I have commented in the past that a surprising number of people find this blog by searching on some variation of “USPS inefficient.” Misgivings about the operational excellence of the local postal service is not, of course, special to America. The operational chops of the post office is questioned around the world and in many places has led to privatization. That is, give up on government bureaucracy and assume that market forces will bring greater discipline and (presumably) better service.
So what does a privatized postal service look like? That essentially the question examined in a recent London Review of Books article (fun fact, we have nearly 400 posts on this blog and this the first time any review of books has been cited). The article (In the Sorting Office, Apr 28) has a particular slant in that it focuses on the way privatized systems effectively replace good paying, middle class jobs with subsistence employment.
Across the world, postal services are being altered like this: optimised to deliver the maximum amount of unwanted mail at the minimum cost to businesses. In the internet age private citizens are sending less mail than they used to, but that’s only part of the story of postal decline. The price of driving down the cost of bulk mailing for a handful of big organisations is being paid for by the replacement of decently paid postmen with casual labour and the erosion of daily deliveries.
How sympathetic you are for the plight of labor may color your interest in the article, however, the following quote really caught my eye:
Hooper is right in that Royal Mail is in a fight for survival with new media, the world of words not written on paper, weightless electronic words. As with music and newspapers, so with letters. It is in a fight with competitors who get guaranteed access to its reservoir of postmen as if they were a water or gas supply. But it is also the subject of a third kind of competition, between two utterly different sets of customers with incompatible needs. A few hundred giant firms and organisations which want to send bursts of millions of letters and catalogues every few days are competing for the same set of postal workers with millions of people who want to send a few Christmas cards and once in a while something that needs signing. In this competition the power lies with the few, whose priority is cheapness, rather than the many, whose priority is regularity and universality; cheapness wins, and it is the postal workers who suffer.
Postal services are caught in an interesting point in history. They were once an essential utility for getting and paying bills, for communicating with family and friends, and for fulfilling social obligations like Christmas or birthday cards. For most of us, those functions have largely been replaced by electronic communication. However, we as individual customers still define the quality of the postal service by the regularity of delivery and how fast the line moves at the post office. That is, by the expensive, labor intensive stuff.
The unfortunate part is that we are not paying the bills anymore. The backbone of demand is now “junk mail” that favors cheap service to reach “enough” customers. Postal services are thus left to serve two masters, as the quote notes, but the operating systems to please both are not really compatible. It is thus not surprising that privatized systems favor large institutional mailers as opposed to retail customers. We have proven that we like electronic options and there is no way fast lines at the post office are going to change that. We are just a bad investment. Catalog merchants, however, need the postal service and are just a better bet.
Marty Lariviere
Gad Allon
Jan Van Mieghem
The last I checked, the USPS is the only company that offers (free) pick up and delivery to every address in the U.S. Who cares if “bulk” mail wants a low, low price. When has a monopoly ever worried about the price a customer wants to pay.
There is no reason to sustain the tension between two masters…nor for that matter any reason to privatize (I can’t believe I’m saying this), the postal service. The USPS needs to set their rates based upon market conditions. If the junk mailers want lower rates they should check with UPS or FedEx or a local delivery company.
If the USPS were to trim the amount of junk mail that it delivers they may be able to become more innovative with other services. They could capture meter readings for the utility companies, provide process serving for the legal industry and other such “high touch” requirements that other businesses or industries require.
The USPS needs to break their junk mail habit. As consumers we would welcome a reduction in the amount of stuff that we literally take directly from the mail box to the garbage can. In Obama’s Green Administration, this shouldn’t be a stretch. New services innovation could take a financial mess and make it profitable. At least the pensions of the postal workers could be covered.
If the corporations run the U.S. mail, they will drive it for profit, and the system will have to fund the million dollar bonuses required for management to get up in the morning.. It is cheaper, and more effecient , for the system to run merely to “break even” and provide a service everyone needs without being burdened with paying CEO salaries/golden parachutes on top of the usual expenses.. If the service is privatised, it will be driven for all the profit it can yeild, and charges will be based on “what the market can bear” ie every cent it can get out of people. This again is less cost effective than merely running it to provide a good service without forcing it to “maximize profits”, which will entail charging as much as possible over and above what it costs to provide the service and break even. The services will have to become more expensive in order to take in more dollars so that a profit can be realized.