We need to sell the Post Office while it still has value

Eric Shierman thb We need to sell the Post Office while it still has value

by Eric Shierman

The true source of their financial woes comes from the fact the Postal Service’s retiree healthcare costs are compounding out of control at the same time letter volume is shrinking faster than the most pessimistic expectations would have predicted a decade ago.

Twelve years ago I was burning the midnight oil at my first job in finance at Morgan Stanley during the very peak of the dot.com bubble. I had access to some of the most respected market research available from the likes of Byron Wien, Mary Meeker and the rest, but as their analytical firepower was devoted to the impossible task of predicting which new online retailers would survive and which would not, the best advice I got came from one of Oregon’s greatest investors you might not have heard of: the late Harry Kendall, a former partner in the Portland insurance agency Jones Kendall Sauer (now merged with KDP).

While everyone was all gaga about the “new economy” Kendall pointed out to me how this phenomenon had repeated itself over his lifetime. Low interest rates had once again formed a go go bubble. Rather than participate in the fool’s game of trying to predict who will survive the inevitable bust, Kendall suggested I invest my client’s money in the smaller group of boring companies that quietly sold to both winners and losers. The most successful investors of the railroad boom did not invest in railroad companies; they invested in the firms that manufactured nails and dynamite. He suggested that parcel delivery companies like FedEx and UPS represented an underpriced play on the inevitable growth of ecommerce. Fortunately I heeded his advice on this and many other matters. Two nasty bear markets later, the S+P500 has been virtually flat for the decade, trading slightly below where it was twelve years ago while UPS trades about 20% higher and FedEx’s value has grown almost 150%.

With favorable trends like these in the shipping sector for more than a decade, why is the Post Office burning cash rather than raking it in like its private sector competitors? In addition to its monopoly right to touch our mailboxes, the Post Office is able to issue GSE like bonds at government-backed low interest rates and exercise broad powers of imminent domain. It pays no corporate income tax, is exempt from state sales taxes, is exempt from state and local property taxes, does not have to register or license its vehicles, and is even exempt from parking tickets. Yet it still managed to lose $5.1 billion last year. How is this possible? – seven words: public ownership of the means of production. As any former cadre of the Soviet Union would warn us, when the state owns an enterprise its management team will face competing goals beyond economic efficiency. Each Postmaster General over these past twelve years would nod his head. Their job has been to manage the unsustainable status quo while proposing reforms that get rejected by congress.

In Patrick Donahoe, Obama to his credit has appointed one of the most effective executives to lead the Post Office in recent memory. Donahoe’s dialogue with congress does not mince words: “I’m operating right now with a week’s worth of cash” he told lawmakers when introducing a package of reforms that involved closing a third of all branches, eliminating overnight delivery, eliminating Saturday service, and tapping into its pension fund. Meanwhile, the Association of Letter Carriers argues there is no crisis at all. If prices were raised, the federal government threw more business their way like managing veterans’ records, their employer was not required to proactively fund its members’ pensions, and the US Treasury wrote them a check for $140 billion, everything would be just fine.

These are business decisions. Enterprises only make the right call on such complex strategic moves when private profits are on the line. Neither the USPS management team nor their union counterparts are focusing their planning on the shareholders’ interests – the shareholder being the US Government. It is extremely difficult to operate six days a week, so management jumps at the chance to make their lives easier even if it might throw away one of their operation’s few competitive advantages. The union is eager to allow management to tap into its members’ pensions and retiree healthcare fund. Congress having been stung by the costs of letting Amtrak do just that, passed a law in 2006 to clarify the Post Office’s responsibility to prefund its pensions so that when it finally goes bankrupt the taxpayers are not stuck with this liability. Should the union not share a concern about the future funding of their members’ retirement? Perhaps they should be demanding even greater up-front contributions to prepare for the inevitable.

The union remains far more comfortable with its ability to make future congresses fund their members’ retirements regardless of the Post Office’s financial performance. Labor and management seek to divert as much money from the future as possible to keep the present spigot flowing. And flow it does. At 80%, the Post Office’s labor costs are in stark variance to UPS’ 53% and FedEx’s 32%. This has proven very expensive for the US taxpayer. Since 1971, the Postal Service has been required to fund its operations from the revenue of its own sales. Could we possibly set the bar any lower than that? With its huge monopoly position, the Post Office should have been paying large dividends of revenue to the US Treasury. The financial opportunity cost of this forgone cash flow has been enormous as the monopoly rents were diverted to its employees.

