Why the US Postal Service is Destined to Fail

Minyanville ^ | 03/04/2010 | Jarrod Dicker

[SeekAndFind]

“Because the mail never stops. It just keeps coming and coming and coming. There's never a letup, it's relentless. Every day it piles up more and more, but the more you get out, the more it keeps coming. And then the bar code reader breaks. And then it's Publisher's Clearinghouse day!”

-- Newman, on Seinfeld

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The mail never stops?

With an estimated 10 billion “piece” volume decrease for the United States Postal Service expected in 2010, Newman may have to start applying for a new gig.

Faced by overpowering competition in the private sector and feverishly amassing debt, the USPS yesterday announced its revamped plan to eliminate Saturday delivery, raise delivery prices, reduce national workforce by 30,000 people, and reduce overtime opportunities.

The decision by the USPS to reduce to a five-day delivery week is an attempt to prevent a repeat of 2009, when the government service recorded a $3.8 billion deficit. The Postal Service currently struggles with a $10 billion debt, and it’s legally allowed to borrow only $15 billion.

However, as the USPS’ troubles mount, shipping companies in the private sector are having no problem staying afloat. Despite the slowdown associated with the recession, private, non-government affiliated services FedEx (FDX) and United Parcel Service (UPS) still reaped celebratory profits last year. In 2009, FedEx saw total revenue of $35.5 billion and $98 million in profits while UPS made $45.3 billion in revenue and $2.2 billion in profits.

This success isn't entirely a result of the business decay of USPS -- FedEx and UPS are actually negatively affected by the putrefying mess USPS has become.

Companies like UPS and FedEx depend on USPS to deliver more than 400 million of their ground shipments every year. A true “I scratch your back, you scratch mine” scenario, the USPS returns the favor by contracting FedEx and UPS to deliver packages via air. With USPS suspending Saturday service, these private shippers will have to sail off route.

But they’re not the only ones who’ll be immediately affected by the change.

Many e-commerce businesses like Amazon (AMZN), Netflix (NFLX), and eBay (EBAY) that rely heavily on USPS ground distribution will be forced to consult with private carriers to negotiate a partner service. If the private carriers assume this role, the USPS will suffer immensely.

It’s not like the USPS ever had it easy. Regulations on how the USPS can charge and handle everyday business have long crippled its ability to make a steady profit. Up against the private carriers who can charge as they please, the USPS is faltered with this governmental handicap, making it nearly impossible for it to gain an edge on its competitors.

Yesterday the USPS revealed its 10-year plan to curb its estimated $238 billion cumulative shortfall by 2020. Postmaster General John Potter expects these latest actions will amount to around $120 billion in saving throughout the present decade.

Of course, these are just the latest efforts in a series of cutbacks by the USPS. According to the Washington Post, since 2002, the USPS has cut costs by $43 billion by reducing overtime limitations, shrinking workforce, and renegotiating contracts.The USPS hasn't received any taxpayer funds to support operations since 1982, and it's responsible for covering all of its costs.

With Potter’s new “10 year plan” on the table, hope seems to be restored -- for now.

However, it seems inevitable that the authority and presence of the USPS, with all its regulations and deficits, will eventually succumb to the power of the private sector. As technology and modernization has slowly eliminated the need for newspapers, magazines, and other classical businesses, the US mail system may be the next victim of the smother.

[SeekAndFind]

Have you ever heard of STAMPS.COM ? essentially you can get stamps online now instead of goign to the Post Office. I wonder if the advent of companies like these affects the USPS revenue...

[Osage Orange]

And some folks want these same clowns running health care.....

[TankerKC]

the USPS fails, it’s because they’ve ossified to the point where the customer and the mail they are transmitting are not the main reason that the employees are getting paid.

You are wrong. I was recently informed by Freeper "muawiyah" that long waits at USPS counters are the fault of the  customers.  /s

[votemout]

About 3 years ago management of the USPS decided to pull all of the clocks out of the lobbies so that we wouldn’t know the waits were long. LOL!

[Osage Orange]

It’s amazing how much we complain about the post office losing under 2 cents a parcel. It’s the government, it’s SUPPOSED to run in deficit, profitable governments are over taxing.

ROFLOL!!

How about just break-even?

[dr_who]

I hate stamps, period. The local (often closed) POS post office no longer has a vending machine for single first class stamps in the increasingly rare case when I need to post something. The one I was able to find one charged me a dollar something for two “first class forever” (yeah, right) stamps. Online bill payments are great, pity it takes away work from the hard-working post office. Pity.

