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  • Dying Monopolies – The Post Office

    Posted by Carl from Chicago on March 31st, 2013 (All posts by )

    In the River North neighborhood of Chicago there are many affluent customers packed into a small physical area. The vast majority of these individuals shop online and receive physical packages as a result.

    And yet the post office building that sits right smack dab in the midst of all these package-receiving citizens is not a hub of activity; many times it seems empty and forlorn.  Why is that?  It is due to the fact that the US mail system, which provides service across the United States, is not viewed as either a reliable or competitive delivery mechanism for e-commerce goods delivery, and the flood of packages that arrives is generally delivered by either UPS or Fed Ex.

    The post office dutifully delivers all the stuff I don’t want – junk mail, catalogs, bill reminders, an occasional holiday card for those that are sent via snail mail, and notices from governmental entities that haven’t joined the internet era (to their credit some of them have moved much of their operations to the internet).

    While the post office is crippled by liabilities, benefits, civil service protections for workers, and a mandate to serve every US address for first class mail, they would be in a much better situation if somehow they had been able to capture a significant share of the package delivery market that flourished right beneath their noses.  This article from Slate describes the situation as it exists today.

    The loss of the package delivery opportunity is only the most obvious squandered one; think of what the post office COULD have done tied vai the internet (guaranteed, reliable domain names linked to addresses for bill paying or as a pre-cursor to social media) or with sales of goods since they have access throughout the entire USA.  However, given that they were set up as a monopoly to do one thing well (deliver first class mail), they didn’t have much pressure to innovate.

    In the end the post office is mostly a machine to employ government workers, spread throughout the US and in every congressional district.  Per wikipedia (which has a solid write-up here) the US post office employs 574,000 workers, with government perks, pensions and benefits that most of you will never receive, in order to deliver that first class mail that you mostly throw into the recycling bin.  The proposals that they are floating show how tied their hands are; they want to cut Saturday mail delivery which will make them even less competitive vs. UPS and Fed Ex – they aren’t really talking about ways of outsourcing services and cutting expensive staff en mass which would be needed to move even close to breaking even.

    The post office is probably just betting that their employees (through lobbying) and government protectors (the politicians) will be enough to stop significant cuts while their service (first class mail deliveries) becomes ever less essential.  Since we bailed out the banks and print enormous amounts of money to fund the US deficits, who will ever even notice tens of billions of dollars in losses on first class mail service to boot.

    The sad part is, they are probably right.

    Cross posted at LITGM.

     

    13 Responses to “Dying Monopolies – The Post Office”

    1. Michael Kennedy Says:

      There was a very un-PC joke when I was in college long ago. There was a well-known shoe store chain called Kinney’s Shoes in California and the joke was to compare them to the Post Office. The comparison was what did they have in common? The answer was that they each had 50,000 black loafers. That is racist and a bit unfair but explains a lot about the survival of the PO, especially with this administration.

    2. Bill Brandt Says:

      most of you will never receive, in order to deliver that first class mail that you mostly throw into the recycling bin.

      Are you kidding?

      Most of it is 3rd class – junk – loose leaflets – flyers – crap sitting all over my garage floor that I have to scoop up and deposit into our blue recycling bins..

      I read too that the average unized postal carrier gets $80K in wages and benefits – and they are prohibited from laying them off and the USPS is downsizing.

    3. Sgt. Mom Says:

      Honestly, I could get along with USPS delivery three times a week. I’d estimate that %90 of what I get on the average day is the printed version of what I empty out of my spam e-mail folder regularly. Most items that I really, really want come through UPS or one of the other commercial services.
      But there are mail delivery customers out in the rural wilds who do really depend on the US Postal service – that is OK by me that they continue receiving regular service. And I also confess that the local USPS people are really nice and helpful. I mail items all the time at the main post office in San Antonio; all the clerks are helpful, professional and … really, really nice. Some of them even remember me, from previous visits. It’s just that I also believe urban USPS delivery really can be cut back. And charging market value for third-class delivery really ought to be considered.

    4. Lexington Green Says:

      Sgt. Mom beat me too it: the UPS subsidizes and delivers physical spam that is environmentally destructive to make and to dispose of.

    5. Ginny Says:

      Well really privatizing it would be good – keeping small offices open, rural free delivery when most come to town every couple of days, pensions that can’t be re-negotiated, the problems are numerous. But Amazon sends us everything through the mail and Amazon isn’t stupid; our local offices where lines are long from open to close have customer-friendly self-serve for most shipping needs of your average consumer. I’d heard that ours were some of the more profitable centers in the nation – maybe because we have a disproportionate number of internationals who use it heavily. For a few weeks our service was pretty lousy (they seemed to have hired a carrier who was dyslexic and he had trouble communicating in English, too); none of the neighbors wanted to complain because he was sweet. But. . .(Okay, my father spent most of his life as a rural mailman or postmaster in a small office; the same for my grandfather; and my husband’s uncle was postmaster of this town until he retired, so, yes, I may not be as unbiased as most.)

    6. grey eagle Says:

      If you look at the original list of 30 stocks used to calculate the DOW industrial average in 1928, only 2 are on the 2007 list (GE and GM). Most of the rest are history (eg. Nash, US Steel, Woolworth).

      The US Post office is around because it is supported by law and taxes. Old private companies die and are replaced by new companies because many old conpanies no longer can adapt to the their customers’ needs.

      Government never adapts to the needs of the People. Rather the People must adapt to the needs of the government or else they are terminated or go the jail.

    7. Melissa Says:

      @ Michael Kennedy, It looks as if you’re right. Check out page 2 statistics on employment by race:

      http://www.gao.gov/assets/100/92171.pdf

    8. Tim Says:

      I work in the building which houses the National Postal Museum. Oddly enough, they have a current exhibit of artifacts from the Hindenburg and the Titanic. Metaphorical?

    9. Bill Brandt Says:

      @Grey Eagle – unless they are GM and Chrysler

    10. Jim Miller Says:

      FWIW, in the last year, I have received a couple of packages that started with United Parcel, but got delivered by the mailman.

      I am not sure how that arrangement works, but it seems as if — for small packages — it would benefit both organizations.

      (Possibly important detail: I live in a Seattle suburb, which is nowhere near as densely populated as the River North area.)

    11. Gringo Says:

      I use the USPS for sending packages, and have gotten good results. I agree with Sgt. Mom that fewer delivery days would be fine. I read some statistic- was it here?- that from 2007 to 2012 the volume of mail that the USPS delivered declined by 25%- which would support fewer delivery days. I and a lot of my neighbors check our mail boxes only several times a week. Six day delivery- who needs it?

    12. Gringo Says:

      I do not get a real-time preview of a comment until I sent a comment.

    13. Jonathan Says:

      The preview feature isn’t perfect.