While in public discourse the Postal lobby milks the myth that the Post Office costs the US Treasury nothing, a close look at their behavior reveals they know how their future bread will be buttered. Our progressive friends held their own Tax day rally this week too. Several events were held throughout Tuesday, culminating in a big rally at the downtown Portland USPS hub. Progressives rallying for the Post Office on TAX day? – what do they need tax dollars for?

7092186353 eee559e9cc We need to sell the Post Office while it still has value

Their central message claims the US Treasury owes the Post Office $140 billion dollars for an alleged four decades of the Office of Personnel Management overcharging the Postal Service for pension contributions amongst a few other accusations of excessively high federal fiscal standards. This too-good-to-be-true assertion for the Postal lobby was created at a convenient moment by an internal study two years ago claiming the formula agreed to by congress in 1971 was improperly followed. If you really want to get into the weeds on the details, here is a thorough assessment by Michael Schuyler. After conducting an independent investigation, the Government Accountability Office has unequivocally confirmed the accuracy of the Office of Personnel Management’s formula for managing the Civil Service Retirement System, rejecting the Post Office’s frivolous attempts to conjure up the pretext of a bailout. Indeed it was not even close, both in matters of law and in the financial calculations. As the Postal lobby continues to organize an “America you owe us!” message that congressional Democrats are too happy to receive, the GAO has been an effective myth-buster, continuing to warn policymakers of the USPS’ acute financial death spiral.

Imagine if, under the tight budgetary restraints we find ourselves in, Obama were to actually write the Post Office that $140 billion dollar check; even this would merely delay the inevitable. As the GAO report makes clear:

Any change in the USPS’s share of responsibility for CSRS benefits would provide some temporary relief from the pressures USPS faces because of declining volume, revenue, and inflexible costs, but would not by itself address USPS’s long-term financial outlook. Such a transfer of CSRS funds would not be sufficient to repay all of USPS’s debt and address current and future operating deficits related to USPS’s inability to cut costs quickly enough to match declining mail volume and revenue.

That is to say, even after a bailout greater than the auto industry in the form of grants rather than loans, the Post Office will still face inevitable liquidation. The true source of their financial woes comes from the fact the Postal Service’s retiree healthcare costs are compounding out of control at the same time letter volume is shrinking faster than the most pessimistic expectations would have predicted a decade ago. The Postal lobby would have us believe this is just a temporary consequence of this past recession. Such magical thinking ignores the reality that the decade before the recession (1998-2008) the US economy and the US population had grown substantially, but letter volume dropped 30% in the same time period.

This has cascaded since 2008, and will NEVER recover EVER. The future of business correspondence through the mail is as rosy as the future of business marketing through the Yellow Pages. Regarding the value of snail mail personal correspondence, I have two old Marine buddies serving in Afghanistan right now that served with me on the USS Wasp in 1995 in the Adriatic Sea. They both recall how we enjoyed sending mail home for free when our ship was within striking range of the former Yugoslavian coast. Now I see their comments every day under my Facebook posts. I read their Tweets. One question I asked recently was if any of them had used the free mail service yet. Neither of them has! When the quantity demanded is zero at a price point of free, we know the demand curve has shifted dramatically.

Parcel delivery continues to grow in spades, and there lies the rub. The Post Office’s entire business model is wrapped around the exploitation of its monopoly of letter delivery to mailboxes, while its parcel delivery costs are higher than its private sector competitors. For the services that ecommerce requires, its prices are higher too. If you order a Macbook Pro, it’s not coming to you on a postal truck. Apple, like most shippers, wants a tracking number and insurance, all of which are built into UPS’ and FedEx’s price. Add these features to first class delivery and the private carriers are cheaper. With lower prices for the services businesses want, the private carriers offer lower damage rates and faster delivery. Only book sellers like Amazon.com remain serious customers of the Post Office exploiting the Media Mail discount whose parsimonious price will not fund the average $75,000 full-time dock worker’s compensation.

There are universal service aspects of the current Post Office, none of which are worth keeping. Ensuring the cheap shipping of junk mail solicitation to rural zip codes is not a worthy aim of public policy. There are people who choose to live in the middle of nowhere. They are used to traveling far to buy groceries, receive medical care, renew their driver’s license, and go on a date. That they will have to do the same for a postal service they rarely use is inconsequential.

