Post Office: Mail Delivery or Welfare?

The management of the Post Office is a joke, and it is hardly worth the electrons to write more about it.   But I did find this factoid in Tad DeHaven's commentary on the Post Office's hopeless efforts at cost reduction interesting.

Traditional post offices, which number about 27,000, cannot be closed “for solely operating at a deficit” and the closure process is burdensome.

Wow, that is a bad law (though no worse than 10,000 others like it).  This sounds similar to the military base problem, where every facility that needs closure has a Congressperson desperately trying to keep it open against all economic reality, merely as a jobs/welfare program once its true utility is over.   Apparently, the Post Office has an overcapacity problem that rivals the US Military's after the Cold War (and really to be honest after WWII)

Full post offices are more costly to operate than other means of serving customers. The average post office transaction cost 23 cents per dollar of revenue in 2009 while the average transaction at a contract postal unit cost just 13 cents. Post offices used to generate almost all postal retail revenue, but 29 percent is now generated online through usps.com and other alternative channels.

In 2009 post offices recorded 117 million fewer transactions than in 2008. Four out of five post offices are operating at a loss. However, the postal network’s overcapacity has drawn little corrective action from Congress. In fact, legislation introduced in the House with 102 cosponsors would apply the burdensome procedures for closing post offices to other postal outlets as well. Congress is actively working against the modernization of the U.S. postal system.

The amazing thing is that they have tons of extra capacity and still provide poor service.  Just compare the process of mailing a package UPS vs. USPS.  I have a UPS account, I can print my own labels, I get billed automatically, I get package tracking, and I can send the package from the drop box downstairs in my building.

It is almost impossible to do this with the USPS.  To mail anything larger than 13 ounces, to buy postage without an expensive meter, to get a greatly inferior sort of tracking -- all require a grim trek to the post office.

My guess is that just like Pemex is not longer really about producing oil, the USPS mission is no longer primarily about delivering mail, its a welfare program.

PS - my USPS delivery guy is great.  Nicest guy in the world.  The mistake for years in criticizing the USPS has always been about criticizing the people.  Not only is that wrong, but it distracts from the problem.  By implying the problem is bad, surly people, it implies the problem is fixable with new people.  But in fact, the problem, as with all government, is information and incentives .... and in this case Congressional meddling in their mission.

  • Glen Purdy

    I'm disappointed in your ignorance of the Postal Service. I routinely use usps.com to print priority mail package labels and drop them off at my mailbox outside my house or at the 24hr dropbox at my local post office. I find this much more efficient and cheaper than the private options.

    That being said, I totally agree that it is too bad that congress can't stop micro-managing the post office and let it downsize as needed.

    Glen

  • Chris

    USPS Priority Mail works amazingly well. From my home I can order free shipping boxes, packing tape, etc., purchase postage and print labels online, then the mailman picks them up from my mailbox or front door. For smaller items in the 1-3 pound range their prices are competitive. I do anything I can to avoid a trip to the post office though.

  • DirtyJobsGuy

    The USPS relies on their quasi-government service aspects to justify lots of things. There is yet no real substitute legally for things like certified/registered mail for notices. Also passport renewals, SS registration etc. etc. That said here is an operation with nationwide (and worldwide) reach, daily deliveries to every address in USA, local service facilities etc. and it cannot make money. One reason is the protections extended to union employees by congress (pensions etc.) which similar to Amtrak is a large cost used by management to justify taking no cost saving or revenue increasing actions.

    But the USPS does farm out many functions like intercity bulk mail transport (a tradition extending back to the Pony Express, Rail Road mail and Air Mail contracts), clearly a reorganization or restructuring to retain the government services bit while removing limitations on staffing and contracting is possible.

  • John Chludzinski

    I agree with Glen and Chris above - many of the USPS's best features are little known - I can fax my order for stamps to my local office and get them delivered to my business the next day. The big picture though, is the perceived problem with operating at a loss - I see no reason the USPS must break even on its mission - we don't expect the military to break even, we don't expect the welfare office to be self-supporting, we don't ask the police to generate a profit, why must the post office?

