How To
Save The U.S. Postal Service
(By Mike Tae and
Adam LaVier, Washington Post, 10 August 2012)
The outside
of the Old City Post Office in Washington, now home to the National Postal
Museum, bears a noble inscription to the mail: “Bond of the Scattered Family/
Enlarger of the Common Life/ Carrier of News and Knowledge/ Instrument of Trade
and Industry.” It’s a proud statement
about what the mail used to be. For more than 200 years after Benjamin Franklin
was named the first postmaster general in 1775, the United States Postal
Service provided services Americans wanted, in ways no other institution could
match — and usually at a profit. But
today, the “bond of the scattered family” comes from text messages, Skype and
Facebook. And global businesses favor private letter and package carriers.
In 2010, the U.S. Postal Service projected that it would
lose $238 billion over the following decade — a sum roughly equivalent to the
gross domestic product of Chile. Sadly, it’s not only the forecasts that are
grim for the USPS. On Thursday, the agency reported a $5.2
billion loss for the second quarter.
Despite years of study and recommendations, Congress continues to play
small ball with the Postal Service. The leading bills in the Senate and the
House each push for budget cuts and downsizing, but these are Band-Aids. They
do not resolve the underlying problems of the USPS.
So what should the government do to turn around the Postal
Service? Some people want a full and immediate privatization of the agency.
That’s what Peter Orszag, the former director of the Office of Management and
Budget, called for in
a recent column for Bloomberg View, and other economists find the idea
appealing. They say a privatized USPS would have the freedom necessary to deal
with the agency’s large structural challenges, which Congress after Congress
has failed to address.While privatization may offer some advantages in the long run, doing it now is neither politically tenable nor wise. To take the USPS private, Congress would need to find a consensus to sell off the country’s second-largest employer during the longest stretch of high unemployment in modern American history. Moreover, the Treasury is liable for post-employment benefits for federal workers. Supporters of privatization cite the $13 billion overfunding of the USPS’s pensions. But few mention the $46.2 billion in underfunded health benefits promised to employees, which no private bidder would ever agree to take on. Immediate privatization would leave taxpayers with yet another multibillion-dollar bill.
The Postal Service can become a sustainable business and
stay under government control. And it can do this in a way that would
ultimately lead to privatization without wreaking havoc on its employees or the
taxpayers. For good models, look abroad,
where postal services have successfully navigated the extremes of privatization
and government monopoly. Sweden eliminated Posten AB’s monopoly, allowed others
to enter the market and forced the enterprise to go head to head with its new
competitors, while maintaining 100 percent state ownership. Germany reduced its
ownership of Deutsche Post to a third and has licensed more than 800 companies
to provide alternative services, forcing Deutsche Post to expand and adapt with
the competition. Even in Canada, which maintains Canada Post’s mail monopoly as
a fully state-owned corporation, the postal service has the mandate and the
authority to make changes to preserve public funds.
In the past 20 years, as the ways we stay connected to one
another have changed dramatically, many of the postal services around the world
have changed, too. But not here. Congress, in fact, has continued to restrict
the USPS and aid its private competitors.
Congress fostered the growth of the companies that are eating the USPS’s
lunch, passing the Air Cargo Deregulation Act of 1977, nicknamed the “Federal
Express Act,” and the Motor Carrier Act of 1980. Both changed transportation
laws to meet the needs of private shipping carriers. But the time when UPS and
FedEx required special protections against the Postal Service has long since
passed. It’s now time for lawmakers to consider how to work for the USPS, not
against it.There are three successful precedents for change that we should consider. First, many national postal services have expanded and diversified their revenue by offering new competitive products, including global package delivery, logistics and freight forwarding. If it’s allowed to use its sizable revenue from first-class and standard mail delivery to invest in new and growing areas, the USPS can build revenue streams that will last beyond first-class mail.
Second, it is possible to deliver mail to everyone quickly and reliably at an affordable price. But this obligation must be coupled with competitive price adjustments and reasonable limits to delivery service. Postage rate increases are currently set by the Postal Regulatory Commission, whose commissioners are appointed by the president — not by the people who run the business. The USPS needs the authority to effectively cover its costs while preserving universal service.
