The latest news says the US Postal Service will, if trends continue and no action is taken, close down within a year. While I think that is unlikely, what would life be like if that did happen?
[Warning – the above link to ABC News may explode with unwanted ad music blasting]
Or, what will life be like if, alternatively, the USPO tightens their belts by shutting down many offices, raising rates, and reducing service?
I don’t think a lot will really change.
The best way to keep the postal service viable is to essentially franchise out all branches aside from maybe keeping 1-2% of the current branches as fully owned and operated.
This is a model that the postal service studied over in Europe (I believe one of the Scandinavian countries) and it has worked well there. Delivery operations continue, but you essentially get out of the business of having all of these postal branches that require people to staff them and everything that goes with it. Because of the historic mission of the USPS many of these branches exist because there was a desire to have branches in lots of places to provide universal access, but they are extremely cost ineffective.
By franchising out what you end up doing is licensing postal service rights to convenience stores and grocery stores in the area, they can then have a fluid staffing structure where if they end up doing a lot of postal business they might have a few full time workers running that section of the store, but if it’s a really low volume area then the same clerk working the rest of the store can just respond to postal customers on demand.
It’s sort of like the lottery counter at the grocery store I go to, most of the time there is no one there, but if someone needs a ticket a regular cashier mans that station. I’ve seen similar setups in convenience stores that have little sandwich shops or etc inside of them, they will be unmanned by any dedicated workers during slow hours but the guy manning the main registered is capable of going back there and filling an order if he needs to.
In a lot of ways I think this would actually lead to better service all around, because you wouldn’t have post offices that are open from 8:30pm to 4:30 pm (the closes one to my home is only open those hours and thus almost unusable to me), instead you could do post office tasks at more liberal hours if they were operated as franchised outfits by a local supermarket or convenience store.
It would also get easier to buy stamps. I don’t know if this is a local phenomenon but I basically have two places I can easily buy stamps: the post office or a credit union I bank at. I don’t know why that is, when I was younger I remember every department store and supermarket having stamp machines, I haven’t seen a stamp machine in years. It’d be nice if local convenience stores had small little postal service sections so I could buy stamps easier.
Kiosks could also replace a lot of postal services, a lot of what many people do at the post office doesn’t require any real human interaction.
Let’s look at the facts: the PS now faces a $5 billion debt for healthcare that they can’t pay. The want WDC to do something about it, which would mean using tax dollars to bail them out. Since they’re not funded by tax dollars, this will result in taxpayer outrage, and rightly so.
Eighty percent of their costs are tied to labor. This is an amazing statistic and reflects the failure of management to negotiate properly and of labor to insist on unreasonable demands. Postal employees cannot be laid off. They have their own retirement and medical insurance system, and their retirement pay is very generous. 80%: think about that for a moment. That means that even though they have they jet mail around the world, have a huge fleet of rolling stock, and own/lease a staggering amount of property, it only accounts for 20% of their costs, compared to 32% for FedEx (or UPS, I forget which).
If my mail is any indication, most people could easily get by with one or two deliveries per week. Less, if I cancelled my magazines. Most of it is junk.
The Postal Service is in need of either serious revamping or elimination, despite putting a lot of people out of work. It’s not self-supporting any longer and has been pretty much an anachronism for the last 15 years. Congress and the taxpayer cannot afford to bail them out any more than we could afford to bail out the banks.
What happens if they close? Big shrug, as far as I’m concerned. They could at least get rid of the fleet and all those guys in shorts tramping through neighborhoods. A centralized pickup point would work just as well in most cases. Either that or they need to start charging for the service, which is no different than paying for newspaper delivery.
For starters, the private companies like FedEx and UPS would either become much more expensive, or also shut down, since the USPS effectively subsidizes them.
The key is that some locations are much more expensive to deliver to than others. If your destination point is close to a distribution hub, in an area with extensive infrastructure like airports, water ports, and a good road or rail network, it’s cheap to deliver a package there. On the other hand, if your destination point is off in the middle of nowhere, down back roads, with the nearest city not even having an interstate highway, it’s going to be expensive to deliver there.
The Post Office delivers to those places anyway, since it considers it a duty to the country. But for UPS or FedEx, if they get an order for one of those places, it’s cheaper for them to just carry the package to their nearest distribution center, and then stick a stamp on it and hand it off to the Post Office. So the Post Office delivers both to the cheap places and the expensive places, and has to set overall rates so they can still afford to do both, but the private companies have a ceiling on how high their costs can ever get, and so can make much more profit. Plus, of course, now the Post Office has to absorb the costs of not only their own shipping to the expensive places, but also the costs of all those packages that get handed off to them by the private companies.
They do? I thought it was the other way around.
If the USPS closed down, who would administer zip codes?
How does it subsidize them?
By delivering items over the last, most expensive, mile.
Chronos already said that in his post.
Basically FedEx and UPS will deliver themselves where it’s convenient, but where it’s not convenient (i.e. to some podunk town of 75 people 10 miles outside of the “big town” of 500 people), they’ll pay the postage for the USPS to deliver it for them.
Only major urban centers will get any mail delivery at all for anything under, say, $20?
What will happen is that we’ll collectively slap ourselves on the forehead for letting such a great service end because it couldn’t achieve some ridiculous notion of “efficiency.”
They’re much more efficient than they used to be. You can buy postage online, print address labels, buy insurance, etc. There are kiosks in many POs where you can weigh, buy postage and mail your packages. There are flat-rate boxes that require less time to process. Finding efficiencies is not going to resolve the massive retirement and medical costs. Five billion dollars is only the start. As all the older employees come into retirement age, the cost will skyrocket. Since they can’t lay off employees, they will have to buy them out or offer early retirements, which they also can’t afford. They have essentially painted themselves into a financial corner.
I wonder if the last mile, if you stop at every address, is the most expensive. Could it be the least due to volume?
A WSJ editorial on the subject. According to the graph, the price of a first-class stamp has increased faster than inflation since 1958.
Hm. I found (an unashamedly partisan) argument that the current PO financial crisis is basically a Congressionally-caused scam.
Oh, and of course the USPS’s costs are primarily labor. It’s not like they’re consuming raw materials to manufacture something. The only cost I can think of for them that wouldn’t be a labor cost would be vehicles. But consider: Driving (all costs considered) costs something like 50 cents a mile. If you’re driving an average of 30 MPH, that means that each vehicle is costing you $15 an hour. But that vehicle also has a driver, who’s probably getting paid at least close to that, and possibly more, and you’ve also got a great many employees who are doing things other than driving vehicles (sorting mail, manning the counters at the post office, delivering mail on foot, loading and unloading the trucks at distribution centers, etc.), and all of them have to get paid, too. What kind of proportion would you expect, for their labor costs?
Having employees who can’t be laid off is a " ridiculous notion of ‘efficiency.’"? Having 80% of your costs being labor is definitely “ridiculous”. A visit to the post office is pleasant only when comparing it to a visit to the DMV.
Older people will be hurt most, since they are less likely to use online services and depend on snail mail (social security checks and the like). I suppose poorer people will be, also.
Personally, I could live with significantly reduced postal services.
Wait a minute, are you saying those ‘forever’ stamps may not be good forever after all?
sucker!! 
Ah, yes, and here we have the rich guy’s assumption that everyone in the country has internet access. Probably the sort of person who thinks that “poor” means that you don’t have both summer and winter homes.