Some good news for the U.S. Postal Service for a change …

psThe U.S. Postal Service has just implemented a price adjustment on first class letter mail – the first rate increase in quite a few years. Some other pricing adjustments have been implemented as well, but on the whole they are modest.

Hopefully the rate increases won’t throw water on the good news that the USPS experienced over the holiday season. According to a Rasmussen Reports consumer survey of ~1,000 American adults age 18 and over conducted at the end of December, Americans used the USPS more in the most recent holiday than in the 2015 season.

The public also continues to give the USPS higher marks than its major competitors – FedEx and UPS – on the way it handles their packages.

For the record, ~21% of the respondents surveyed by Rasmussen reported that they used the U.S. Postal Service more this holiday season than they have in previous years, while ~18% reported they used it less. The remaining ~61% kept their USPS usage at around the same level of activity.

On the commercial side, for many businesses who do not have the kind of high volume shipping needs to qualify for special pricing from FedEx or UPS, the USPS also appears to be a far more lucrative choice from a price-to-value relationship.

usIn mid-2015, FitSmallBusiness.com undertook apple-to-apples comparisons of the three big package delivery firms, and found some startling differences.  For example, to ship a 3-lb. package overnight-delivery from New York City to Los Angeles, using FedEx would set the sender back $83.  UPS was even worse, at $84.

The USPS price?  Just $24.99.

Comparing short-haul rates as well as heavier 10-lb. packages found similar major discrepancies — all in favor of using the U.S. Postal Service. On top of that, the USPS provides free packaging materials, complimentary pick-up service, free insurance and tracking — not to mention flat-rate boxes for packages that weigh up to 70 lbs.

feSealing the deal further, while FedEx’s 50,000+ and UPS’s 63,000+ locations worldwide are certainly nice to rely on, the number of USPS locations dwarfs those figures by a country mile. Those myriad USPS locations also mean that packages can be shipped to P.O. boxes in addition to physical addresses – something that’s out of the reach of either FedEx or UPS.

People love to beat up on the United States Postal Service.  But say what you will about the USPS, its problems and its financial challenges, they’re still a major-league bargain for many consumers and businesses.

As the U.S. Postal Service girds for processing 15 billion pieces of mail this holiday season …

workerConsidering the many dire predictions about the perils of the out-of-date business model of the United States Postal Service, one might surmise that its very future is in doubt.

But then we read the following news about the upcoming holiday mail season:

  • 15 billion+ pieces of mail are expected to be processed by the USPS this holiday season.
  • That represents an increase of ~10.5% compared to last year.
  • Of the 15 billion items processed, more than 500 million will be packages.

There’s a new benefit being offered to USPS customers, too. Ahead of the holiday season, the USPS is now offering real-time delivery notification.  People who register will receive real-time e-mail alerts when delivery scans are made by postal workers.

That new function may well be why the new USPS slogan has been unveiled as “One more reason this is our season.”

Normally, all of the additional volume would be cause for celebration – tapping unused capacity while growing revenues during this busy time of year.

But here’s the rub: In order to handle the added volume, the USPS needs to hire ~30,000 temporary workers.

This could mean that substantially all of the added revenues are immediately sucked out of the USPS’s coffers in order to pay for the added labor resources.

“It’s always something …”

In the U.S. Postal Service’s own words: “Letters are going away.”

Actually, the pronouncement isn’t really all that earth-shattering.

USPS Mail DeliveryBut the fact that “letters are going away” has been stated by a spokesperson for the United States Postal Service speaks volumes.

The comment came after a not-for-profit interest group calling itself the “Taxpayers Protection Alliance” released a video that admonishes the USPS to “stick to delivering our letters.”

In the cartoon video, a girl is mailing a holiday card to her grandmother while complaining that it’s getting harder and harder to send First Class mail.

TPA videoReferring to the package delivery and grocery delivery services that the USPS now offers, the cartoon character pleads for the USPS “stop cutting mail services in favor of these other costly things and stick to what we really need them to do:  deliver our letters.”

The Postal Service’s response can be summed up in two words:  “Dream on.”

