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Source link: http://archive.mises.org/15856/the-smaller-fish-tries-to-eat-the-bigger-fish/

The Smaller Fish Tries to Eat the Bigger Fish

March 1, 2011 by

Ever heard of AFMA shipping? It seems to be a company on the go, one anxious to complete with Fed-Ex and UPS. That’s all to the good. But apparently the company has run into some trouble. Customers are sticking with the competition, and the AFMA figures that there is no good reason for doing so. Therefore, apparently, the company has decided that it is a victim of unfair competition and filed a complaint with the Justice Department, and so the Justice Department is investigating and these shipping companies are on the hot seat.

There’s nothing new in this. It’s never the consumers who file these complaints. It is always some other company that badgers the government into intervening, and the government always makes a mess in trying to pick winners and losers.

The big picture here is what strikes me about this story. The very existence of UPS and Fed-Ex is something of a miracle, companies that were built up based on a loophole in the letter statutes that give the government itself a near-total monopoly on mail, or at least that was the idea. Private shipping companies found the workaround and ended up driving all the innovation in this industry that has taken place for decades. The Post Office is reduced to a pathetic game of catch up amidst constant threats of insolvency.

And yet we are asking the same government to adjudicate an antitrust suit in the private sector? If we are looking for monopolistic behavior, it is not hard to find. Look no further than the USPS. The doctor should heal thyself.

{ 16 comments }

Mark Luedtke March 1, 2011 at 1:41 pm

Never heard of it. I’m sure its way cheaper to ask the Justice Department to drop the hammer on the competition than to market the company to potential customers.

HL March 1, 2011 at 1:47 pm

After reading this I am jonesing for a SM Olivia hit.

augusto March 1, 2011 at 1:57 pm

hm… I couldn`t read the WSJ article, but I visited the AFMA website, from what I understand they are not a shipping company, they are a consulting company that specializes in negotiating shipping contracts.

J. Murray March 1, 2011 at 2:05 pm

The complaint is that FedEx is “freezing out” third party negotiators. Which is a load of crap, why would I want to pay AMFS when FedEx and UPS have services where I can arrange package pick-up and delivery right through their website without paying anything extra?

augusto March 1, 2011 at 4:47 pm

In that case, Im a little surprised they didn’t sue for discrimination…

Thanks for clarifying this, though. As I said, I was not able to read the WSJ article.

J. Murray March 1, 2011 at 6:19 pm

I’m a subscriber, I can help any time.

J Cortez March 1, 2011 at 2:10 pm

The AFMA website is garbage.

B.K. Marcus March 1, 2011 at 2:16 pm

And didn’t that loophole become viable only when the airlines were deregulated in the first place? If I’m recalling correctly, then the existence of FedEx and UPS required overcoming two separate government-monopoly systems. And yet, as you say, we should apparently turn to that same central government to adjudicate what is and isn’t going to count as proper competition.

Scott March 1, 2011 at 2:25 pm

While it’s true that UPS and Fed-Ex are close to being miracles, a true miracle in the upper Midwest is SpeeDee Delivery ( http://www.speedeedelivery.com/index.html ). They’re a regional operator in the same industry that in many cases can offer next day service at amazingly low rates with exceptional service. And surprise, surprise, no government intervention was necessary. I don’t think our company’s ever had a package take longer than two days to deliver, the price is half of UPS’s already low rates and damage is almost unheard of.

J Cortez March 1, 2011 at 6:01 pm

Interestingly, Lone Star Overnight (http://www.lso.com) which operates where I live in the South/Southwest, is very similar in that it charges less, and does as much and if not more, than UPS, Fed Ex, and the odious government postal monopoly named USPS.

There’s more than a few regional carriers that act like Lone Star Overnight and Speedee Delivery. In fact, there are many more citywide carriers that compete against those regional firms and the the larger national firms.

So why does there need to be any more government intervention? Or better yet, why does the post office exist exactly?

RTB March 1, 2011 at 8:58 pm

The post office exists for all the freeloaders: those who want to send/receive mail at subsidized prices and the bloated employee payroll of the USPS itself.

Alpheus March 3, 2011 at 3:25 pm

The USPS also still has a monopoly on letter carrying. If I have a need to send a physical letter (it’s rare for me to do so, but the need occasionally arises), I have to do it through USPS.

Of course, that need *only* exists because of some stupid law, that ought to be repealed!

Freedom Fighter March 2, 2011 at 1:52 pm

What’s the point of trying to become the bigger fish to eat and terrorize all the smaller fish.

The big fish is still trapped in the same tank as the rest of the small fish, his “power” to terrorize and eat the small fish is just a small and vane consolation.

I want to be my own water tank and find a way outside the tank, now that would be genuine power.

J. Murray March 2, 2011 at 2:06 pm

The guy tapping the fish bowl won’t let you do that.

Freedom Fighter March 2, 2011 at 11:00 pm

Actually, it’s more than one “guy”, they are a whole division of “guys” making it very hard for me to escape the fish tank. But I found a way out, it’s called superposition and I found a way around, it’s called successive approximations.

Ed April 2, 2011 at 7:34 am

RE: And yet we are asking the same government to adjudicate an antitrust suit in the private sector?

Yep, and it’s the same here in Australia. The Gov takes the lions share of petrol prices while focusing the attention on petrol sellers by creating “watch” services such as FuelWatch to keep business owners “honest”.

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