Recently, while waiting in line to ship a package at the post office, I started to think about how much trouble the United States Postal Service is in these days. I continued to wonder to myself, as the line moved at the pace of a sloth, how did they get into this situation and why can’t they get back out of it. If the line is this long how can they not be doing okay. I decided to do a little research to find out what was going on with our beloved Postal Service.
We all use the USPS at one point or another, often quite regularly, but do any of us know it’s origins and how it operates?
The USPS was established in 1775 by Ben Franklin during the Second Continental Congress. From Ben’s creation the Post Office Department was created in 1792 as part of the United States Cabinet. In 1971, under the Postal Reorganization Act, the Postal Service that we know and love today was born. Prior to this reorganization the Postal Service received taxpayer money to operate, after which it became completely self-sufficient. The USPS has, essentially, a monopoly on letter delivery within the United States, no other private or public organization is permitted to carry letters. In the package delivery area, however, the USPS competes with the likes of UPS and FedEx. They employee nearly 600,000 workers and utilize over 200,000 vehicles, their employee force is only overshadowed by Wal-Mart. These employees are all members of one or more of the postal labor unions. Our Postal Service, on a daily basis, delivers upwards of 660 million pieces of mail (177 billion annually) to as many as 142 million locations. Their vehicle fleet consumes 444 million gallons of fuel each year. The usps.com website brings in nearly 15 million visitors per month.
What is happening with the USPS?
Starting in the early 80’s the USPS stopped receiving taxpayer funds and became a self-sufficient, independent agency of the United States. For a while, they truly were, self-sufficient, and at times, profitable. Then, in the 90’s, Email began to replace many citizen’s needs for mailing letters. In this most recent decade, our economy and housing market took a nose dive, which only reduced the need for mailing physical documents and assisted in damaging the USPS’ financial situation further. In 2006, the USPS, had just completed the fiscal year with its largest mail volume ever, 213 billion pieces of mail and a net income of $900 million. Only two years later, and the financial situation had gone the other direction. Mail volume dropped by nearly 10 billion pieces which lead to a loss of $2.8 billion. An attempt to offset this decline was made with continuous rate increases and various cost-cutting measures but these remedies helped very little. In 2009, the USPS proposed to Congress that they be given $25 billion in financial relief over eight years by changing the statutory mandate for funding its retiree health benefits. The Government Accountability Office has been worried that the cost-cutting measures the USPS have planned simply won’t be enough and that the USPS will continue to decline into collapse.
Why can’t they get back out?
Mail volume, reduced by Email, will not return, not unless there is some sort of catastrophe that destroys the internet. The only way the volume reduced by the economy will return is if the economy and housing markets improve, hard telling when that will happen. Additionally running a postal service isn’t cheap, the unstable fuel costs alone can mean the difference between breaking even or losing money. One can only imagine the difficulty associated with anticipating costs when so much of it relies on mail volume and the fluctuating costs of supplies. On top of all that, the Government denied the most recent attempt to raise postal rates again, stating that the USPS needed to get their costs under control before they would consider a rate hike. How can an organization pull itself out of a hole with all these odds stacked against them.
What could they do?
At times, due to the effect Email has had on the postal system, some have hinted at taxing Email to assist in funding the Postal Service. This ridiculous concept is nothing more than a crutch that would allow the USPS to continue as they are without making changes towards better efficiency. Thankfully a law signed in by Bill Clinton, and later extended by George W. Bush until 2014, prevents any government from taxing internet access, bits, bandwidth, or Email. Other suggestions have been made that the USPS would benefit from being privatized, I’ve never been a big fan of privatization as the goal inevitably ends up no longer being for the consumer but instead for the shareholder’s benefit. Below are a few concepts that could lead to better efficiency and reduced waste.
As mentioned before, the USPS utilizes over 200,000 vehicles of varying types. Many of these vehicles are the smaller safari style trucks mainly used for urban and short distance rural delivery. With such short distances these vehicles would be prime for conversion to hybrid. Have you noticed how the roofs of those vehicles are flat, this makes them perfect for a solar panel to provide supplemental power. Additionally, the larger vehicles (many of which are diesel) could be quickly and easily converted to bio-diesel. Obviously the facilities aren’t in full swing to make bio-diesel in large quantities, however, if a large fleet of government vehicles switched to bio-diesel, it might just drive the industry to ramp up production with the potential to benefit everyone. Think about it, they use 444 million gallons of fuel each year, average it in at about $3.00 a gallon and that’s $1,332 billion. Cut that even in half and you’ve saved a boatload of money.