In fact, here’s what a USPS spokesperson stated to Target Marketing magazine about single-piece First Class mail, which includes personal correspondence and bill payments:

“[It] historically has funded the organization, since we do not receive tax dollars.  Package volume is growing exponentially … The mail mix is changing and the Postal Service welcomes that change.”

Indeed, First Class mail volume — and particularly single-piece First Class mail — has been declining rapidly, as can be seen in the USPS’s annual volume figures shown below:

First Class Mail Volume Trends
First Class Mail Volume Trends: 2005 – 2014. (Source: U.S. Postal Service)

By comparison, package delivery has grown by nearly 20% over the past five years.

Target Marketing and others have done a bit of digging to learn more about the “Taxpayers Protection Alliance” … and they’ve discovered that the group is particularly perturbed about the USPS getting into the grocery products delivery business.

“Expanding services into the private market is not only wrong because it undercuts private competitors,” the TPA organization’s president David Williams complains, “but because it is coming at the expense of its government-granted monopoly – mail delivery.”

TPA logoAll of which makes it intriguing to speculate who is actually behind the “Taxpayers Protection Alliance” and what particular agenda they may have.  Hint:  private companies that offer grocery delivery services, perhaps?

But the bigger news is this:  The USPS is no longer even pretending to claim that First Class mail is a central part of its business model looking to the future.  And that’s a huge change from only a couple of years ago.

Titanic deck chairs – USPS edition: The Postal Service is getting into the clothing business.

New USPS apparel line "Rain Heat & Snow"The U.S. Postal Service, hemorrhaging red ink all over the place, has finally decided to jettison Saturday mail delivery.

This decision was taken after years of (very public) hand-wringing and amidst dire predictions of public outrage if the trigger was actually pulled on eliminating Saturday delivery.

Yet, once the decision was finally announced, public response was … near silence. It was a total shrug.

[Politicians, take note: This may also turn out to be the public’s reaction to the sequester cuts kicking in — breathless predictions to the contrary aside.]

Of course, we all know the USPS hasn’t been able to catch a break in recent times. As mail volumes continue to slump, the postal service finds itself attempting to spread its fixed and operating costs over a steadily smaller share of mail volume.

According to the USPS’s own figures, there’s been a ~33% decline in catalogs mailed in just the past four years.  First class mailed hasn’t fared much better, decreasing by one-fourth over the past decade.

At worst, the situation is a recipe for complete failure … at best, the USPS will just continue to lurch from one mini-crisis to another. 

So what to do with such dire prospects staring you in the face?

Why not start a clothing line!

That is correct: The USPS has announced plans to launch a new line of apparel and accessory items. It is partnering with Cleveland-based apparel company Wahconah Group to launch the product line, which will be sold under the brand moniker Rain Heat & Snow.

Forget trying to figure out mail delivery practices that will work in the 21st Century. According to the USPS’s corporate licensing manager, Steven Mills, “This agreement will put the Postal Service on the cutting edge of functional fashion!”

By “cutting edge,” Mills is apparently referring to the fact that the new clothing line will incorporate wearable electronics technology to make the items “smart.”

Isaac Crawford, CEO of Wahconah, reports that “the products will build on the rich American history of this iconic brand, creating specialized apparel for consumers, at affordable prices, delivering something new and exciting that retailers can offer their customers.”

Is anyone jumping up and down with excitement yet?

Tellingly, none of the Rain Heat & Snow apparel will be available at post office locations — only at department stores and apparel shops.

I guess it would be rather strange to encounter mannequins and display racks amongst the shipping containers, change-of-address forms and passport applications at your local post office branch.

As much as many people would like this new venture to be a success, I can’t visualize this endeavor causing anything more than a minor blip on an otherwise steady downward trajectory for the postal service.

So, is it back to the drawing board?

Celebrating American Pioneers of Industrial Design

USPS Pioneers of American Industrial Design Postage Stamp Set

Russel Wright American Modern dinnerware: Water Pitchers
Russel Wright American Modern dinnerware: Water pitchers from outer space.
The U.S. Postal Service has just issued its newest series of commemorative stamps, and it’s a marvelous set. Instead of honoring yet another crop of political leaders, sports figures or performing arts stars, these postage stamps commemorate 12 American pioneers of industrial design.

