Economics Discussions Production Costs Postal Service (USPS)
I would suspect that the fixed costs of contributing to employee's retirement funds (Risk Analysis Research Center, 2009, p. 4) and also their restriction from closing local offices (Slentz and McCann, 2009, p. 12) contributes to higher fixed cost at USPS than FedEx because FedEx is not unionized and while UPS is unionized, and thus experiences a fixed cost that is incurred to the level of union contracts, those contracts are more negotiable for UPS than USPS, and nonexistent or fluid for FedEx. Furthermore while union contracts probably affect the rate of closure for physical facilities for UPS, this would probably be more negotiable than for USPS and FedEx especially if FedEx operates totally under ‘right to work' management structures. The fixed cost USPS inherits from its special status as an ‘off-budget' but still in some ways regulated recipient of federal transfers mandates it upholds these precedents from an era without UPS or FedEx.