Selling the Post Office is the lowest hanging of budgetary fruits. Because congress has at least prevented the Post Office from underfunding its retiree programs, the USPS actually has value. It does not have high tech sorting facilities, but wow does it have a lot of real estate. If the US Treasury only raised a dollar to make a valid contract on the sale it would be a windfall. This would divest the taxpaying public of yet another looming fiscal liability, while giving our economy assets that can be put to more productive use while allowing the national, state, and local governments the opportunity to tax these assets accordingly. The costs of NOT selling the Post Office are just astounding when you add it all up.

We would not want to sell a Postal Service that retains the mailbox touching monopoly. More money could be raised by licensing the ability to deliver to mailboxes the way radio spectrum is sold. The customer’s mailbox could remain a unique public infrastructure that if put in the productive hands of private companies that have mastered efficient parcel delivery, would help grow our ecommerce economy to new levels. This is such a no brainer, it is no wonder we are one of the last developed countries to do it. From Sweden to Germany, cashing in on the value of their postal services early on has helped them maintain a better fiscal position than their southern counterparts.

Selling the Post Office would be very easy to execute as well. In the spring of 2001, I saw Morgan Stanley save Lucent Technologies from certain bankruptcy as it quickly packaged up and sold its optical unit called Agere Systems, delivering in record time an IPO at $4.00 a share when few thought either company would survive another year. As a going concern Agere has been able to develop superior VOIP technology enabling the teleconferencing we have today. Either a Post Office IPO or private placement sale would be a much easier challenge. The opportunity to turn nonperforming assets into their most productive positive externalities looms large as a bonus beyond the budgetary reasons for the sale.

And thus as a wedge issue this should be a no brainer for the Romney campaign as well. Whether he likes it or not, Romney will have to defend his professional record. He will have to defend both venture capitalism and “vulture capitalism.” There are many times when an economy is better off with a company being liquidated than letting it squander its resources all the way to a dragged out bankruptcy. With an infusion of technology and a fraction of its present work force, the Post Office might be a turnaround opportunity to create the next Deutsche Post, or it might provide our economy more value auctioned off piece by piece. If Romney cannot make that case either way with his track record of success doing both, what can he do?

The Post Office presents a moment of truth for Oregon’s Greg Walden as well. There are twenty obvious closures coming to Oregon right away. From New Pine Creek to Helix, most of them are in Walden’s district. Will he stand up for reform or will he defend local stakeholders? Senator Gordon Smith failed this test, and the role of the Republican Party as representatives of rural America often compromises its commitment to limited government principals on spending issues since so many Republican districts are net consumers of public dollars, not net payers. If Republicans cannot deliver on free market reforms the Netherlands implemented years ago, how much further should we lower our expectations?

Eric Shierman lives in southwest Portland and is the author of A Brief History of Political Cultural Change, and also writes for The Oregonian’s My Oregon blog.

tt twitter big4 We need to sell the Post Office while it still has value tt facebook big4 We need to sell the Post Office while it still has value tt linkedin big4 We need to sell the Post Office while it still has value tt reddit big4 We need to sell the Post Office while it still has value

Posted by at 07:21 | Posted in Uncategorized | 15 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    Privatizing sounds most rational but maybe a way to get there politically would be to offer to reassign the postal service operation and assets to each state if the state should be willing to take over such operation, assets, and much of the unfunded pension obligations corresponding to state’s share.  This might provide some cover to the likes of Walden.  Or maybe as part of privatization there is a 5 year or so period of obligation for the private company to provide for the continued delivery in rural areas by the same mail carrier altho now in the private carrier’s truck and if applicable uniform.  Need to smooth out the transition I should think.

    Hopefully, Mr. Sheirman takes up the issue of dealing with the other big red ink federal enterprises Freddie MAC and Fannie Mae soon.  Maybe it’s time to kill off these serious red ink machines now seeing how we can’t get much lower in the Housing sector than now anyways. 

  • JoelinPDX

    I think any competent business person realizes that the PO model just doesn’t work…it’s day is done. The bottom line then is that the headline to this article has clearly passed it prime…the Post Office has no value and it has a whole raft of debits. 

    Not the least (in fact, probably the greatest) of the Post Office’s problem is its huge pension obligation. Like the auto industry, the PO was able to give it’s employees enormous pension benefits when it operated the only game in town. But the laws have changed and today the PO must compete on the open market with the likes of FedEx and UPS. These companies have proven successfully that when it has to be there overnight, they can get the job done…but it’s going to cost you. (And that says nothing about email.) The PO is foolishly trying to compete by offering lower prices and relying on its government subsidy.

