on Nov 28th, 2011 in Pricing & Rates | 15 comments
Have you ever heard of Alaska Bypass? It’s a service the U.S. Postal Service offers only in Alaska, allowing shippers to send shrink-wrapped pallets of goods at Parcel Post rates using private airlines. The Postal Service pays airlines to carry the goods to rural Alaskan communities by delivering these goods directly to the stores located in rural areas. The shippers effectively and entirely “bypass” the Postal Service’s delivery network. The Postal Service has to pay the airlines much more than it receives in postage for this program. In FY 2010, the Postal Service lost $73 million on Alaska Bypass. In addition, the people receiving the shipments are usually retail merchants, because the orders must be at least 1,000 pounds. The Postal Service doesn’t provide this kind of service for retailers anywhere else in the country. Alaska Bypass began when it was much more difficult to get goods to rural Alaskans than it is today. There are even some that say it no longer seems to fit with the Postal Service’s mission. The Office of Inspector General Risk Analysis Research Center has developed a white paper, Alaska Bypass: Beyond Its Original Purpose, which outlines the history of the program and the shift away from its original purpose. The paper offers various options to improve the program. Should the Postal Service continue to pay for sending large shipments of goods to retailers and be permitted to charge the shippers more for this service? Should the 1,000-pound minimum order requirement, targeted to retailers, be eliminated in order to extend the benefit directly to consumers shopping online? What do you think? Click here to read the white paper and we invite you to share your thoughts about this program on our blog. This blog is hosted by the OIG’s Risk Analysis Research Center.


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As long as shippers tender these products as mail, can the Postal Service refuse under the universal service mandate? As long as there is no surface transportation to these communities, can the Postal Service transport it by any method other than air? As long as postage is cheaper than air freight, why wouldn't shippers send these goods via the Postal Service? Wasn't Alaska bypass created because it's cheaper for the Postal Service to handle an entire pallet of beans than one can of beans at a time? And isn't it simpler and cheaper to deliver the pallet of beans directly to the grocer than to the Post Office first? Somehow, I thought that Alaska bypass was better for the USPS than their other meager alternatives in Alaska. I fail to find the scandal that you're hinting at.

I am a postal employee, not that it matters here, except this kind of lost revenue is no hill of beans. Red ink drives management to take it out on those of us who process and deliver mail. Add up all the lost revenues (and I am not talking about Grandma forgetting to stamp a letter and no one notices), and the stress factor might not be as much. I am talking about lost revenues that were given away on purpose, by law, or by some kind of contract or other dealings such as this.

People that live in Alaska choose to live there, unless they are actually Real Natives. Government workers, and probably others, get up to 25 percent extra pay for the "cost of living factor". Let them use it to pay the price it takes for them to live their dream, or whatever.

I think the Postal Service was sold a bill of goods. This is not part of Universal Service, and it is not mail. Anything domestic over 70 pounds has to go by commercial freight, that is, 18 wheeler, train, whatever. It is not our job. We do mail. MAIL. Mail does include parcels under 70 pounds, but anyone else has to pay the going rate.

This may not be a scandal, as it apparently is legal and by the book, but it does need to be stopped. It is ridiculous. You reckon FedEX, or UPS, or any of our other competitors would offer to do this at a 73 million dollar loss per year? I think not!

IDIOT !!! Natives can choose to live in the bush or in town. Why do you believe they cannot choose where to live?
FYI - Some Alaska natives actually live in the lower 48 states

and here i thought everybody can wherever wishes

As for it being Universal Service, ok, we'll do it, AT THE SAME RATE PER POUND THAT ANYONE ELSE HAS TO PAY, WITH THE SAME 70 POUND PARCEL LIMIT. If someone wants to order a billion pounds of beans, fine and dandy. Same rate for all. Businesses should not be able to capitalize on the backs of other people who have to pay more for stamps to subsidize this sweet deal.

I am pro business, pro capitalism, and all that, but let the free market control the shipping costs, and let the beneficiaries pay their share.

