30 May 2011

U.S. postal service "near collapse"

Excerpts from a long article at Bloomberg Business Week:

The problems of the USPS are just as big. It relies on first-class mail to fund most of its operations, but first-class mail volume is steadily declining—in 2005 it fell below junk mail for the first time. This was a significant milestone. The USPS needs three pieces of junk mail to replace the profit of a vanished stamp-bearing letter.

During the real estate boom, a surge in junk mail papered over the unraveling of the postal service's longtime business plan. Banks flooded mailboxes with subprime mortgage offers and credit-card come-ons. Then came the recession. Total mail volume plunged 20 percent from 2006 to 2010. 

Since 2007 the USPS has been unable to cover its annual budget, 80 percent of which goes to salaries and benefits. In contrast, 43 percent of FedEx's budget and 61 percent of United Parcel Service's  pay go to employee-related expenses. Perhaps it's not surprising that the postal service's two primary rivals are more nimble. According to SJ Consulting Group, the USPS has more than a 15 percent share of the American express and ground-shipping market. FedEx has 32 percent, UPS 53 percent.

The USPS has stayed afloat by borrowing $12 billion from the U.S. Treasury. This year it will reach its statutory debt limit. After that, insolvency looms. 
More at the link.  Via Neatorama, where several salient points are made in the comment thread, particulary whether it should be run as a self-supporting business, or whether it is a service deserving of government support.  Your viewpoint may depend on your political leanings...


  1. Why, if the largest volume of mail is junk, do junk mailers not carry a proportional share of the cost? I don't believe that taxpayers and users of first class mail should be subsidizing this scourge on our mailboxes.

  2. Fed ex and UPS have thrived by competing only with the express service...at several times the cost, by adding pick-up service. Refusing to accept mailbox dropped packages over a certain size after the Unibomber incident worsened the matter.
    I feel we need to subsidize the USPS. We won't like what Fed-Ex charges for home mail delivery if they go away.

  3. When Netflix goes all download, they're really going to be in trouble.

  4. Those of us in the non-contiguous parts of the US rely on the USPS, as UPS and FedEx are pretty well prohibitively expensive here. Many Alaskan communities also don't have home mail delivery, which reduces costs. Maybe other areas could go to that system, in addition to increasing rates for bulk mail.

  5. I've often wondered how much they could save if they only delivered the mail every other day.
    It would make no difference to me.

  6. @Brett: Do you want all the postal workers unemployed? You ain't seen nuthin' yet baby. Be careful what you ask for.

  7. I only check my mailbox maybe once a week because it's a lot easier to throw it all away at once...
    +1 to good riddance!

  8. USPS vs FEDEX? It's like comparing apples and durians.
    Experiment: Award a 20 year contract to FEDEX or UPS to deliver mail in one state with a decent urban/mix and a fair sized population, and require them to deliver 6 days a week at the same rates as the USPS. Any shortfall they have to make up from package revenue elsewhere. I'd be surprised if they could get their labor costs below 80 percent. I'd be surprised if they were solvent nationally after a few years. I'd be surprised if they were stupid enough to take the contract in the first place.

  9. And as to employees being dolts, obnoxious or both. Maybe some individuals are, but the USPS suffers from ubiquity, a mandate to drive by EVERYBODY'S house and business 6 days a week just to see if you've got mail, the necessity of keeping a large labor force to do just that. You're bound to find a few knuckleheads. Combine the above with a government enforced monopoly(leaving some to believe they are tax supported) and by gosh, look at that idiot OUR taxes are supporting, such an example of government waste, I'm putting this on YouTube/writing my congressman.

    And no, I DO NOT work for USPS.

  10. My wife worked for the Census last year... and they chose NOT to use USPS because they could not offer the same promises as UPS or FedEX. They might not be government funded, but even the government is not using their services.

  11. The Royal Mail in Britain has related problems, only ours have been caused by badly handled rule-changes.
    Some years ago the market was de-regulated so that other providers could step in and handle bulk mail. The Royal Mail was left with the expensive bit - small volumes to every house in the land, but lost the profitable stuff, the business mail to high-density places like The City.

    Damned stupid and almost impossible to reverse.

  12. I have mixed feelings. Personally I don't check my mailbox daily. However, I do work for an attorney, and since lots of documents are not accepted by the court via fax or email, we RELY on the USPS to get the job done.

    Additionally, we actually use real stamps on our envelopes and like most other businesses rent a P.O. box.

    We hardly ever have any issues with mail delivery, our local postal workers are friendly, and when I drop a letter in the box by 5 p.m. I can count on it being delivered locally the following morning.

    And of course, both of my grandparents were retired postmasters for a small town post office. I grew up sorting play mail, rubberstamping the heck out of scrap paper, and misappropriating government issue pens. ;)


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