The Postal Service is in big trouble. The quantity of mail they push through is dropping like a rock, and they’re bleeding cash. They now owe the government over $10 billion dollars and it’s only going to get worse.
It’s not hard to figure out why: they’re facing the double whammy of the Internet (email replacing letters) and private shipping companies (UPS, FedEx) taking away their freight business. That’s called progress and capitalism. I have to wonder if this mean their time is over. Like some of the larger corporations receiving bailout funds, shouldn’t we be thinking about whether it’s time to let them die? Or at least face a reduction in services?
Yes, I realize there are a lot of people out there who still rely on the Postal Service. I have two thoughts on that:
1) The Postal Service should not be obligated to provide the same level of service. The article discusses cutting Saturday delivery, but why stop there? Cut certain areas to three days a week. I can’t imagine receiving anything so time-sensitive that a couple of days would make a difference, and in those instances, the recipient should probably think about using UPS, FedEx, or paying the USPS to rush it anyway. If the USPS is bleeding cash and can’t support the existing services, it’s time to slash those services.
2) Instead of giving a dying institution $10.2 billion dollars when it’s only going to delay the inevitable, spend that $10.2 billion on investing in ways to get the people still relying on the service a new way to receive their communication. Broadband penetration in the United States sucks. If the bulk of the mail going through the USPS is catalogs/junkmail and credit card bills, then why bother? Every one of those services can deliver their communications electronically, and in fact, most actively encourage it so they can save money themselves. Sink that $10.2 million into expanding broadband offerings to these hole-in-the-wall areas and you can replace most, if not all, of the USPS services.
What a waste. The government calls it a loan, but the taxpayers will never see a penny of that money coming back without drastic changes. What’s more, we’re going to face costs beyond just another penny or two on the cost of stamps.
Consider the junkmail companies. Like spammers, they have to flood the mail system with their catalogs because the return rate is very small. When the shipping costs go up for all that bulk, they have two choices: reduce the quantity or raise their product costs. They’re not going to reduce quantity because that reduces volume. Yet in either case, they’re looking at a hit on their margins (less sales or more postage), so they raise the prices of their goods. A five-dollar tchotchke now becomes a seven-dollar tchotchke. Not much on a single item, but when folks start doing their Christmas shopping for friends & family, they’re suddenly wondering why they spent so much more than the previous year.
Now look at the credit card companies. Right now, my banks are begging me to go to electronic billing. I get notices with my bills, I get special offers via email, and they push it on me every time I log on to check balances or pay the bill. This is huge for them because it saves them a bundle of cash. However, there will be a limit. They’re going to get to the point it’s cost-prohibitive for them to keep sending out all that mail, and with sign-ups for electronic billing leveling off, they’re going to need a way to recover that cost (because let’s face it, they’re not swell guys willing to take a hit for the big company). How do they make their money? Interest rates. Even if they just start at two or three percent, that’s going to add up across the months and years most Americans are carrying balances for. But when’s the last time one of your banks stopped at 2 or 3 percent?
The same goes for utilities. I can pay all of my bills online, and I’m sure they’d be happy to email me my bills. They may not be able to hit us with interest, but they have lots of fun little surcharges like “delivery charges” they can pad out as needed.
I can already hear people whining: “But Mike, my 88-year-old grandma lives out in the middle of Alaska isolated from civilization and she has no idea how to use a computer!” Okay, so we should spend $10.2 billion dollars to make sure she still gets her Victoria’s Secret catalogs? I don’t think so. Assuming Granny can’t adapt to using a computer, I’m sure she’ll adapt just fine to getting her mail just a couple of days a week instead of Monday through Saturday.
I’m not going to get into the economics and politics of bailing out the banks and the car companies being “too big to fail,” but it doesn’t take a genius to see the Postal Service is on life support. It’s time to beef up alternatives before we’re forced to pull the plug.