    At any rate,  the time has come to close the Post Office. I don’t know what you do about their outlandish un(der)funded pension program. As usual the government is probably on the hook to pay it off. If it were up to me, I’d just tell all of the 50-year old pensioners to go find a job.

  • Chana Cox

    Bob and Eric,

    Yes the USPS should be sold and it should be sold while it still has some value.  There may, however, be a Constitutional Issue.  

    In Article I section 8 Congress is given the power “To establish post offices and post roads”  Does that mean that it has the responsibility to do so — to maintain post offices and post roads?  If it does have that responsibility the sale would need to be done carefully once the existence of adequate private providers could be established. 

    Any Constitutional lawyers out there?  

    • http://www.facebook.com/eshierman Eric Shierman

      Because my article was already getting too long, I cut the constitutional part out, focusing on the economics. When the Postal lobby makes a constitutional argument for a government run office, they really are making a rights argument rather than addressing the structure of government. Article I Section 8 enumerates a finite list of things the federal government CAN do; it is not a list of things the federal government must do, nor does it spell out to what extent the public sector must dominate the delivery means of those policy areas. The same section also authorizes a standing army and navy, but several times we have disbanded them following wars relying on privately run militias. The government contracted to private shippers for the first half century of our nation’s history, creating the Post Office as we know it today in the Postal Act of 1863 when the southern Democrats were too busy fighting a civil war to block it and that was just for inter-city mail transport. Local delivery was not established until 1872. Any federal government power to ensure that mail is delivered does not necessarily translate into a government duty to deliver the mail itself. When the Postal lobby clings to the federal government’s power to “establish post offices and postal roads” they are really making a rights argument, that their constituency has a right to be employed by the government rather than a private firm.

  • Buyacriticalthinkingbook

    This is crap.

    The Republicans made the USPS amortize all their pensions/benefits out to 75 years, which is far beyond what other agencies are required to do and is the primary reason the USPS is facing the difficulties it is. At the state level, most agencies are required to amortize their pension/benefit liabilities out to 25 years, nowhere near what the USPS is required to do.

    Once again, Republicans stick the knife in the backs of working folk, this time so they can sell the USPS to the Koch Bros. Disgusting.  

    • JoelinPDX

      The Koch Brothers have way too much business sense to be even remotely interested in buying the Post Office. The only thing disgusting around here is know nothing, pro-union liberals.

    • Rupert in Springfield

       Oh good Lord, the Kockh brothers again? Do you guys realize that you aren’t fooling anyone? Yes, blaming every hangnail on Bush was getting so absurd people started making fun of you. Now the Koch brothers, same old same old. Get real.

  • Doggone

    Only had to read this much and I quote
    “In Patrick Donahoe, Obama to his credit has appointed one of the most
    effective executives to lead the Post Office in recent memory. ”

    Moron does not even know who appoints the Postmaster General So I need read no more if he cant even get that part right, The rest I’m sure is just as full of false assessments as this was!

    • http://www.facebook.com/eshierman Eric Shierman

      There is so much truth in this article of mine, that you need to read it, all of it, particularly the part a few more paragraphs down where I provide a link the the GAO’s assessment that the Office of Personnel management owes the USPS nothing which comes as a shock to most Post Office employees who think the US Treasury writing a check for $140 billion is actually taken seriously outside the Association of Letter Carriers’ union hall. 

      Let’s start with the factoid quibble you are now presenting me, that somehow it is a mistake to say that Obama appointed Patrick Donahoe. The postmaster general is no longer a cabinet position, but neither is being the Chairman of the Joint Chiefs of Staff nor being the CEO of General Motors. The executive branch appoints the board of directors to all of these organizations that makes the formal recommendation for the top job. Before they make that recommendation public, the board seeks the approval of the White House. In 2010, I’m sure Obama had other things more pressing to worry about. When Rahm Emmanuel told the president that the board would like to appoint a guy named Donahoe, I’m sure he said little more than “OK” without knowing anything about him. The more important point that you probably disagree with more strongly, is that Donahoe is a much better executive than the Guy Bush appointed. John Potter was to the USPS what Rick Wagoner was to GM, but he sure was easy to negotiate with!

      The USPS is sometimes referred to as an independent agency, but it is probably the least politically independent agency of them all since it is such a gravy train for so many insiders. Now that the gravy is drying up, perhaps we will see more direct scrutiny from the Oval Office. 

