The U. S. Postal Service (USPS) expects to lose $7 billon this year. Postmaster General John Potter has recommended termination of Saturday mail delivery to save $3 billion. In addition to reduced service, we can expect rate increases.
Netflix ships DVDs to over twelve million subscribers and is the USPS’ biggest corporate customer. Saturday delivery is crucial for renting movies by mail. And higher postage rates won’t help the company’s bottom line either. Rather than wait for the USPS put it out of business, Netflix is now offering unlimited movie downloads. Netflix users can now watch movies all day for their regular subscription price.
In trying to save money by eliminating Saturday mail service, General Potter is shooting his mail carriers out of the saddle. Netflix is moving its deliveries to cyberspace, never to return to snail mail.
As a general rule, businesses bend over backward to accommodate their biggest customers. In this case, one Netflix equals one million or more small businesses when it comes to earning revenue. Do the math Gen. Potter.
UPS (Big Brown) and FedEx are remarkably efficient. Just compare their package tracking services with that of the USPS. The USPS is twenty years behind the package services, especially so when it comes to capturing signatures.
I don’t ship many parcels. But I do know that I can go online to Big Brown and print a shipping label much easier than I can at the USPS website. With the post office, I usually resort to using the one-rate envelopes or boxes even though it costs more. If I overestimate shipping weight and pay Big Brown too much, the company refunds the difference after weighing the parcel.
The USPS has had a monopoly on first-class mail service since the nation began. By definition, monopolies cherish archaic work rules and resist innovation as long as possible. At any given moment in a monopoly’s workday, one-third of its employees are “in meetings.”
A good example of how the USPS monopoly operates is provided by its web-based postage stamp store. When I order stamps online, the USPS charges a service fee. And even though my order is an electronic credit card transaction, it takes five business days for my stamps to arrive.
If the USPS cannot provide next-day, or even second-day delivery of postage stamps, then I ask, “What can it do efficiently?” Nothing much, it seems.
It is particularly galling that the USPS charges a shipping and handling fee on stamp sales. It’s not as if the mail carrier is making a special trip to my mailbox to deliver the order.
Big Brown employs about 240,000 people. The post office employs well over 600,000. FedEx has even fewer employees than Big Brown, but that figure can be misleading because FedEx classifies some delivery people as independent contractors.
I would guess that the USPS is overstaffed by at least 200,000 employees. As to whether the real number is higher or lower matters little because the post office is in no hurry to downsize.
Can you imagine what would happen if Postmaster General Potter recommended firing as few as 50,000 employees? Congress and the postal unions would go berserk. By the end of the day, Gen. Potter would be on the street, and Congress would have blocked any downsizing until it was thoroughly studied by a special commission.
The Postal Service has two options going forward. First, it can limp along as it has for years making fixes to the system like the proposed reduction in service and rate increase. Such thinking will continue to drive customers away.
The second option requires embracing technology. The Postal Service could be just as efficient as Big Brown and FedEx. And if it was, the USPS just might find that it could cut rates and reclaim some of its lost market share.
Regardless of choice, however, the USPS faces a major reduction in its workforce.
In the recent past, the USPS has invested heavily in bricks and mortar—the buildings are called Processing and Distribution Centers. To my ear, the words “distribution center” connote a warehouse operation—not a delivery service. As for “processing”, I can only wonder idly: If Spam is processed meat, then what is processed mail?
If I was facing extinction (like the USPS is), then I would want a warehouse full of processed mail, too. I’d gather as many things as I could that reminded me of the good old days when I had it all.