Business Lessons from the US Postal Service Woes

5 years ago

I am a big fan of sending and receiving snail mail even in today's virtual world. Say what you will, but sending an e-card is NOT the same as receiving a handwritten physical card from someone. The convenience of walking to the mailbox to receive client payments or magazine subscriptions couldn't be easier. At $.45 (rising to $.46 in late January 2013) for a first-class U.S. stamp, you can't beat it. So, for a system so crucial to our life and business operations, how could it get perched on the edge of financial disaster?

CNN Money says that the Postal Service faces its own fiscal cliff this spring.

For the cash-strapped U.S. Postal Service, the cost of being ignored by Congress means that it will be on the brink of bankruptcy. For the American public, it could result in cutbacks on mail delivery. For postal employees, job cuts.

But, why? Sure, we all know that snail mailing bill payments and regular communications has been on the decline (the fax machine in the 1980's started it all), but this is not a news flash people. It has been happening for years and is only going to continue. Yet, there is still an important need for the service regular mail provides.

The post office is an incredibly efficient operation. This Forbes article gives us the quantifiable and staggering numbers:

And the Post Office has been fantastically good at operational improvements. Literally billions of items are processed every week (about 700million/day;) picked up, sorted and distributed across one of the physically largest countries in the world.  The distance from Anchorage to Miami covers a staggering 5,100 miles, and works out to a miniscule .009 cent/mile for a first class letter! Compare that to Pony Express pricing (in 1860 $10/oz and 10 days Missouri to California,) and adjusted for inflation you’ll be hard pressed to find any business that has continually improved its service, at ever lower (constantly declining when adjusted for inflation) prices.

The problem is not that it isn't efficient on a macro level, it's that it is becoming irrelevant in many ways. That coupled with the constraints around price increases and labor (only government workers and the resulting pay scales/health care/benefits need apply) leaves them in a pickle.

Image: Aranami via Flickr

I might also add that personally I find going to the post office sheer torture. There is always a long line and the clerks behind the counter are in no rush to keep things moving. The implied message at my local post office is "we shall not be rushed".

The biggest problem with the situation in my assessment is that the postal service is not allowed to act like a real business and yet all its closest competitors can and do.

The Next New Deal has a thoughtful article on the problem. It cites the problems as:

There is a crisis, but it is not because the Postal Service is inefficient and its workers overpaid. It is because the Postal Service:

7. Is the only federal agency or private company required to pre-fund retiree health benefits for 75 years
8. Is therefore required to pay $5.5 billion annually to the Treasury, an amount not required of any other agency or company

Without these unique requirements, it would have earned a surplus of over $600 million during the last four years.

This ties back to not being able to operate like a regular business. Sure corporations have pension funding requirements but not to this degree.

What is your take on the postal service woes? How often do you use the postal services (vs. UPS, FedEx, or electronic alternatives) and how has this changed in the last 3-5 years?

Would love to hear your thoughts.....

Paula Gregorowicz plucks women business owners off the hamster wheel of overwhelm, struggle, and self-doubt and guides them to a purposeful path of building authentic and successful businesses.
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