Third, postal services are pursuing technical innovations to
keep up with modern communication. In 2010, Deutsche Post embraced online and
hybrid mail services, and made money doing it. (Hybrid mail systems give
customers a choice between electronic or physical letters.) The Postal Service
could adopt similar innovations.
These are all reasonable changes that have worked abroad.
But Congress and presidentially appointed overseers stand in the way of trying
them here. In addition to the stranglehold on pricing, the 2006 Postal
Accountability and Enhancement Act severely restricts the USPS from expanding
its services. The path forward for the
Postal Service will be difficult and involve compromise for everyone. But by
loosening restrictions on its ability to compete and allowing it to adapt,
Congress can allow the USPS to remain as an “enlarger of the common life” — not
just an enlarger of our debt.
U.S. Postal Service Faces Bankruptcy,
Plans Cuts To Slow Delivery Of First Class Mail
(Associated Press, December 4, 2011)
Facing
bankruptcy, the U.S. Postal Service is pushing ahead with unprecedented cuts to
first-class mail next spring that will slow delivery and, for the first time in
40 years, eliminate the chance for stamped letters to arrive the next day. The estimated $3 billion in reductions, to be
announced in broader detail on Monday, are part of a wide-ranging effort by the
cash-strapped Postal Service to quickly trim costs, seeing no immediate help
from Congress. The changes would provide
short-term relief, but ultimately could prove counterproductive, pushing more
of America's business onto the Internet. They could slow everything from check
payments to Netflix's DVDs-by-mail, add costs to mail-order prescription drugs,
and threaten the existence of newspapers and time-sensitive magazines delivered
by postal carrier to far-flung suburban and rural communities.
That
birthday card mailed first-class to Mom also could arrive a day or two late, if
people don't plan ahead. "It's a
potentially major change, but I don't think consumers are focused on it and it
won't register until the service goes away," said Jim Corridore, analyst
with S&P Capital IQ, who tracks the shipping industry. "Over time, to
the extent the customer service experience gets worse, it will only increase
the shift away from mail to alternatives. There's almost nothing you can't do
online that you can do by mail." The
cuts, now being finalized, would close roughly 250 of the nearly 500 mail
processing centers across the country as early as next March. Because the
consolidations typically would lengthen the distance mail travels from post
office to processing center, the agency also would lower delivery standards for
first-class mail that have been in place since 1971.
Currently,
first-class mail is supposed to be delivered to homes and businesses within the
continental U.S. in one day to three days. That will lengthen to two days to
three days, meaning mailers no longer could expect next-day delivery in
surrounding communities. Periodicals could take between two days and nine days. About 42 percent of first-class mail is now
delivered the following day. An additional 27 percent arrives in two days,
about 31 percent in three days and less than 1 percent in four days to five
days. Following the change next spring, about 51 percent of all first-class
mail is expected to arrive in two days, with most of the remainder delivered in
three days.
The
consolidation of mail processing centers is in addition to the planned closing
of about 3,700 local post offices. In all, roughly 100,000 postal employees
could be cut as a result of the various closures, resulting in savings of up to
$6.5 billion a year. Expressing urgency
to reduce costs, Postmaster General Patrick Donahoe said in an interview that
the agency has to act while waiting for Congress to grant it authority to
reduce delivery to five days a week, raise stamp prices and reduce health care
and other labor costs. The Postal
Service, an independent agency of government, does not receive tax money, but
is subject to congressional control on large aspects of its operations. The
changes in first-class mail delivery can go into place without permission from
Congress.
Technically,
the Postal Service must await an advisory opinion from the independent Postal
Regulatory Commission before it can begin closing local post offices and
processing centers. But such opinions are nonbinding, and Donahoe is making
clear the agency will proceed with reductions once the opinion is released next
March. "The things I have control
over here at the Postal Service, we have to do," he said, describing the
cuts as a necessary business decision. "If we do nothing, we will have a
death spiral." The Postal Service
initially announced in September it was studying the possibility of closing the
processing centers and published a notice in the Federal Register seeking
comments. Within 30 days, the plan elicited nearly 4,400 public comments,
mostly in opposition.
