It might have been cheaper to ship it with a NON-flat rate postage.
Also, I had this same dilemma a couple months ago. Had to send about 10 pounds of fish food back to an online retailer for an exchange. I priced it out with UPS, USPS and FEDEX. The flatrate shipping (was $11) with USPS was cheaper than UPS by $5 and cheaper than FEDEX by $8.
USPS is losing money, but it has recently (within the last 6 months) come out that the guy appointed to head the USPS office has been misappropriating funds (John Potter, Bush Appointee in 2001). Many USPS employees know about this. He has since required that pension plans be PRE-funded 10 YEARS in advance (it would be similar into thinking you must pay 10 years of your mortgage in advance). This of course creates a HUGE budget gap. I just wish people would stop trying to ruin government programs.