service "to bind the nation together" will die, they say.
Mr. Chairman, this logic leads us in the wrong direction. It perpetuates the
fundamental problem with the Postal Service as a privileged competitor to
private business and a government agency. Let me pose two fundamental questions
that go to the heart of this debate:
1) "What is the role of this government
agency?"
2) "Is it the proper role of the government to leverage a monopoly
power to compete with private business?"
You have stated that the objective
of reform should be to enhance the core mission of providing universal
letter-mail services at uniform, affordable rates. We agree. Unfortunately, we
believe that, in its present form, significant portions of HR 22 would create
even greater danger of monopoly abuse by the Postal Service.
Reform should not grant the Postal Service
additional freedoms to abuse its monopoly to compete with the private sector.
Yet, that is exactly what we believe the current bill would do. Is this the role
that Congress intends for a government granted monopoly?The Postal Service is
currently operating under a hybrid status where it is neither subject to the
same controls as a government agency nor is it under the same discipline and
obligations that private businesses face. The Postal Service enjoys a host of
exemptions from regulations such as taxes, licensing requirements, and zoning
regulations to name a few. The result of this structure is a Postal Service that
has abandoned its focus of providing superior first class service for all
Americans. This is all in efforts to gamer market share from private sector
competitors through abuses of its monopoly under the guise of protecting
universal service in a changing marketplace.
For the past decade or so, the
Postal Service has ventured into new markets and products never envisioned by
Congress who reformed the Postal Service in 1970. The Postal Service has engaged
in direct predatory competition by using revenues from its captive first class
monopoly customers and taking every advantage of its government status to
undercut the prices of its private sector counterparts.
It is time to have
this government agency refocus on its primary mission of providing superior
universal letter-mail delivery.
Absent expiration of the monopoly, Congress
should at a minimum, strengthen the Postal Rate Commission to increase the
Postal Service's accountability to consumers and taxpayers. Currently, the PRC
does not have all the basic tools to get the information it needs from the
Postal Service to make informed and rational decisions. In the international
arena, the PRC has no jurisdiction and the Postal Service has total freedom to
set any rate and service. Again, I ask -- What is the role of this government
agency?
The PRC should be granted subpoena power and the authority to make
final binding decisions on all postal rates, including full jurisdiction over
international rates. And, to encourage cost efficiency at the Postal Service,
the Commission should be given authority over the Postal Service's revenue
requirement.
As long as the Postal Service maintains a government-granted
monopoly and is in direct competition with the private sector, these short-
term, basic reforms are needed to help provide consumers, taxpayers and private
competitors with the accountability Americans expect or a $60 billion government
agency. No monopoly should have the unchecked authority the
Postal Service is seeking. These reforms will
also help simplify and streamline the rate-setting process. A stronger system of
accountability will be an important first step in whatever longer-term reforms
come to pass.
Again, I thank the Committee for your attention to this very
important matter and for listening to our views. I welcome any questions you may
have.
END
LOAD-DATE: March 6, 1999