Rural Alaskan communities are the victims of colonialism. They have had a monetary system and market economy forced upon them but often lack any real means to participate in it. Some communities have natural resources to sell, but many would only have subsistence living if it weren't for intense interventions on the part of the government and bodies like the USPS.

These communities have long since forgotten the subsistence lifestyle of their ancestors, and thus if services like the Alaska Bypass were eliminated whole communities would basically disappear - completing an ethnic cleansing that was started years ago. First their religions, then their languages, traditions, and lifestyles were taken away from them in active campaigns to make them "real americans". Their children were forced in many cases into boarding schools and were punished for speaking any language but English. Their natural resources were plundered by the white majority, and they were left at the mercy of a voracious and soulless market economy.

It is the responsibility of the society that has forced the Native Alaskans into the larger American economy to ensure that the consequences don't entail the destruction of entire peoples.

What is being proposed is nothing short of ethnic cleansing.

Well said. ^ I went to the northern eat university in the U.S. and what he is saying is true.

I read the report and feel the postal service is correct that it shouldn't be subsidizing the program. It looks like the postal service is required to pay for a service over which it has no control (control held by DOT) and which no longer meets the goals of the original program.

Time for Alaska residents to stand on their own (and yes, I AM one). I am tired of the government subsidizing individuals (or states) at the expense of the greater country. If it is too expensive where you live to get groceries by freight - move. No one is "forced" to live in the bush. And I shouldn't have to help pay for you to "maintain the history" of the Native Americans that live there. Didn't realize that beans and soda by air were part of their heritage.

I have read the report. It is excellent. Tina and Chris above are right on. I, too, live in Alaska. I support any of the options suggested except the "improve infrastructure" -- because it is impractical--building many roads in Alaska is impractical. I will FAX a letter to the Alaskan Congressional delegation and to Sens. Lieberman and Collins and to the IG supporting the IG position. I encourage you to do likewise.

I think there may be valid arguments for the existence of the "Alaska Bypass" service. But I don't think that forcing Postal rate-payers to fund such a service makes any sense at all.

Based on your white paper, the program was initiated to address an operational problem in post office facilities. If that problem is gone, the program should either go with it, or charge a sustainable rate.

If Alaskans need a service subsidy, that sounds like a great thing for the State of Alaska to fund for them.

I agree with the Postal Inspector General's conclusion except that the logic should be extended. No state should receive a net subsidy for postal services, although the mailing location and the delivery location should in bookkeeping get equal credit for the postage paid, since obviously most mail order companies ship from larger cities, yet without the customer receiving the delivery the entire postage transaction would not take place. Delivery frequency must be reduced in each state as much as needed to keep the mail service from actually losing money in that state down to as little as one day a month if necessary in remote areas which always raise costs.

Universal service does not have to mean with the same hours of operation or delivery schedule.

When mail consolidation morphs into "freight" alternatives must be reviewed. Check out the way USPS handles Military Mail; USPS handles the mail and the DOD handles the freight. There is a distinction.

Why does it take so long to mail a package to Fairbanks Alaska? We mailed packages on and before December 12 and they still haven't gotten there on December 27th. I heard that a package mailed to Afganistan will get there a lot quicker than mailing one to Alaska!

Many of you have some of your facts wrong. The white paper does not cover all that was involved with the origional intent of bypass mail. Senator Ted Stevens, may he rest in peace, was the author of the original legislation that brought bypass mail into being. One of the primary reasons was to subsidize air fares and increase flights into rural Alaska. Alaska is a very large state. The north slope borough is as large as the state of Wisconsin, yet has fewer than 30,000 residents. Our nations gas and oil reserves are largely in the north slope borough.
Senator Stevens wanted greater commercialization of the rural communities because that would lead to further development of the resources, and it has. Bypass mail is a good thing. If you disagree, try studying a bit of economics, and do some further research into the history of bypass mail and the changes that have been made in the past ten years since the postal service has began struggling.
Eliminating bypass mail is but a bandaid. The real issue is that the postal service was privatized during the Carter administration. An easy solution is to return it to a government agency and fulfill the constitutional requirement to deliver the mail. Mail is not delivered in most of rural Alaska. Residents must go to the post office to pick it up.