03 March 2010


The Atlantic | Megan McArdle | Going Postal

According to the Washington Post, "The U.S. Postal Service estimates $238 billion in losses in the next 10 years if lawmakers, postal regulators and unions don't give the mail agency more flexibility in setting delivery schedules, price increases and labor costs." The author, Ed O'Keefe, can't quite bring himself to say it, but the post office as we know it is becoming increasingly untenable. What do we do with the wreckage? [...]

Mostly, I get catalogues, Christmas cards, and the occasional invitation to a wedding or baby shower--not $23 billion worth of service. Probably not even worth my per-capita share of the postal service, [...] call it $100. Would you pay $100 a year for the privilege of getting mail? Yeah, me neither.
That analysis is almost, but not quite, right. We're not paying $100 for the privilege of getting and sending mail. We're paying $100 for the privilege of getting and sending mail at current prices. We are each paying $100 in taxes not for mail itself, but to subsidize cheap postage.

People who mostly receive mail, or have little business with mail at all, are paying to make mail cheaper for those who mostly send it.

Not to engage in the UN fallacy, but postal systems in other countries have found ways to make money: by selling phones, for instance, since that revenue stream is inversely correlated with declining mail revenue.  I believe some also got into the ISP business, since that's also complementary business.

We, on the other hand, can't even get straigtforward cost-saving investments to work.  The USPS has been pulling all their stamp vending machines out of operation, requiring customers to wait in line for a (tax-payer subsidized) clerk to buy a sheet of stamps.   How can they not find a cost-effective way to run a vending machine?  Especially once they're paid the sunk cost to purchase the things, and since there's practically no cost to stock them since they're co-located in post offices already.

I don't know how things in your neck of the woods are, but my local branch has one of those automated parcel shipping machines, complete with scale and printer and touch-screen display.  It's wonderful.  But 95% of the time there's an assistant manager standing next to the machine, punching the buttons for the customer.  What's the point of capital investment like this if it isn't bringing down labor requirements or increasing service?  Complete waste.

McArdle mentions the USPS's massive, distributed system of branches as a major expense, but that could also be a major benefit if they wanted to use it.  Why isn't there a RedBox and a CoinStar in every branch?  Why do we leave those kind of activities to other widely-spread organizations with locations in sparse areas?  (*Cough* Walmart *cough*)  What could you do with 33,000 retail locations?  More than sell stamps, I'd bet.

What's the footprint of an average vending machine?  Six square feet?  Eight?  What could you do with thirty thousand of those spread out around the country?  I guarantee you could generate more revenue than those 6 sq ft are bringing in right now.  (Which is about zero dollars per square foot.)

I don't have the answers to save the Post Office, but answers exist.  Last year I blogged an idea that would save us from having to buy physical stamps ever again.  As best as I understand the USPS work flow (which is not much, but slightly better than average) you wouldn't need any equipment more complicated than the current kit used for OCRing zip codes.

I've just thrown a handful of ideas up against the wall, and postal services aren't even my thing.

Wait, wait, most post offices (all of them?) have the capability to refuel their delivery trucks, right?  Why not convert some of them to gas stations?  There's another idea.  Okay, the margin on fuel isn't that high, and most gas stations make their money on the attached convenience stores, so why isn't there a mini-convenience store in the post office?  At least a rack of jerky and a cooler of energy drinks.  Maybe that wouldn't work either.  I dunno.  But it's another idea.  Study it; try it.  Try something.  Don't just sit their sucking your thumb selling heavily subsidized services people increasingly don't want, expecting something to magically turn around when you're losing money faster than a malarial Scotsman trying to grow potatoes in Panama.

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