FedEx fights disclosure of postal contract data (PDF)-

Traffic World reports 'In a letter that had been kept confidential, FedEx wrote to the U.S. Bureau of Transportation Statistics (BTS) that releasing revenue and volume information about its lucrative postal contract would bring the carrier and the USPS "commercial harm" and would delay mail delivery.' The article also quotes attorney David P. Hendel, a critic of the contract, as saying 'I think the Postal Service is embarrassed about how much they are paying -  FedEX in a document filed with Securities Exchange Commission (SEC) last year  wrote, "Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended." (3/1)|

- USPS Top Contracts and Suppliers 2003

Even as it hauls huge volumes of mail in a deal with the U.S. Postal Service trumpeted as a classic partnership, FedEx is in a struggle with a government agency and competitors over whether to disclose just what that partnership is worth to the company.

In a letter that had been kept confidential, FedEx wrote to the U.S. Bureau of Transportation Statistics that releasing revenue and volume information about its lucrative postal contract would bring the carrier and the USPS "commercial harm" and would delay mail delivery.

"The information requested is highly sensitive,"

," FedEx Legal Department Managing Director Sarah Prosser wrote in an April 23, 2004 letter to the BTS.

"The disclosure of revenues received and ton-miles of mail transported would enable competitors to undercut our pricing or rates in future negotiations with USPS," the letter said.

The letter, released in response to a Traffic World request under the Freedom of Information Act, is part of an ongoing struggle between FedEx and the federal government about whether the company must reveal more of the tightly held details of the contract.

For a full copy of the FedEx letter to BTS, go to www.trafficworld.com/focus/fedexletter1.asp.

The BTS collects and publishes revenue and volume information from airlines about the mail, cargo and freight they carry. About a year ago, the agency asked FedEx Express to provide more detailed information about the mail it carries under the postal contract. Competitors, including the airlines that have lost huge volumes of mail under a USPS management of its delivery network, want those details as they seek ways to win back mail traffic.

U.S. passenger airlines lost the bulk of their mail business after the twin hits in 2001 of the no-bid FedEx contract, which took effect in August 2001, and security restrictions after September 11 that prohibited them from carrying cargo, including USPS parcels, from unknown shippers.

"Last time I checked, FedEx was a competitor of the Postal Service," said attorney David P. Hendel of Wickwire Gavin. "Yet they don't mind if FedEx has this information. Why shouldn't other companies?"

Hendel is a former USPS attorney and a critic of the FedEx contract, which is estimated to be worth more than $1 billion per year. He represented Emery Worldwide Airlines in an unsuccessful challenge of the contract. Emery had been the top USPS supplier before FedEx.

Hendel said he believed the secrecy cloak is hiding potentially embarrassing information about the management of the contract.

"I think the Postal Service is embarrassed about how much they are paying," he said. "They've really clamped down on any information about it. They treat it as a big success. But it actually is a very expensive proposition for them."

According to information Wickwire compiles from USPS data, FedEx is by far the top USPS supplier.

In the 2003 fiscal year - the most recent year for which information is available - FedEx received $1.1 billion from the USPS. The second-place supplier was US Bank's XPress Copy Centre, which received $350.2 million.

USPS Vice President for Network Operations Management Paul Vogel told the BTS that his agency supports FedEx's refusal to provide the information.

"If required by BTS to provide the segregated mail volume data, its competitors would be able to determine FedEx's pricing arrangements on its contract with the Postal Service," he wrote in a Feb. 8 letter to the BTS. "Such a determination by FedEx's competitors would enable them to undercut FedEx's pricing in the event there are future mail transportation contract negotiations with the Postal Service."

The USPS did not respond to follow-up questions submitted by e-mail.

FedEx lumps the mail it carries under the USPS contract in with the air cargo figures it sends to the BTS. The carrier has counted more than $1.5 billion from air freight in its public reporting in the last two fiscal years.

The carrier says it cannot segregate data to BTS specifications because the USPS buys service on a cubic-foot basis and can use that space for whatever it wishes. "USPS may use the cubic space for any lawful purpose, including shipping its own supplies, furniture and, of course, the U.S. mail," Prosser wrote in the April letter.

Third-party vendors load the shipments into containers and deliver them to FedEx facilities.

"If the department were to insist that FedEx Express generate the information, FedEx Express would have to unload the containers, analyze the contents, sort the mail from the freight, separate priority from nonpriority mail and weigh each group separately," Prosser wrote. "Such a burdensome requirement would increase the cost to both parties of transporting the U.S. mail and delay its movement unacceptably."

A FedEx spokesperson did not return a phone call seeking comment.

The BTS is expected to rule on the matter within the next month.

reprinted with permission from www.trafficworld.com