Names like Norman Bel Geddes, Gilbert Rohde, Russel Wright and Dave Chapman may not be known to many people today, but they were among a rarefied group of forward thinkers who revolutionized the way we think about design.

In part a reaction against the delicate fussiness of the beaux arts and art nouveau styles, these visionaries sought simplicity in form, celebrating the “utilitarian” aspects of the products they designed while eschewing any purely decorative elements.

From the clock radios of Norman Bel Geddes to the rotary telephone of Henry Dreyfuss, these designs placed “function” front and center. And they were indeed eyebrow-raising – in some cases shocking – to American consumers of the 1940s and 1950s.

But unlike the often ugly, relentlessly boring steel-and-glass boxes that came to symbolize modern architectural style, the items these industrial designers created possessed a style and elegance all their own – and many went on to become icons of design in their respective product categories.

In my youth, our household was one of many that owned a set of American Modern dinnerware, designed by Russel Wright and manufactured by Steubenville Pottery. These dishes were the epitome of “functional simplicity” – used and abused in kitchens and dining rooms during the 1940s, 1950s and 1960s.

And yet, despite all of their simplicity, they had a style that was so distinct, no one who lived with them could ever forget them. “Vegetable bowls from outer space,” a friend of mine remarked once.

But Russel Wright and his fellow designers were doing far more than just paring down to the essentials; they aimed to simplify daily life itself. As a parallel to designing tableware, furniture and decorative objects, Russel Wright and his wife, Mary Wright, published a book titled The Guide to Easier Living.

Aiming to sweep away the last vestiges of the “old order,” when the well-heeled and bourgeois alike relied on “the help” to carry out elaborate dinner parties and other social functions, this book was a veritable how-to guide for the modern 1950s family.

How to organize and decorate the home … how to go about daily living … how to entertain without all of the fussy trappings: This and more were spelled out in suggestions and step-by-step instructions.

Originally published in 1950, the book was an instant success. Amazingly, it would be re-released in 2003 in its original form – without any editorial updates or adjustments – its content remaining surprisingly up-to-date.

The same timeless quality characterizes the work of the other 11 industrial designers featured in the USPS commemorative postage stamp series as well. Time and time again, people have returned to the work of these designers for inspiration.

Indeed, some of today’s most talked-about products, such as Target’s Michael Graves series of teapots or the new Dyson line of bladeless fans, trace their design inspiration straight back to the work of these pioneers – revolutionary in their day, but true classics now.

Proposed USPS legislation is no panacea.

With all of the horrid financial news coming out of the United States Postal Service in recent months and years, we’ve been waiting to see what sort of congressional legislation would be proposed to alleviate its problems.

The wait is now over, with the announcement of a legislative proposal called the Postal Operations Sustainment & Transformation Act of 2010. (P.O.S.T. – get it?)

This legislation attempts to fix the USPS’s precarious financial condition with a bevy of provisions such as easing employee pension and retiree health costs, making it easier for the USPS to close redundant or underperforming branch offices and, most dramatically, eliminating Saturday mail delivery altogether.

It’s no wonder the proposed legislation seeks to cut back on operating costs, because the volume of mail the USPS processes has dropped by ~20% just since 2006. And the prediction is for a further decline of ~20 billion pieces of mail that will be handled in the coming decade.

Sen. Thomas Carper, who introduced the bill, had this to say about the proposed legislation: “… If we act quickly, we can turn things around by passing this necessary bill that would give the Postal Service the room it needs to manage itself …”

That sounds nice and tidy. But does it really solve the USPS’s financial and structural problems?

If enacted, the new provisions in this legislation are expected to save the Postal Service somewhere north of $3 billion per year. But only a couple days following news of the legislative bill comes word that the USPS lost $1.6 billion in the month of August alone.

In fact, for the first 11 months of its fiscal year, the Postal Service’s losses have totaled nearly $8 billion. USPS losses are significantly higher than last year at this time (~$6.3 billion by comparison) – and that’s even while experiencing an increase in mail volume of ~1.8% year over year.

In this context, it seems pretty evident that the pending legislation will not come close to remedying the USPS’s financial situation – even as it enables the most sweeping cuts in operating activities that have ever been seen. Unfortunately, a classic case of “too little, too late.”

