Post Office Deficit / by kevin murray

Goods don't magically show up at your business or your place of residence without someone physically driving that piece of mail or package to you, and that requires fuel, labor, logistics, and effort.  Whereas Federal Express (despite the name this is not a government-owned business), UPS, DHL, and numerous other small delivery services are able to make it their business to deliver packages and other items efficiently, on-time, and to be on-going and self-sufficient corporations.  This would strongly imply, that our USPS should be able to somehow provide the same sort of service without any net taxpayer cost, but this is hardly the case, despite the fact, that since 2006, the cost of 1st class postage for regular mail has increased by over 25%, and for the first 3 ounces of packages, that increase has been over 300%.


Another significant problem for the USPS is that their volume of mail has declined precipitously from 2006, when they delivered over 213 billion pieces of mail to around 160 billion pieces of mail in 2013. In any normal business environment, this would be a clarion call that business as usual should desist, and that fundamental changes are mandated.  The bottom line is that USPS is not as efficient as it could be and changes need to be mandated as soon as possible for the benefit of the taxpayers and for the industry in general.


For instance, there has been discussion off and on, for several years, about eliminating Saturday delivery, and the time to implement that change is now.  The Congressional Budget Office has estimated that this change would save somewhere in the neighborhood of 2-2.5 billion dollars per year.  However, I do believe that starting from the Saturday after Thanksgiving and ending on the Saturday after New Year's Day, Saturday service by the USPS should be continued, since this is the busiest time of year.


Additional savings could also be realized by mandated 10% reductions in staffing, in postal offices, and the freezing of wage and retirement benefits, until such time as the post office either returns to a breakeven status or to a surplus, to which in order to provide incentives to do so, a bonus pool could be constructed just for this particular contingency.  It is high time to look upon the post office as an unnecessary government monopoly that should be put on a tight leash, by which, if they are not able to right the ship within the next three to four years that more stringent steps should be taken to perhaps privatize the entire industry. 


There is little doubt, that companies such as UPS or Federal Express, in conjunction with local services, would be able to ramp up and take over the duties and responsibilities that are currently performed by our postal service, without necessitating subsidies from taxpayers.  Perhaps, our current structure of mail being delivered to our mailbox Monday through Saturday, would have to be modified, amended, transformed, or changed, but whatever those changes were, certainly, the burden upon the recipients would not be much, and in all probability the overall service would be better.


It isn't so much that our post office is currently run poorly or incompetently, it is the fact that it can't seem to perform without running massive yearly deficits which it did to tune of nearly $16 billion in 2013, whereas UPS made a profit of $4.4 billion, even though their respective revenues were relatively comparable.