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Part and Parcel

Part and Parcel

Through rain and sleet and even snow…as long as it isn’t a Saturday. Recently the post office made the decision to discontinue Saturday delivery effective August 3rd of this year. It’s a decision that brought forth a great deal of hue and cry, most of it negative.

Most people don’t know that the Post Office is one of the few government services that is constitutionally mandated – keep in mind that back in the 18th Century, nearly all communication that wasn’t face-to-face was done by letter. There were no telephones, no e-mail, no telegraph. Well, there were smoke signals and semaphores but that’s pretty much it.

It’s no secret that the Post Office has been up against it for some time. Once it was the pride of the nation – delivering huge amounts of mail to a vast country and its territories. It was at one time the largest single employer in the country (and is the third largest as this is written) with the largest fleet of vehicles in the world. However, it is not supported by direct taxation (the USPS does get federal revenue for costs associated with delivering ballots to and from overseas and disabled voters) and revenue has been declining. First class mail (which is a USPS monopoly by law) has dropped off dramatically as more and more communication is done by e-mail and via the Internet.

The USPS also has had to compete for parcel delivery with UPS, FedEx, DHL and other courier services which have been able to utilize cutting-edge technology and software to make overnight and package delivery more efficient and cost-effective than the USPS has been able to although the USPS has been catching up in that department lately. This service however is really the most profitable aspect of the mail industry – package delivery accounts for big business both domestic and international.

So why support the USPS? Should something that is obviously so far in the red (to the tune of just under $16 billion) be allowed to declare bankruptcy? Are they indeed too big to fail? What would happen to the infrastructure of the United States if the Post Office went belly up?

Well, a lot of bad things. Every day the post office delivers not quite 700 million pieces of mail. Of course a huge percentage of it is “junk mail” – advertising circulars and the like. But much of it is made up of bills, official documents, mail order packages, personal correspondence and magazines, just to name a few items. In short, things we actually want to receive. If the USPS suspended operations, all of that would go to the remaining parcel services which quite frankly aren’t equipped to handle it. The business of snail mail, which remains an important part of our infrastructure, would grind very nearly to a halt.

The USPS has been crippled by a number of things, not just the decline in revenue due to the competition of FedEx and UPS. The Postal Accountability and Enhancement Act of 2006 (PAEA) forced the USPS to fund health care for retirees at present value within a ten year span – something no other government agency or office has had to do (and something no other business that I’m aware of does). The decline in revenue from first class mail as more people use e-mail for personal correspondence (remember every letter used to have a first class stamp on them and when you’re talking 700 million pieces of mail every day it adds up) plus the increase in the price of fuel (for every penny the average price of gas goes up adds $8 million annually to the USPS costs.

So it seems for the foreseeable future we will need the post office. That will require some changes to get the USPS out of debt and back to running efficiently and if not profitably, at least to a point where they’re breaking even. Some things are already in place to do just that, such as an initiative called the Intelligent Mail Barcode that will improve efficiency in tracking mail as well as delivering it. Things have sure changed since the days of the Pony Express.

The heavily unionized USPS will probably need to do some heavy negotiating, particularly when it comes to their retirement plan, one of the most generous there is out there. Not that those who are working haven’t earned it but there simply isn’t enough money to fund it. There’s currently a $6.9 billion surplus in the plan – the USPS hasn’t been able to pay into it for a year now. It would seem to me that some wiggle room is in order.

I think that the USPS should seriously look into converting their fleet into electric and solar powered vehicles. Maybe not all at once, but as vehicles are retired certainly they should seriously be thinking about using vehicles that are less expensive to fuel and being less destructive to the environment certainly wouldn’t hurt either. It’s something they should get a jump on – fossil fuel supplies are dwindling and getting more costly to obtain. Eventually oil and gasoline will no longer be a viable fuel supply. Hydrogen, solar and/or electric vehicles may be much more cost-effective and environment-friendly and it is much easier to start now and use those sorts of vehicles than to wait for gas prices to shoot through the roof which they inevitably will and be crippled by them.

So is FedEx a better service to mail your package with? In many ways the answer is yes. I’ve admired for a long time FedEx’s determination to compete with the USPS at a time when the USPS was one of the most efficient, cost-effective and reliable services on earth. FedEx had to become more efficient, more cost-effective and more reliable and quite frankly, they’ve stayed that way while the USPS has not kept up. That doesn’t necessarily mean that FedEx should be your go-to package service for every case; the USPS with their “if it fits it ships” flat rate boxes and envelopes can be economical and their website is in a lot of ways much easier to use to arrange shipping and pick-up than that of FedEx.

The USPS is a victim of modern economics just as much as any other business. Keeping competitive, dealing with rising costs and a weak economy have combined to sock it to the Post Office in a way that nothing in their history ever has. I remember growing up that everyone knew who their local mailman was; often during the summer he’d park his truck under a pepper tree around the corner from my house and eat his lunch there and quite often kids would gather to say hi, and it wasn’t a rare occurrence that a resident of the neighborhood would bring him some lemonade or a soda or a home-baked treat as a way of saying thank you for a job well done.

Those days of the Norman Rockwell postman are gone but the image remains of the mailman being part of the neighborhood in the same way that the ice cream man was or the crossing guard. Perhaps that is what motivates me to want to see the USPS succeed and to perhaps use their services more often than FedEx or UPS – no disrespect meant to those businesses who do a fine job, but it seems to me that the organization that has more than two centuries of delivering mail back when it was a lifeline to this nation’s commerce and correspondence should be treated better than they have been – to only receive any sort of attention when their rates are raised or their Saturday delivery service is terminated. In that sense, they’re a victim of their own success – we’ve taken the USPS for granted. Hopefully, that won’t come back to haunt us as a nation because if you’re complaining about the cost of sending through the mail now, imagine what it will become if the USPS is no longer around; I’m sure it won’t go down. That’s what privatization does.


One Response

  1. Hi! I’m at work surfing around your blog from my new apple iphone! Just wanted to say I love reading your blog and look forward to all your posts! Carry on the excellent work!

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