Considering the many dire predictions about the perils of the out-of-date business model of the United States Postal Service, one might surmise that its very future is in doubt.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.
Actually, the pronouncement isn’t really all that earth-shattering.
But 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.
Referring 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:
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.”
All 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.
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.
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.
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.
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?
Death … taxes … rising U.S. postal rates. It seems all three of these things are just a given. And the USPS is getting ready to up the price mailing a first-class envelope another 2 cents, effective next week.
But hold on! Because it’s suffering from a significant decline in mail volume approaching 15%, the USPS is concurrently rolling out a special program heretofore never seen from this most politically tin-eared of government agencies. The impressively named Saturation Mail Incentive Program gives large standard mail direct marketers who increase their mailing volumes the opportunity to earn per-piece credits — discounts essentially — on their mailing activity.
The discounts themselves are rather small — ranging from 2.2 cents per nonprofit letter mailer to 4.0 cents per flat piece (catalog).
… And the “fine print” conditions as to who actually qualifies for the discounts are almost byzantine in their description.
… And the savings are for a limited time only (~1 year) beginning this month.
… And program participants must formally apply to the USPS for approval.
… And they must do so by June 11 or lose their opportunity to participate at all.
… And, and, and … Well, you get the idea.
But the fact that the postal service is actually throwing a “sale” on rates is big news in and of itself. When has this ever happened before?
Quoting the eloquent words of USPS spokesperson Michael Woods, “The Postal Service is always looking for ways to use our pricing flexibility to improve business, and the current economic climate makes that more important than ever.”
Translation: “We’ve lost a pile of business in the economic downturn, and maybe if we lower our prices, we’ll get some of it back.”
We’ll check back after a few months to see how things are going. Judging from the most recent financial results published this week — a quarterly loss of nearly $2 billion — we may not see much improvement. After all, the USPS has managed to make money in only one quarter out of the past eleven!
UPDATE (5/18/09) — The USPS has now finalized the program, which will now launch July 1. Details are here.