- Kiosks (or Automated Postal Centers)
One day I went to large post office downtown, just needed to ship a simple package, but the line rivaled some Disney World queues. This particular branch offered one of those self-service kiosks that allows customers to perform a variety of tasks on their own, there was only one person using it, no line. I tried it out, it worked exceptionally well, I didn’t have to deal with a clerk and their horrible attitude, I didn’t stand in the molasses line, and it cost exactly the same. I imagine going into a post office and seeing an entire row of these machines. You’ll still need a clerk for oddball requests or questions, but you probably only need one not an entire team. These machines probably aren’t cheap, but they will begin to pay for themselves over time. They don’t take breaks, need insurance, raises, or retirement funds. In time people would become as comfortable with these kiosks as they are with ATMs.
- Saturday Delivery
We have enjoyed delivery of postal items six days a week for a very long time, but with the multitude of ways to communicate with others these days do we really need that many? All that aside, delivery six days a week is becoming increasingly difficult for the Postal Service to sustain. Drop Saturday delivery and, according to various studies, the USPS could save $3.1 billion the first year and as much as $5.2 billion annually by 2020. In March of 2010, this very suggestion was made by the USPS, with a possible change to occur in 2011. I say, go for it, we’ll survive.
- Postage Rates
Postage rates, at least for standard letters, is the same regardless of where it is sent from to where it is sent to. More so, we enjoy some of the lowest postal rates in all of the industrialized nations. While the USPS’ most recent request for raising postal rates was denied, I still think they need to consider it. Don’t raise your rates a measly two cents, how about more like 10 cents. You know what really irritates me about postal rate increases, their frequency. I hardly mail stuff out as it is, by the time I get around to needing a stamp you’ve raised the rates. I have to go buy a bunch of 1 cent stamps or, if I’m feeling particularly lazy, just put two of the old ones on. I know they sell Forever Stamps but you don’t always think to ask for them, how about selling those exclusively. Instead, do a larger increase but then don’t have another increase for several years. People are going to complain (because they love to complain), regardless of how much you increase the rates, but if you do a large increase now and hold it for several years you’ll only have to hear the bitching once, and it’s not like they’re going to stop mailing things because of it (they’re entirely too lazy to do that). There’ll always be a need for mail, just not the same need we used to have. Another consideration is postage based on destination and/or source zip code, this would be more difficult to implement but its a thought nonetheless.
While we’re on the subject of postage let’s talk about completely eliminating the sale of postage stamps. By discontinuing the sale of postage stamps you would eliminate the cost associated with manufacturing them. Part of the cost you pay for a stamp goes towards its manufacturing. Even after a postage rate increase, the elimination of the cost of manufacturing could possibly mean little noticeable difference to consumers as far as cost of postage is concerned. The question then becomes, how do people put postage on their mail items. There a couple of ways to handle this. First, allow services similar to Stamps.com to continue to operate as they have been, doesn’t cost you anything to make these stamps and you still collect money. Second, those kiosks we talked about in number two, allow stacks of mail items to be inserted into them where they are subsequently weighed and appropriately posted, the customer then pays with their credit/debit card and is on their way, they’ll love this, as they didn’t have to stick stamps on mail anymore. These two methods would cover a majority of the customers. A third option could also be considered, just throw your letters into a mailbox sans postage, the post office will deliver them then charge you for the postage in a monthly bill. This option could be easily manipulated and taken advantage of, so obviously, steps to prevent this would have to be taken.
Any combination of these suggestions could possibly bring the USPS back into the black and allow them to continue to serve our country with reliable and efficient service. Some of these suggestions would require significant investment, mainly one and two, but the savings caused by the other suggestions would help. Additionally, if the government were to approve money to help that would make it all that much simpler. Times have changed, our views of mail have changed, it’s time the Postal Service changed to.