Punchinello’s Chronicles

September 27, 2008

US Post Office – The Coming Crisis

Filed under: Butterfly Wings — Punchinello @ 9:00 am
Tags: , , ,

Each year, following the holiday shopping season, statistics come out about online shopping. E-commerce has been growing exponentially, for a variety of reasons. One large reason has been that bad decisions in retail, taken from manufacturing’s just-in-time inventory, have failed. When we’re dealing with making a car, getting nuts and bolts to the assembly point “just in time” makes a lot of sense. We know we’re going to absolutely use those nuts and bolts.

In retail, stocking the shelves “just in time” for a shopper to fill a basket simply fails, over and over. With so-called Big Box stores more interested in opening new locations than in customer satisfaction, increasing numbers of shelves are empty, you can’t get what you want, or it’s the same bad product in every single store. There’s little competition anymore based on variety.

Another reason for online shopping isn’t only variety, but cheaper and cheaper goods. Low quality has reached the intolerable levels. If you’re looking for something different, you’re surely not going to find it in a brick-and-mortar location. Drive up and down the “main mall street” of Anytown, USA, and you’ll see exactly the same stores, with exactly the same merchandise.

People say that these big chains have driven out of business the local mom-and-pop stores. I’d say that instead, those microbusinesses have abandonned physical stores and moved to the World Wide Web. And that means shipping products from here to there.

Right now we have the US Postal Service (USPS), United Parcel Service (UPS), Federal Express (FedEx), and DHL (a German company), to name the biggest carriers that come to mind. Of those, only the post office is required by law to deliver to all addresses in the United States. It’s also subsidized by the US Government, not to mention run in a similar way to a government agency.

UPS and FedEx will deliver anywhere, but if it’s not an easy destination they can charge more money for that delivery. Rates change according to world economics, distance, weights, and so forth. The USPS can’t change rates without a government intervention. And so, an increasing number of online businesses often choose US mail as the least expensive method of shipping.

What happens as online commerce grows and grows and grows? At what point will the USPS run out of employees? Worse; what happens when the post office has to hire new employees, but the rates for stamps and packages remains far below market pricing or comparable UPS/FedEx prices?

With small business now accounting for at least half the entire US domestic product, there’s no way at all anyone is going to “allow” the US Post Office to go under, be overwhelmed, or to collapse. To that end, we’re almost certainly going to see huge rate increases for all postal deliveries.

Would it make sense to split the USPS into three major categories, based on the obvious categories already in place? Why not leave letters and flat envelopes alone, keeping the price of stamps about the same, but start looking at package shipments and third-class mail differently? Seems to me that if we don’t do something about all this pretty soon, we’re just going to have another emergency and crisis, demanding bail-outs and immediate action.


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