[discostu]

Like that’s ever going to happen. Sure it would be nice, but let’s face it with that many billions of things and billions of dollars running around a budget it’s not going to happen. As it is USPS will be shipping over 190 billion items this year, and lose under 4 billion dollar, or about 1.6 cents an item. It’s only the sheer volume of what they’re doing that that makes the loss so big. If they had FedEx’s volume and maintained their 1.6 cents an item loss it would take them 4 or 5 years to lose enough to buy an F16. But they don’t have FedEx’s volume, they have hundred of times FedEx’s volume.

[muawiyah]

Of course those waits are the fault of the customers. If 90% of them didn't show up you'd have a much better chance of getting service as you walked up to the counter.

Not at all like an auto parts store eh!

[CSM]

Ah, government efficiency on display for all to see. Time to hand over another 6th of the economy to these folks.

[earlJam]

“Because the mail never stops. It just keeps coming and coming and coming. There's never a letup, it's relentless. Every day it piles up more and more, but the more you get out, the more it keeps coming. And then the bar code reader breaks. And then it's Publisher's Clearinghouse day!”

-- Newman, on Seinfeld

Don't forget this reason why the Postal Service will fail:

NEWMAN: "Do not bend"? (Laughs evilly) Just crease, crumple, cram.. you'll do fine.

[chimera]

A lot of the delays at the post office is people that don’t know what they’re doing. I see a lot of people walk in with unsealed unaddressed boxes of stuff and the postal worker actually helps them get it all together. If people actually came in prepared they could cycle a 25 person line in 15 minutes.

This happens a lot in the post offices I use. Customers come poorly prepared to conduct their business. I always come with everything I know I will need, what service I want, and money to pay for it all in a convenient manner. Then it's like bang-bang and you're out of there. The only time I've been angry is when the clerks just leave the counter and go in the back seemingly for no reason. They aren't getting anything for a customer, they aren't bringing supplies to the counter. It's just like, they go away. And no, I don't think it's for potty breaks, unless there is an epidemic of weak bladders in the USPS.

[CSM]

The only mail I receive that I have no alternate method of communication, is the mail from my local government. Water bills, tax statements, etc.

[PugetSoundSoldier]

Come to the Lynnwood, WA (ZIP 98046) postal office sometime. You’ll see that 20+ minute line, and an APC that will only sell 3 stamps at a time, minimum (unless you want to purchase priority mail stamps, or certified delivery, in which case you’re looking at $3.20+ minimum).

I use the downtown Edmonds branch - 4 miles away - which never has the line, but still has the APC limitation of 3 stamps minimum.

[HopewellGOP]

I know a few mail carriers.
1. Decent pay plus good overtime
2. Great benefits
3. Insane pensions
4. They can do their routes in about 3 hours if they hurry. But they don't work for Fedex so why push it.

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I used to be a carrier and still have friends that work there. It used to be you could get done in 3 hours and hide out but those days are over.

You now swipe your badge at various check points so they can track you.

[discostu]

Then there’s the once a month “special trip” people, they’ve got a bunch of stuff to go out, a bunch of slips for stuff to pickup, and they want to review all the new stamps before buying 2 sheets. There’s a whole slew of unprepared people out there. I see them at the drive-up ATMs too, they don’t seem to be doing anything out of the norm for an ATM, but somehow it takes them 5 minutes.

Yeah the disappearing clerk thing can be annoying, but I’ve worked retail enough to guess it’s probably related to a supervisor that said “you’ll go on break at 3:15” and has a history of complete freakouts if they check the clock records and find out the person went on break at 3:16. Makes no sense on our side of the counter, but when you’ve got to deal with a manager that thinks the most important thing is whether or not you did exactly what they said you learn to stop caring about the customer just to keep the peace.

[Trailerpark Badass]

The only mail I receive that I have no alternate method of communication, is the mail from my local government. Water bills, tax statements, etc.

Pretty much, though my water bill is paid automatically, so I just glance at the monthly bill to make sure I haven't sprung a leak somewhere. I don't think it would be too hard for them to set up user accounts online.

Funny though that my annual registration fees reminder for my LLC's are sent by email, and I pay them online. I pay my car tags online, as well.

Obviously, the need for the Post Office, in it's traditional configuration, has been mitigated significantly by technology.

[discostu]

Ours is a 5 stamp max, which was kind of entertaining when we had nearly a full roll of old 1 cent too little stamps. 5 1 cent stamps, 5 1 cent stamps, 5 1 cent stamps...... They really need a “do it again” button.

[newfreep]

Newman!

[Cobra64]

I agree.

If I were the Postmaster General, the first thing I would do is eliminate all flyers and coupons.

[CSM]

The funny thing is that I pay those manually mailed statements with my on line checking account. I wish they would figure out how to post the statements on line. Then I could remove my mail box!

;-)