    And why does reducing the number of offices make them "more efficient"? One overlooked metric in judging the USPS' performance is: why can't they operate today on the volume of mail they receive? If you check the volume stats I believe you'll find that they are carrying the same number of pieces as they did about 10 years ago, with fewer offices operating today. Why must they close more offices in the name of false efficiency? Would they be ideally efficient if they had zero offices?

  • IgotBupkis, President, United Anarchist Society

    The real fact of the USPS is that, for well over two decades, 95% or more of the mail should've been handled by two people -- the guy who pulls it out of whatever mailbox it was dropped into (and, in many cases, even this could be largely automated) and the guy who puts it into your mailbox at the very end.

    The USPS has, for example, been working for decades on the Holy Grail of handwriting recognition for addressing resolution -- the real fact is, a far more appropriate solution has existed for over 30 years -- bar codes. For that 30 years, any larger business could've been using bar codes for all mail, allowing for automatic machine routing of most envelopes, and, as PCs and printers have become more prevalent, so, too, could the average user.

    Provide a 25% discount (or whatever) for a bar-coded address, and people would readily have switched to them.

    The USPS could've spent a fraction of the money they've spent trying to develop handwriting recognition to produce standardized bar-code software which could be used at home and/or on a public PC at any postal outlet.

    That's rather clearly what any business, as opposed to a government entity, would have done as soon as bar code scanning became reliable in the late 70s early 80s.

    > From my home I can order free shipping boxes, packing tape, etc., purchase postage and print labels online, then the mailman picks them up from my mailbox or front door. For smaller items in the 1-3 pound range their prices are competitive. I do anything I can to avoid a trip to the post office though.

    TANSTAAFL.

    It's "Free" only in the sense you don't pay directly for it, Chris. Federal Taxes and high postal rates are just a hidden expense that covers for that "free stuff" in your daily life, whether you utilize them or not.

  • IgotBupkis, President, United Anarchist Society

    > I see no reason the USPS must break even on its mission – we don’t expect the military to break even, we don’t expect the welfare office to be self-supporting, we don’t ask the police to generate a profit, why must the post office?

    Because the post office CAN. Because it's rather obvious that a business running under the same constraints could do such a thing. If you doubt this, note the existence of both FexEx and UPS -- not operating under quite the exact same auspices, I grant, but, if they were allowed to in the first place, would certainly jump at the chance.

    No, the USPS says (with the Constitution behind it) "No, only WE can do this!" Well, if you can't do it as efficiently as a private business, then it's time to change the Constitution.

    And because the other things you point out aren't revenue-generating services, unlike the USPS, and they don't charge you for their use.

    Do you get a bill from the police every time you make a 911 call? Do you pay ahead of time for whatever "welfare" you happen to use in your life? Do you buy "military stamps" to send a soldier to Afghanistan?

  • Daniel

    I run all of my domestic shipping and handling services with USPS.com. I am able to order the boxes through the website and fill out shipping labels via the site. On average, they are cheaper and easier to deal with than UPS and FedEx's behemoths.
    The USPS should identify how much money it needs to remain solvent; then calculate what prices it can set via supply/demand curves to gain that solvency. At whatever cents to send an envelope across the country, when it takes $1.00 or more to do it with FedEx, there is a lot of price increases available before USPS gets to its competitor's prices.

  • ElamBend

    for Business related stuff, the USPS can be good (and hey, guess what, they have competition). For first class mail, they are terrible. Here in Chicago, the first class delivery is so unreliable that if it has a check in it, I will use priority mail, despite the costs. I have simply had too many important pieces of mail disappear (or go missing for a couple of weeks) when sent first class [this happens enough that when I'm the sender, the receivers, if they're in Chicago, aren't surprised if I told them I sent it and it should have been there].

    That being said, Warren's point about being over-staffed is completely obvious every time I visit.

  • Dr. T

    "... to get a greatly inferior sort of tracking — all require a grim trek to the post office..."