      • valley person

         Eric, how do you respond to the issue raised about requiring the Postal Service to fully fund pensions out to 75 years. Hasn’t that had a huge impact on their current budgets? Is there any precedent elsewhere in government or private enterprise for this level of pension set aside? And if they did not have to do this set aside immediately, wouldn’t it change their financial picture for the better?

         I get your larger points about the business model problem, and maybe there are better ways going forward. But does it really make financial sense to burden the Postal Service with an unrealistic pension funding requirement and THEN hold a garage sale over the carcass? Who benefits from that other than the vulture capitalists who can pick over the bones and extract some profits?

        • Ardbeg

          People who hate democracy do.  This has nothing to do with the post office and everything to do with union busting.  Unions support democrats so get rid of the union and get rid of support for democrats. The conservative game plan isn’t difficult to figure out.

        • http://www.facebook.com/eshierman Eric Shierman

          When asking me how I respond to having the Post Office fully fund its retirees pension and healthcare funds, you make me wonder if you actually read my article. Not only did I address this issue directly, I included a block quote from the GAO that points out to congress that even if the USPS’ desire to forgo these payments are granted, eventuall 
          bankruptcy is still only a few years away. So if the Postal Service is forced to make these payments now, it is basically insolvent already but insolvent with fully funded retirements, meaning it can be liquidated without compromising the promises made to both current retirees and younger workers who are fully vested with portable assets that are protected the same way ERISA protects the defined benefit retirement assets of workers in private sector bankruptcies. Granting them their wish to forgo these deposits simply delays the inevitable, but when liquidation comes, there will be a shortage of assets to make good on promises made to these workers. 

          The incredible disconnect between the behavior of the National Association of Letter Carriers and the Teamsters symbolizes why the Post Office can never function as an efficient enterprise under government ownership. When times were tough in 2002 and 2010, the Teamsters who represent UPS’ workers went to the mat fighting management’s desire to forgo payments to its defined benefit plans because in the risk of a scenario that bankruptcy might occur, there would be no recourse beyond the Pension Guarantee Trust Corporation that pays parsimonious pennies on the dollar. The Unions representing USPS workers behave differently, looking to the case of Amtrak where the US Treasury picked up the tab after a dragged out process of insolvency that depleted its retirement assets. Assuming the government is there to backstop losses, both the USPS’ management and unions are on the same page, desiring to divert these funds to delay the inevitable with little concern for the way it risks greater taxpayer liability. 

          While Amtrak’s pensions were serious money, the USPS as the second largest civilian employer in the largest economy of the world whose retirement programs amount to a mini SSI and Medicare suddenly blowing up in our budget – a scenario that was not included in that favorite CBO projection of yours. One of the many CBO rosy assumptions is that the USPS will never ever cost the US Treasury a dime. There is only one way to make that scenario come true, divesting the government of this liability while the USPS still has some value. 

          We should also be clear that standard ERISA parameters are being described by the Postal lobby in a way to make that 2006 requirement to fully fund their retiree obligations seem like some arcane, draconian burden. ERISA safe harbors as a best practice full funding to 75 years, but if you understood what that means, you would then realize that the amount the Post Office has to deposit now to fully fund 75 years of obligations is nearly equal to the amount it would have to deposit if it were fully funding obligations for 75,000 years. To “fully” fund, does not mean deposit all the cash that will be needed for the parameters in question, but rather to deposit an amortized amount, meaning that given a growth rate assumption an actuary will discount to present value the deposit necessary now to compound to the defined benefit in the future. The formula is asymptotic, infinitely approaching zero the further you go out in time. If $5.5 billion in current deposits seems outrageous, it is not because of the onerousness of the prudent management of a defined benefit pension plan. That number is so huge because the Postal Service has promised an exponentially larger sum in the future: a sum everyone knows the Post Office’s future financial prospects cannot come close to paying. The Postal Lobby is behaving rationally given the hidden assumption that, like Amtrak, the US Treasury will take care of everything, meaning those Teamsters at UPS with their heavier work loads and longer hours will have to pay more in taxes so USPS workers will not have to face the same tough realities private sector workers do every day. 

          Like I said, these are ultimately business decisions. Let the USPS management and its union negotiate under the same constraints of market discipline that everyone else does. They do not perform critical public services that the private sector could not produce such as police and fire. The costs of liquidating them now pales in comparison to the costs of liquidating them under a worse financial position that both the Post Office is deteriorating to as the US budget deteriorates from all its other obligations as well. 