The Postal Service’s own Office of Inspector General has released a report claiming that the USPS could be financially sustainable at the lower mail volume levels projected … if it could raise prices above the inflation rate. But such an action could tip the whole enterprise into a “death spiral” where the price hikes drive away customers. A reminder to everyone involved: Mailing service is no longer a monopoly in this country.

This problem is by no means solved.

USPS: Yes, it’s in the news again.

It seems the U.S. Postal Service is never out of the news – and the news is almost always depressing or infuriating.

And last week, the USPS made the headlines not once but three times. The first item was a financial report – numbingly repetitive by now – that the agency lost nearly $1.6 billion in the last quarter.

Like a bad movie that never seems to end, the USPS is on track to lose as much or more money in FY 2010 than it dropped in 2009. Meanwhile, the Postal Service continues to seek ways to reduce expenses by cutting back on the services it provides. Look for Saturday mail delivery to be a thing of the past by 2013.

Then, later in the week came news that Robert Bernstock, the USPS’s former president of mailing and shipping services, was found to have improperly used his position to conduct outside business, including helping award six non-competitive contracts to several of his former business pals. The Office of Inspector General, which investigated his activities from July 2009 onward, also concluded that Bernstock “used his subordinate staff to conduct work that supported his outside business activities.”

Bernstock resigned his position on June 4.

Hard on the heels of the Bernstock revelations came the nice little news nuggett that the USPS has been overcharged in excess of $50 billion for payments to the Civil Service Retirement System (CSRS) – payments that were made over a 37-year period from 1972 to 2009. The Office of Personnel Management, which is responsible for calculating the CSRS pension liability, is now reconsidering its calculation of the USPS’s pension assets in light of the report.

While it’s nice to see that the CSRS error is being remedied, it’s pretty amazing that something so inaccurate as this could have gone undetected for the better part of 40 years!

And what’s the USPS doing for an encore this week? It’s filed for an exigent postal rate increases ranging from 5% on first class mail to a whopping 23% on parcels. Isn’t that wonderful: reward inefficiency by getting a price increase.

This quartet of USPS news items over the past week embodies everything that concerns those who are looking at the prospects of increased government involvement in health care with dread: operational inefficiency … financial mismanagement … corruption and backroom dealing at the highest levels.

It’s also a cautionary tale for those who blithely believe that if we could only move this or that business activity away from the “money-grubbing private sector” and give it to a government entity instead … all of our problems would be solved.

Uh-huh.

An Address: The Next Human Right?

The flag of the Universal Postal Union, the UN agency that coordinates postal policies for member nations.
The flag of the Universal Postal Union, the UN agency that coordinates postal policies for member nations.
Food, shelter, clothing. These are considered basic human rights. But what about a personal address? Is that a human right, too?

That’s the contention of Charles Prescott, a former Direct Marketing Association official who is in the midst of forming a new transnational organization to promote universal “addressability.”

“The consequences of existence, or lack thereof, of an address – especially in the developing world – are dire,” Prescott says. The new group he is organizing (the name isn’t finalized yet – the International Address Data Association is being considered) will promote the adoption of a Universal Postal Union resolution calling for all countries to adopt formal address systems, including change-of-address systems that are available at an affordable cost.

Prescott notes that the cost of change-of-address systems range widely at present, from just a few cents per name in the United States to as high as ~80 cents per name in The Netherlands. If costs are too great, businesses won’t bother using them.

In the U.S., highly addressable mail isn’t that big of an issue, although it’s probably true that a great many catalogues and other printed materials end up in landfills because they’re not addressed to the correct location and never find their way to their intended recipients.

But it’s a huge issue in the developing world. “Address coordinates which can be associated with an individual are extraordinarily important for fostering economic, social and political development,” Prescott emphasizes. But how does this play out in parts of the world where the address descriptions are vague … or non-existent?

I recall when I visited Mumbai, India in the late 1970s, I stayed in a dwelling known as Motiwala Mansion in the Mahim District of the city. Its address was simply “Opposite Shree Cinema.” I asked about the address of the movie house across the street and was told that it was “Opposite Motiwala Mansion.” How’s that for confusion in a city of millions if you don’t know where either one of these buildings is located?