    You can print labels and get tracking numbers at http://www.usps.com, but ONLY if you select costly Priority Mail or outrageously priced Express Mail. If you want to use the more economical First Class Mail or Media Mail options, then you must trudge to the Post Office. The only beneficiaries of this policy are the Post Office workers who get to keep their jobs.

  • me

    Honestly, whenever I have the option to ship via USPS I pick it - not only is it cheaper (there is a valid argument about externalities here), but the deliveries are quicker and more reliable (UPS usually makes a mess out of things and in about 10% of the cases I have to spend an hour to drive down to the hub to pick up my packages).

  • http://herdgadfly.blogspot.com/ gadfly

    Fedex and UPS developed the highly efficient package delivery model that works. USPS has also developed Automated Postal Centers that work quite nicely. According to the PO:

    Talk about quick, these handy, credit card-operated futuristic vending machines provide 80% of the products and services of a Post Office, and are very user-friendly. You can purchase stamps and postage, deposit a package, get insurance and add delivery confirmation all with one swipe of a major credit card. They’re also located in the part of the Post Office lobby that’s accessible 24-7.

    So self-service works but only if the service offered is restricted to machine only service, much like self-service gasoline. 27,000 post offices must remain open . . . fine. Let's make them self-service and cut way back on the excessively overpaid "civil servant" headcounts. As for the other 20% of the products and services of a post office, let the users desiring such services communicate via the internet though secure sites as registered customers.

    My guess is that the reduced overhead would make the Post Office profitable just as quickly fast as the government employees and facilities can be shed.

  • http://www.rashynullplanet.com/blog/ Matt

    Lysander Spooner knew a *long* time ago that the USPS is horrid and he did something about it, only to be shut down by the same democratically entrenched tyranny machine with which we all continue to be afflicted:
    http://www.lysanderspooner.org/STAMP3.htm

  • tomw

    Bupkis, re bar coding, the USPS has done some of that for several years now. But, apparently, only for business mail. If you look at your electric bill, for example, you will see a line of vertical bars, short, long, high, and low near the bottom right. Sometimes it is printed above the first line of the address. This is machine readable bar code that allow for mechanical sorting.
    They just haven't gone far enough with expanding its use. The firms that code their mail get a discount on their postage.
    Seems to me that it would be relatively easy to provide the bar code information to home customers by entering an address into a USPS program, and generating an address label either for printing directly on an envelope, or saving it to a USB thumb drive or other media. Every payment that is made could have the barcode pre-printed on the return envelope.
    But what do I know about mail service?
    tom

  • Ben S

    How can you dislike an organization that is willing to do this?

  • Scott Finegan

    Part of what has been missed:

    Mail in the USA has always been subsidized. Gov't owned facilities don't pay taxes. Railroads were paid to haul mail, even though it wasn't economical. Air Mail in the early days cost more than the face value of the stamps on the carried mail.

    City carriers are likely to be union. Their pay and hours of work are pretty well fixed. If their mail has been delivered, they can go park their truck, and sleep (in my town). They get a good pension. They get a good medical plan. Probably provided with a "mail" vehicle.

    Rural carriers, aren't in a union. Medical insurance is available, don't know about pension. Their vehicles may or may not be provided (depends on available working used castoffs from city PO's). If a vehicle is not provided, all of the wear and tear goes on a personal vehicle. Their pay is determined by route size, which is determined by a ride along, count of the mail delivered, and the amount of time taken. These counts and ride along audits are scheduled, and mysteriously there are several days of light junk mail around the audit. When the regular junk mail resumes, longer days are required to deliver it all.

    What I can't figure out, is why if you are loosing money you subsidize lesser classes of mail, with first class. Seems like business is gettin a deal.

  • Agammamon

    I live in a small town (Somerton, AZ) and the local post office does not deliver. To get mail I have to go to a central facility.

    UPS and FEDEX deliver to my door.

