The GAO completed a study on the Post Office 18 months before its due date (the problems are that bad!) and made some very interesting findings. The first problem is declining revenue and centers around the decline in first class mail volume.
Since 2005 first class mail has declined by 20% due to the recession and the rapid ascendancy of electronic delivery of time-sensitive communications and the trend is continuing. FedEx and UPS have taken over the market for high value documents and packages and in the last several years have moved even more aggressively into the mid-value area of parcel post with FedEx Ground and UPS trailers hauled on fast-moving dedicated freight trains across the U.S. Neither of these companies has any compunction about playing hardball with the unions. Alas, the same is not true of the Post Office and that's the second part of the problem.
The Bloomberg article notes that:
"The USPS has historically placed the interests of its unions first. That hasn't changed. In March it reached a four-and-a-half-year agreement with the 250,000-member American Postal Workers Union, which represents mail clerks, drivers, mechanics, and custodians. The pact extends the no-layoff provision and provides a 3.5 percent raise for APWU members over the period of the contract, along with seven upcapped cost-of-living increases. The union is happy."
Indeed they should be. Faced with declining revenues and high fuel costs like everybody else for its enormous fleet of vehicles, the Post Office gives away the farm. Great. It's all about the kids, right? Oops - wrong venue.
Then there are the post offices themselves. Did you know that in Sweden only 12% of the post office buildings are owned by the post office? In Germany it's only 2%. How can this be? Well, they rent the space they need in places like gas stations and convenience stores and it works just fine. With this approach, the U.S. Post Office could even sell a large number of its 31,000 + structures and still get the job done. As John Lennon used to say, "Imagine!"
Then there's the final frontier. In semi-socialized Sweden and Germany the post office is privately owned and operates at a - shhhh! - profit. C'mon John, say it - Imagine! And they are offering all kinds of new digital services to customers to expedite communications.
In contrast, in the U.S., the Post Office trudges along as it has for a long time while morphing into a government-subsidized purveyor of mostly junk mail and a sanctuary for featherbedding labor. Despite being relieved of pension obligations of $27 billion in 2005, the agency is still tanking. Getting rid of pension obligations and closing a few post offices here and there isn't the answer:
"I really believe that the USPS is going to get to a point where, regardless of what it does with the prefunding [of retiree health care], it is going to implode," says R. Richard Geddes, an associate professor of policy analysis and management at Cornell University. "It is either going to default on those obligations to its retirees or we are going to have to give it a direct bailout from the United States taxpayers."
It doesn't have to be this way. Like so many other issues that are gridlocked in Washington, it's a matter of political will. In this case, the Democrats are wedded to the post office model circa 1901. Of course it may have something to do with the fact that about 99.9% of the political contributions from the humungous postal employee unions go to Democrats. Surprise, surprise! But the needs of the nation for efficient communications transcends the wants of the unions and their political cronies. It's time for a change. Imagine.
www.businessweek.com/magazine/content/11_23/b4231060885070.htm
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