The U.S. Customs Service is putting private carriers such as the United Parcel Service Inc. and FedEx Corp. at a competitive disadvantage, according to a study released this week by the Air Courier Conference of America, Washington. The USCS does not inspect the majority of shipments entering the United States through the U.S. Postal Service, while it does so for 90 percent of the express shipments handled by private carriers.
The study, which was conducted by Wirthlin Worldwide, McLean, VA, a strategic research and consulting firm, also found that the actions by the USCS result in a loss to the U.S. Treasury of more than $1 billion.
In general, the study by the ACCA, whose members include FedEx and UPS, found that the USCS properly inspects and assesses duties and fees on only 6 percent of USPS shipments, while rigorously implementing these responsibilities for nearly 90 percent of the express shipments handled by private carriers.
As part of the study, shipments of two identical sets of 90 dutiable packages were sent to the United States from Aug. 4 to Aug. 16, 1999, from 10 countries with the same destination address. Ninety packages were sent via the express mail service provided by foreign postal administrations with transfer either to the USPS or to express carriers. The other 90 were sent via UPS or FedEx.
The study found that the USCS properly entered only 6.3 percent of the shipments transferred to USPS, compared with 88.9 percent of similar shipments transported by private carriers. It also showed that when USCS properly enters USPS shipments, it collects much smaller amounts of duties than it does from private carriers.
“When it comes to the postal service, the Customs Service is turning a blind eye and compromising its critical enforcement and assessment mission,” said Joe Morris, executive director at the ACCA, which represents the air express industry. “This study starkly illustrates a Customs process that creates a huge competitive disparity for private carriers [and] costs the American taxpayer.”
Customs spokesman Dennis Murphy reportedly acknowledged that the agency has trouble processing inbound shipments handled by the USPS and thus could be losing money from potential duties and fees. He said that private carriers have sophisticated computer systems in place that can track each parcel and its contents from its point of origin to its destination – information that is relayed to Customs, allowing it to easily determine which shipments need to be processed and are subject to duties and fees. But, Murphy said, the USPS doesn’t have that kind of automated tracking capability.
USPS spokeswoman Monica Hand disputed the ACCA claims and said that “we are in compliance with [Universal Postal Union] guidelines concerning customs rules and regulations.”
Hand added that the USPS is examining the study more closely, but that on first inspection, “the fact that the study is based on a sample of mail – and not real mail, we take exception to it.”
While the study aims to show the government that its second-largest source of income – the USCS – is failing in its obligation to collect all applicable duties and fees, resulting in revenue loss to the U.S. Treasury, it actually gives overseas direct marketers shipping merchandise or direct mail to the United States an incentive to use the USPS vs. other carriers.