Government Can’t Run The USPS – #36

Recently the Postal Service reported a financial loss for the 12th consecutive year. What will the report requested by President reveal – declines in mail volume, out of sight costs for pensions and health Care obligations. Yet, prices went up by $.05 to $.55 per ounce for a first class letter. The boss represents negativity in his statement “absent legislative and regulatory change, we can’t generate enough revenue or cut enough costs to pay our bills”. With this attitude from the Postmaster General and the CEO the USPS is not destined to make a profit – blame someone else – “the flawed business model imposed by law continues to be the root cause of our financial instability.”

The Postal Service lost $3.9 billlion compared to $2.7 billion in 2017. 70% of its business depends on letter mail which is rapidly losing to e-mails and other means of communication. Why not place a tax on e-mails that replace letter mail – right now you and I are subsidizing the efforts of convenience that is being experienced by everyone such as banks who are making money due to us paying a subsidy for their convenience.

The answer is that this losing effort will continue unless we work on a letter mail offset and higher rates for packages and mail that is being delivered – for the last mile by USPS. The last mile simply let’s packages and mail be delivered to people living in the hinterlands. Right now, Amazon, Wallmart and other key e-commerce companies have their items delivered, at the same or lower rates, to areas that require normal delivery. Jeff Bazos is laughing all the way to the bank as he continues to grow while taxpayers are facing frequent price increases on 70% of the $ volume that the USPS badly needs to address. Jeff is sending up a few drones to provide cover for the real issues – he is working hard to work on delivery (his own delivery services) in major population areas and letting the USPS continue to serve the last mile Customers.

The issue lies in setting PLANS that address the issues – start generating revenues and profits that stop the tax-payer subsidy. Stop blaming Legislators and create a PLAN that reflects how the USPS will decrease costs and start making a profit.

  1. Although revenues increased by $1.1B, they were offset by increased transportation , labor (pensions) and most importantly package delivery costs.
  2. The 2019 PLAN should reflect a break-even situation and then a small profit in the years thereafter. Unless a business is producing a profit, it won’t survive for long without being subsidized by someone (tax payer).
  3. What would it cost the e-commerce companies to establish a service to deliver their goods the “Last Mile”?
  4. Package deliveries increased by 7% in 2017. If deliveries will reflect e-commerce sales increases over the holidays, we will be continuing to subsidize the USPS. They have to get to a break-even status ASAP.

The USPS represents the best model to provide realistic solutions – They need a PLAN that says “the enemy is Us”. This is an independent agency, they need to act like they are independent and run the USPS like a business. Fire all the consultants and have them replaced with employees being able to provide ideas – harness the ideas of the “BEST” consultants in the business – the USPS employee. The USPS “Customer” should also be contacted to have them share their requirements and “must” have service levels. The Union plays an important role at USPS, and they need to be listened to for their ideas. These three entities will have to “give and take” in representing the solutions that will be needed for the future. Some suggestions from my end as the “Customer”.

  1. What would it cost the USPS to rent their equipment vs. owning it. Someone should see if the shift of capital expenditure could take place and provide effective savings in the infra-structure area.
  2. Why do we need a truck for every Postal Worker in the dense delivery areas (cities)? Wouldn’t a more effective approach result in one truck delivering the mail to a pick-up point, and then provide a “high level of service” by walking the route to each household. Could this work be done by other labor structures that we haven’t thought of at this point. Could the sorting be done by a centralized function and only one delivery truck per multi delivery personnel.
  3. How about some “Customer Service” training at local post offices. Every time I go to a Post Office I wait in line and I have the pleasure of being confronted by the most Non-Customer oriented USPS employees. In Chicago, I have had the pleasure to visit (3) Post Offices, and I found the same rude approach to the Customer at all (3). Instead of penalizing the Customer, who will seek out other communication capabilities, train your personnel on one principal “the Customer is always right”.

We need to act now, and our recommendations will need the Customer to start bringing solutions to the table before the USPS disappears along with Sears, Toys R’ Us and other leading businesses that missed the logical pursuits of a profit objective. The USPS should be presenting a PLAN for 2019 that clearly identifies the steps toward this break-even objective.

Please share your observations/recommendations with us! Let’s get our creativity working!!