  • IgotBupkis, President, United Anarchist Society

    Tom, precisely. For more than 20 years now, virtually ALL mail should generally have had a bar-coded address label (strongly encouraged by a substantially reduced postal rate and both freely available "standardized software" and postal meters, along with "bar code kiosks" at the POs themselves).

    I'm not certain about the actual level of info contained in the bar codes you mention (though,yes, I've seen them) I do not believe the USPS uses them to anywhere near the level I've indicated, where a machine takes a standardized "box-o'mail" and dumps it into a reader that then sorts it out to a destination completely mechanically and hands-free (this might happen 2-3-4 times on its route to a destination) until it arrives in a box that the postman takes out and then puts it into your mailbox.

    The banks have used such a system literally for decades with the routing of payments/checks/deposits -- those computer numbers at the bottom of any check you write or pre-printed deposit slip you fill out. The computer systems handle them without human interaction as long as those numbers are detected -- if there is something wrong or if they aren't there, then it kicks it out for human handling. The reliability of this kind of system is shown rather self-evidently by the almost complete lack of failure in the banking business of the process. One occasionally hears about a screw-up, but those are in the "man bites dog" news category.

  • IgotBupkis, President, United Anarchist Society

    > How can you dislike an organization that is willing to do this?

    Do what?

    Have sex with underaged teen girls? Throw feces at monkeys? Hire people to eat cockroaches on TV?

    What?

  • bobZ

    just as a quick side note for all the commenters here noting that 'shipping via USPS is cheaper than their competition", once upon a time in a past life, i worked for that big brown company. they - and fedex - had run the numbers, and every single year, they trotted up to capitol hill, in the name of justice and fair play. each and every year, they **proved** mathematically to the relevant committee that USPS was subsidizing their pkg. operations - the ones they've got private competition for - with the revenue they got from their first-class mail revenue, which they *don't* (and can't ever) have competition for. and year after year, congress sorta listened, and gave the private shippers the finger. lotsa union mailmen out there, and they vote.

    ever wonder exactly HOW USPS shipping can be cheaper than the vastly-more-efficient UPS and Fedex (if you doubt this, watch them all working someday. the mailman, while working, moves at a calm, measured pace. UPS & Fedex guys flat-out HUSTLE, no?) and yet....somehow....USPS parcels are cheaper to ship. meanwhile, have y'all noticed how fast first-class postage is rising? anyone ever seen it go down? ever? anyone here think it will ever go down? or even stop going up quite so fast???

    yeah, me neither.

  • uclalien

    A common misconception is that the USPS is not subsidized by the federal government. This belief is simply wrong. In addition to the laws that outlaw private carriers from delivering certain types of mail, USPS actually receives over $3 BILLION per year in the form of "Capital contributions of the U.S. government" (found in USPS's Annual Reports). USPS only provides Annual Reports going back 10 years, but I know that these "contributions" have been paid out by taxpayers since at least 1999. That's over $37 billion over the past 12 years!

  • filigroove

    Just to let you know...I am a postal window clerk. The same package you send through UPS and FEDEX ends up at the post office, and is delivered by the postoffice. They come in at the end of the night and drop everything off. However, they charged you double so they could bring it to us. If you had used the post office to begin with, your package would have cost half as much. In addition, the post office does offer tracking at their website... http://www.usps.com You can order it the same way, and print out you label and then you can contact your local post office through the website, and HAVE YOUR CARRIER pick up the package. You don't have to leave your house. You should investigate before you put things up here.

    Another thing...the post office doesn't receive any government contributions. The reason we are in a deficit is because people are paying bills online. We are not even considered government anymore. Did you also know that when the military ran out of funds for their medical, the post office gave them money, and increased the amount we have to pay? Most government positions are 20 years and out or 25 years and out (retirement) The post office doesn't offer this same package to its employees. If you leave after 25 years you will only receive 50 percent of the money you were making. From that 50 percent (in my case 1500$) 600 will go towards your health care, and another 500 will go towards spousal insurance in the event you die and want to leave the rest of your pension to your spouse. Now look that up!