How the Post Office could solve its budget shortfall
Filed under: Recession
A story posted earlier today reported the dire situation of the U.S. Postal Service. Increasing costs, particularly fuel, and declining revenue from mail advertising has resulted in a $2.8 billion shortfall last year, with more expected in 2009. As the Postmaster General noses around D.C. looking for a bailout and threatening a cutback in service, I wondered what other alternatives it might have.
1. In an era where more cars are registered in the U.S. than there are drivers, could we function without home delivery? What if the Post Office created convenient drive-through pickup sites where we could receive our mail each day, or less often if we so choose? And perhaps get a soft drink and some fries?
In such a scenario, home delivery could remain an extra-cost option, with vouchers to pay for this service for the housebound. Perhaps mail delivery and newspaper delivery could even be bundled.
2. Is the Post Office charging enough to distribute advertising materials? There is a point of diminishing returns here, a price at which vendors will reduce their mailings and more than wipe out any increase in revenue. From the volume I receive, however, I suspect that the USPS could wring more money out of this area.
3. On foot, door to door delivery of the mail in cities must come at a huge price. Many new developments now have mail box banks, a single site where mail for the entire street is delivered, from which residents retrieve their mail at their leisure. Perhaps it's time to bring that same distribution method to established neighborhoods.
4. The Postmaster General has floated the idea of five day a week delivery. When I was young, the mail was delivered twice a day. I don't remember people protesting too loudly about that cutback. How many people use the USPS for extremely time-sensitive deliveries (except, perhaps, my colleague, Geoff Williams)? With the success of FedEx and UPS, alternatives exist for those who absolutely, positively need to receive something tomorrow. I wouldn't be put out much by eliminating Saturday mail delivery, although I fear Netflix might.
5. How about cutting postal employee's wages? According to the US Department of Labor, the median wage for postal workers is $45,050, not a fortune by any means. I don't see how reducing these modest incomes can solve the service's dilemma.
6. Raise the price of stamps? Again, the law of diminishing returns could make this a non-starter. I already have chosen to receive many of my bills by email, and pay via the Internet. Higher stamp prices could convince more people to do so.
Reader Comments (Page 1 of 1)
3-26-2009 @ 1:27PM
j said...
stop selling one cent stamps
sell 5 cent stamps every time the price increases they would make a little bit more at the start of a rate increase to catch up on what they were behind faster.
Guess what nobody would really know the difference and it would not go against that archaic rule that limits the amount of our postal increases to such weird numbers.
Besides I get tired of seeing a whole bunch of one scent stamps on the envelope.
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3-26-2009 @ 3:13PM
Keith said...
Stop raising the stamp and start charging proper rate for your packages and allow UPS and Fedx to compete. Mail is profitable but your package segment is not. I believe you lose money on every package that gets shipped.....that's why you can't break even.
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3-26-2009 @ 4:57PM
lt said...
5 day delivery week - it will save billions - there is simply not enough mail being dfelivered to justify 6 days - we are in different times with email and online bill payments - most will not even notice or will easily adjust - for the few that absolutely need delivery on saturday they should pay the premium for it - it would be grossly inequitable to have taxpayers spend billions extra to subsidize continuation of a 6 day delivery week
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3-26-2009 @ 5:13PM
gina said...
Is it possible that the USPS could get back on the road to profitability by concentrating on their core business, and providing innovations that enhance only that core business? I may be mistaken, but it seems that when they started to compete with overnight services, and started to try to be a thought leader in the marketing world, they started complaining about profitability. I seem to find them at most every trade show I attend, which can't be cheap. Dreamers like me envision an 'mail' service that aggregates and organizes 'mail' messages for me, delivering them once a day electronically. I can download what I need, and it's secure for things like bills and notices. I can rapidly see if I've got a message from the kids' school - or a credit card solicitation - because it's all sorted for me. My bills don't get lost in a stack - and I can even enable payment from my 'mailbox'. My house is not cluttered, and my recycling bin does not overflow. It sounds like heaven to me...what do you think?
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3-27-2009 @ 2:28PM
Ruth said...
Gina, I agree with you. I live where there is a single bank of 63 locked boxes at a delivery site. My mail is easy to collect, and it is safe until I am able to empty the box. The management puts a wastebasket beside the boxes, and recipients of bulk mail usually sort their mail right there and toss the circulars in the trash. Whatever the PO delivers is thrown out, unread. Most see the fliers as a problem, a general mess to be tolerated, since we receive boxes -full of flyers every week, from local stores. Mail MUST be picked up the day such flyers are in the boxed, or there will not be room for important mail the next day.
3-27-2009 @ 2:58AM
jonh611 said...
If every household went out and bought a book of stamps, it would give the USPS a quick $800 million or so, at a cost of only $8.40 each. Amazing how quickly it adds up when there are 100 million people doing something.
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3-27-2009 @ 5:16AM
Scot2_200 said...
Sell advertising on the stamps. Who cares if a nike swoosh is on a stamp? It could generate millions of $$$ a year.
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3-27-2009 @ 10:46AM
Lynn said...
The post office should charge more for junk mail and magazines to get proper revenue. They should concentrate on the main goal of letters .
They don't charge enough for parcel post where the cost is the highest. It wouldn't be the end of the world if they cut out Saturday delivery.
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3-27-2009 @ 11:29AM
c said...
Stop Saturday delivery. That was save dollars. I don't think we will miss that at all.
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3-28-2009 @ 11:34AM
Lucinda said...
Stop Saturday delivery--it's a small change that we will easily get used to & could make a real impact.
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4-21-2009 @ 11:41AM
Don McGlory said...
The Postmaster General is being paid $800,000.00 a year to manage the Postal Service. In the private sector when managers are faced with belt tigntening choices to cut overhead tough decisions have to be made. Identifying which services being provided are loosing money, increases for those services or service cuts must be considered. Private companies are always faced with tough decisions and that is why managers are hired to solve them.
There is no excuse for the Postmaster General to manage the Post Office any differently than other business managers have to operate. Sure there are tough choices to make but isn't that the reason to hire $800,000 managers in the first place. I think most Americans can readily accept less services or pay more to get more. You cannot run a business and lose $2.5 billion dollars annually. My advice is to manage the assets you have, tailor the services you can provide and do what has to be done to operate within approved budgets. I don't know of any other way to survive in business and the Government must operate in the same mind set and principles as all companies do. Just do it right!
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