          As is the case with all “vulture capitalism” the people who benefit here is all of us. Growth emerges from the efficient employment of an entire economy’s resources. The USPS has been such a huge inefficient operation for so long, it has been inflicting damage on all of us year after year. It squanders valuable real estate. It has inflated the price of delivering mail (remember the only reason private carriers are more expensive is that they are mandated to charge a minimum of six times the price of 1st class mail to prevent them from competing on price for urgent delivery). Its utter lack of serious operational engineering causes it to burn fuel that UPS’s superior rout planning would have eliminated. The sooner we bring this to an end the better for all of us. The economic literature on this has been so solid for so long, Sweden, Germany, the Netherlands and the rest saw this as a no brainier a long time ago. 

  • Laidback

    But it doesn’t have much value. More and more people are paying online and more and more people are not even using the thing. It is going to be a hard sell.
    Plus, it won’t happen due to the union thugs who have the dems in their pockets.

    • leigh

      No value? It was doing just fine without tax dollars until 2006 when the rebublicans forced it to pay an unreasonable, unpresented 75% into the pension fund. Bush and Co. needed war money i guess. AKA 1%ers. Seems to me the dems are working hard to save middle class jobs and the r’s are acting like vultures. Just read what they are proposing! I’m afraid of my job and my families future for shear stupidity in congress.

  • Rupert in Springfield

    I have to take objection to some of the points in this article. 

    >while its parcel delivery costs are higher than its private sector
    competitors. For the services that ecommerce requires, its prices are
    higher too.

    Not true. For very high volume shipper, like Amazon, this could possibly be true because they can negotiate with UPS/Fed Ex for a lower rate. However for the average E Commerce shipper the post office offers a cheaper rate. This is especially so on international shipments (although this is due to the post office enforcing a monopoly on parcel post as opposed to expedited shipment internationally).

    >Apple, like most shippers, wants a tracking number and insurance, all of
    which are built into UPS’ and FedEx’s price. Add these features to
    first class delivery and the private carriers are cheaper.

    Partially true. Tracking of USPS packages does not make them exceed the cost of tracking with UPS or Fed Ex.

    Insurance on USPS can, but does not always make their rates exceed private carrier, but this is largely true with packages under $100.

    >With lower prices for the services businesses want, the private carriers offer lower damage rates and faster delivery.

    Completely and untrue to the point where a new word should be invented that says untrue more vehemently.

    Delivery time is the one area where USPS exceeds private carrier at almost every level.

    A package shipped coast to coast will take five business days via private carrier. USPS takes three days.

    This is a crucial difference with E commerce.

    If a customer orders over the weekend, the order will be picked up Monday regardless of carrier. The day of pickup is not counted so delivery coast to coast will occur on the following Monday via private carrier, or Thursday/Friday via USPS.

    This is a huge psychological distinction for the customer. Order this weekend and have it for next, or go into the next week via private carrier.

    Several years ago I decided I needed to increase international orders for my business. I added real time shipping rate API’s to my sites back end in order to offer USPS as a delivery option for international orders.

    Why did I do this? For whatever reason, Fed Ex and UPS are prevented from making non expedited international shipments, thus their rates are far higher. Offering USPS as an international delivery option was the only was to get international orders.

    This worked, and was the only thing that got my business through the Obama presidency. Americans weren’t spending a dime, Europeans were spending like crazy.

    Since this worked so well, I decided to offer USPS as a domestic shipping option as well.

    The disadvantage of doing this was increased processing time per package. Shipping with USPS is more time intensive than UPS or Fed Ex. It takes longer to prepare a label for shipping, tracking and insurance claims are more complicated.

    I have to charge for this, so the add on charge for USPS is higher than for UPS and Fed Ex, thus if a customer selects USPS as their shipping option I charge more than for UPS.

    Stunningly customers consistently pick USPS to the point where half my shipments go out via USPS the other half via UPS.

    That’s an amazing statistic.

    Even though USPS costs the customer more, because I have to charge more for increased processing time, customers consistently will pay more for USPS.

    Why?

    Way faster delivery time.

    The postal service needs changes, that’s for sure. However there are some things they do well. If they concentrated on lowering their ridiculous labour costs, and shifted their business model from junk mail to what they do well they could probably survive.

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)