Even more challenging are the slum districts that pepper the world, where addresses basically don’t exist. Today, with the explosion of mobile technology, cell phones reach into every nook and cranny of the world. In fact, cell phones are ubiquitous in the favelas, back alleys and other transient communities that have sprung up in and around every major third-world city. These phones can track the coordinates where someone is living, thereby tagging him or her with an “address” of sorts.

Sound far-fetched? It’s actually happening today, such as with one Brazilian department store chain that is extending store credit to people residing in these localities – once their physical location is known.

But Prescott contends that mobile phone coordinates represent only a partial solution – one that doesn’t allow for the delivery of physical mail. It also doesn’t solve other barriers existing in some countries that have a direct bearing on the economic opportunities for poorer people. One example: the need to show a birth certificate to register children in school … hobbled by the inability to obtain that birth certificate without having a formal address.

Obviously, any new push for a universal “address” initiative faces challenges. As illustrated by the Mumbai example above, addresses will need to be developed using systematic logic that is consistently applied from community to community inside a country. That’s a lot easier said than done.

But as an evangelist for providing every person on the planet an address as a basic human right, Prescott is clearly serious in his endeavor. The advisory board he’s formed includes key thought leaders from business organizations, academia and government in the United States and Europe. This initiative bears watching.

USPS: The Losses Keep Piling Up

The latest financial results for the U.S. Postal Service are in, and they’re a continuation of the same old story line: Tons of red ink and fingers pointing in every direction.

The USPS posted a net loss of $3.9 billion for FY 2009, “only” $1.1 billion worse than the previous year. And that’s even after receiving a $4 billion deferment on paying an annual $5.4 million obligation to pre-fund healthcare premiums for its retirees.

Not surprisingly, total postal revenues were down about 10% to ~$68 billion, not only because of the economic downturn but also because of the continuing shift to digital communications. Total physical mail volume declined ~13% to around 177 billion pieces.

Given the sorry financial stats, one would assume that the USPS would be moving forward in all haste with its plans to shutter as many as 10% of its post offices and branches around the country.

But if you thought that … you would be wrong. What started out as a potential closure listing of ~3,200 stations (the impressively named Station & Branch Optimization Initiative) quickly became ~700 stations and branches that were actually slated to close. Then that figure was trimmed to just over 400. And now we have word that the closure figure is down to ~370.

Given more time, the number of closures may well slip even further … and at some point the whole exercise becomes completely meaningless as cost-cutting endeavor.

And then there are the persistent rumors that mail delivery will be cut back to five days from six. But that never seems to be anything more than just an idle threat.

Welcome to the wonderful world of government agencies: Stultifying bureaucratic procedures that are near-Byzantine in their complexity, coupled with reacting to every conceivable interest group while being too timid to make any hard choices at all when it comes to managing their operations like any business in private industry must do.

Anyone for government-managed healthcare?

USPS: Why don’t we just throw another couple billion around?

Last week, the United States Postal Service reported its latest quarterly financials — a $2.4 billion loss. Compare that result against the same quarter last year (pre-stock market dive), when the USPS lost only a mere $1.1 billion …

But what the heck? Why doesn’t the government throw a few more billions of dollars around? That’s probably in the cards, because Postmaster General Jack Potter has let it be known that the USPS may be on track for losing as much as $7 billion for the year … and that’s even if the USPS follows through on its plans to shutter ~3,200 post office locations (nearly 10% of the total).

Of course, one of the reasons for the sorry financials is a decline of USPS operating revenue on the order of around 9%. The most recent postal rate hike couldn’t make up for the ~14% decrease in mail volume, which dipped not just because of the recession but also because of changing communications practices, online bill-paying and the never-ending growth of e-mail.

Still, those volume declines are not as steep or as challenging as many private-industry companies have faced in their industries. Could it be that the USPS, as a government entity with all of the bureaucracy and HR/personnel strictures that entails, simply cannot be as nimble and flexible as firms in private industry? And what does this portend for us in the realm of government-managed healthcare?

Maybe the words of singer-songwriter Bobby McFerrin are applicable here: “Don’t worry. Be happy.”

Besides, what’s the alternative — clinical depression?