Among them:
_Small-town
mayors and legislators in states including Illinois, Missouri, Ohio and
Pennsylvania cited the economic harm if postal offices were to close,
eliminating jobs and reducing service. Small-business owners in many other
states also were worried. "It's
kind of a lifeline," said William C. Snodgrass, who owns a USave Pharmacy
in North Platte, Neb., referring to next-day first-class delivery. His store
mails hundreds of prescriptions a week to residents in mostly rural areas of
the state that lack local pharmacies. If first-class delivery were lengthened
to three days and Saturday mail service also were suspended, a resident might
not get a shipment mailed on Wednesday until the following week.
"A lot
of people in these communities are 65 or 70 years old, and transportation is an
issue for them," said Snodgrass, who hasn't decided whether he will have
to switch to a private carrier such as UPS for one-day delivery. That would
mean passing along higher shipping costs to customers. "It's impossible
for many of my customers to drive 100 miles, especially in the winter, to get
the medications they need."
_ESPN The
Magazine and Crain Communications, which prints some 27 trade and consumer
publications, said delays to first-class delivery could ruin the value of their
news. Their magazines are typically printed at week's end with mail arrival
timed for weekend sports events or the Monday start of the work week.
Newspapers, already struggling in the Internet age, also could suffer. "No one wants to receive Tuesday's
issue, containing news of Monday's events, on Wednesday," said Paul Boyle,
a senior vice president of the Newspaper Association of America, which
represents nearly 2,000 newspapers in the U.S. and Canada. "Especially in
rural areas where there might not be broadband access for Internet news, it
will hurt the ability of newspapers to reach customers who pretty much rely on
the printed newspaper to stay connected to their communities."
_AT&T,
which mails approximately 55 million customer billing statements each month,
wants assurances that the Postal Service will widely publicize and educate the
public about changes to avoid confusion over delivery that might lead to
delinquent payments. The company is also concerned that after extensive cuts
the Postal Service might realize it cannot meet a relaxed standard of
two-to-three day delivery. Other
companies standing to lose include Netflix, which offers monthly pricing plans
for unlimited DVDs by mail, sent one disc or two at a time. Longer delivery
times would mean fewer opportunities to receive discs each month, effectively a
price increase. Netflix in recent months has been vigorously promoting its
video streaming service as an alternative.
"DVD by mail may not last forever, but we want it to last as long
as possible," Netflix CEO Reed Hastings said this year.
Maine Sen.
Susan Collins, the top Republican on the Senate committee that oversees the
post office, believes the agency is taking the wrong approach. She says service
cuts will only push more consumers to online bill payment or private carriers
such as UPS or FedEx, leading to lower revenue in the future. "Time and time again in the face of more
red ink, the Postal Service puts forward ideas that could well accelerate its
death spiral," she said, urging passage of a bill that would refund nearly
$7 billion the Postal Service overpaid into a federal retirement fund,
encourage a restructuring of health benefits and reduce the agency's annual
payments into a retiree health account.
That measure
would postpone a move to five-day-a-week mail delivery for at least two years
and require additional layers of review before the agency closed postal
branches and mail processing centers. "The
solution to the Postal Service's financial crisis is not easy but must involve
tackling more significant expenses that do not drive customers," Collins
said. In the event of a shutdown due to
bankruptcy, private companies such as FedEx and UPS could handle a small
portion of the material the post office moves, but they do not go everywhere.
No business has shown interest in delivering letters everywhere in the country
for a set rate of 44 cents or 45 cents for a first-class letter.
Ruth
Goldway, chair of the Postal Regulatory Commission, said the planned cuts could
test the limits of the Postal Service's legal obligation to serve all
Americans, regardless of geography, at uniform price and quality. "It will
have substantial cost savings, but it really does have the potential to change
what the postal service is and its role in providing fast and efficient
delivery of mail," she said.
No comments:
Post a Comment