Men in Shorts

The United States Postal Service has been battered by competitive factors. Men (mostly) in shorts running up and down steps and pushing great carts in elevators stocked with overnight shipments. DHL, FedEx, UPS – new levels of logistics, mostly with independent contractors effecting pick-ups and deliveries, relatively modern bureaucracies and less-than-burdensome pension obligations. Messenger services. And most of all, electronic delivery of key documents. eMail, texting, posting on social networks (the new “junk” mail, often highly personalized) and those ubiquitous “attachments,” sometimes accompanied with a toxic virus or worm, or a hacking tool that opens your private habits to public view.

The USPS even collaborates with those big carriers – yup DHL, UPS and FedEx – on pricing, and U.S. mail is often carried by those services, “the last mile.” The service is supposed to be self-sufficient, but the organization can’t just raise rates without Congressional approval. Catch-22. Cutting back Saturday delivery, which ends this August (and was started in 1863), is supposed to shave $2 billion off the USPS annual budget. With all the other budgetary cutbacks, the Postal Service is hoping to restore solvency by 2015. Hoping.

Here are some basic facts about the USPS that are just good to know: “The USPS employs over 574,000 workers and operates over 260,000 vehicles. The USPS is the operator of the largest vehicle fleet in the world. The USPS is legally obligated to serve all Americans, regardless of geography, at uniform price and quality. The USPS has exclusive access to letter boxes marked ‘U.S. Mail’ and personal letterboxes in the United States…

“The USPS has not directly received taxpayer-dollars since the early 1980s with the minor exception of subsidies for costs associated with the disabled and overseas voters. Since the 2006 all-time peak mail volume, after which Congress passed the Postal Accountability and Enhancement Act, (which mandated $5.5 billion per year to be paid into an account to pre-fund retiree health-care, 75 years into the future, a requirement unique among organizations and businesses in the U.S.), revenue dropped sharply due to recession-influenced declining mail volume, prompting the postal service to look to other sources of revenue while cutting costs to reduce its budget deficit.”  Wikipedia.

Operating in a competitive environment is really tough for an organization that has no real control over the price of its service. A single penny increase in fuel costs adds an estimated $8 million a year in costs. And the USPS is saddled with a huge pension obligation (a weird system not like any other in the government that requires pre-funding), just as recent trends have slammed its revenue potential. The big change came over the last decade, as electronic delivery and private carrier services accelerated into the marketplace. While 2001 was the peak year in revenues from first class mail, between 1998 and 2008, revenues dropped a dramatic 29%! The USPS has slowly responded, closing smaller post offices or reducing hours of operation.

The USPS can take some serious credit for America’s growth into a superpower and a super-economy. Ben Franklin set up the precursor to the USPS back in 1775-6, but he basically replicated the British system then in place with a main emphasis on sustaining and supporting the nascent revolutionary government. The real Postal Service came into being a few years later, after Franklin’s death: “[T]he Post Office Act of 1792, with a broad civic mandate, vastly expanded the postal network while admitting newspapers into the mail at an extremely low rate. No less impressively, it guaranteed the sanctity of personal correspondence by protecting letters from the prying eyes of government. In a stroke, the founders provided the entire population with low-cost access to information on public affairs, while establishing a right to personal privacy. 

“The results were astounding. Alexis de Tocqueville marveled at the skill with which postal administrators circulated hefty bundles of newspapers from New York and Philadelphia to the wilds of Detroit, then a thinly populated outpost on the western frontier. To his eyes, the post office was the only entity with the organizational capability to circulate the information of public significance that was essential to sustain America’s bold experiment with democracy. The German-born philosopher Francis Lieber called it an ‘element of civilization’ — worthy of comparison with the printing press and the mariner’s compass.” Richard John, writing for the New York Times, February 8^th.  

Yep, it is a great and noble institution to which we owe a lot. And as I said earlier, perhaps to a great degree, our status as a world power. Some think we should just give up and privatize all such “mail” delivery, but why would someone still deliver mail to those exceptionally remote locations? And how much would privatization cost the overall economy? Are we really willing to give that up? I vote for keeping the system, and just making it more competitive. What are your thoughts?

I’m Peter Dekom, and so much of American greatness is predicated on our ability to “deliver” when we need to.