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What do you think are the 3 major drivers behind the gradual demise of the USPS?
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- Brian Phelps
Reason 4: When Ben Franklin ran the P.O., it cost 2 cents and took a week for a letter to get from Philadelphia to New York. Now it costs 44 cents and takes a week for a letter to get from Philadelphia to New York. The horse is getting old.
I agree with the comments posted so far, but would like to add another, which is very relevant:
The USPS has its hands tied by legislation enacted during the Nixon administration; legislation that essentially forces the USPS to adhere to what would otherwise be considered bad, if not foolish business practices.
The 1971 Postal Services Act contains many provisions like the following:
For example: "101.(b): The Postal Service shall provide a maximum degree of effective and regular postal services to rural areas, communities , and small towns where post offices are not self-sustaining. No small post office shall be closed solely for operating at a deficit, it being the specific intent of the Congress that effective postal services be insured to residents of both urban and rural communities."
For a further explanation, read the full comment by Faye Sinott at the end of this Blog Post:
"How Marketing Myopia has Killed the USPS" http://bit.ly/nnu0Bf
Jim Watson
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The top three issues contributing to the United States Postal Service's current woes are:
1. The rise of email as the primary form of written communication has had a huge impact. For example in 2007, the USPS delivered 212 billion pieces of mail, while in 2010 it only delivered 167 billion. Mail volume is the lifeblood of the business so this is really bad news. Furthermore, it's first class mail volume that really matters to the Postal Service and that's the area that's been hardest hit by email.
2. At the same time, population growth in the United States adds one million deliverable addresses to the USPS rolls every year. In other words, mail volume is falling off a cliff but the number of addresses that must be delivered to continues to grow. The USPS is built from the ground up (labor, processes, systems...) for this latter metric so it delivers less mail to more addresses every year. Now that is the definition of a broken business model.
3. This is not a customer-centric organization that takes its cues from its customers and tries to delight them at every turn. In fact, USPS management has viewed the union as its primary customer. The USPS employs over 550,000 full time workers so the employee voice is an important one, but not to the extent it threatens the very existence of the organization. Case in point: 80% of the annual USPS budget goes to employee salary and benefits. FedEx is at 43%. That's just not competitive. And it just reached a new agreement with the American Postal Workers Union this year that extended a no-layoff provision, a 3.5% raise over the term of the agreement, and seven uncapped cost of living increases. Why is this? The USPS lacks many of the same incentives that cause private market firms to make good decisions and adjust to market conditions.
All is not lost though. It may comes as shock, but the USPS need look no further than Europe to right these wrongs. Most of the major postal services in Europe have transformed themselves into profit-making enterprises.