SANFORD, FL (jbeech.com) – the USPS is drowning in debt and wants to shut down facilities and reduce service. Are there reasonable alternatives?
Recent news about the USPS (United States Postal Service) seemingly centers on shutting down facilities and eliminating Saturday delivery to reduce costs.
USPS management first tried raising the price of stamps. Demand for mail service went down. They blamed email and raised prices more. This hasn’t worked either.
Now, with things so dire they can’t cover anticipated pension obligations, the geniuses want to mothball infrastructure. That, and eliminate some ZIP codes altogether. They even want to eliminate our Saturday delivery.
I say no. Not just no . . . but Hell no. Since any idiot can complain, here’s what we should do instead.
Lower stamp prices
Management whines about email eating into them. I agree, but I say bullshit too because raising the price of stamps is like raising the price of anything. It makes folks use less. Anyway, they been raising postage prices since before email.
Moreover, it’s not as simple an argument as email eats into the business. There’s still demand for physical mail. However, as with everything else, raising prices decreases demand. This is basic stuff, folks!
For example, compared to a printed brochure, emailing a PDF isn’t as good for my business because it generates inferior result. A keen observer of humanity, Lynn theorizes it’s because guys don’t think far enough ahead to print the PDFs before heading to the toilet.
She’s probably right but nevertheless, I use more and more email in the business. However, it’s not because it’s free. It’s because the USPS keeps raising my mailing costs.
Let’s lower stamp prices because increased demand is a high quality problem.
Eliminating ZIP codes
The USPS physical plant can be roughly categorized as big stuff and little stuff. Big stuff is the infrastructure we’ve built out to automate delivery. E.g. the major sorting centers.
Little stuff are individual post office facilities. It’s about eliminating some ZIP codes. The present cadre of USPS management want to dismantle big and little stuff both. The big stuff is about Saturday delivery.
Granted, reducing physical plant will cut costs. It works like pulling the plug on the patient stops the medical bills. Anyway, now the high brows want to mothball the high speed physical plant because it’s too expensive. They want to shut the whole thing down on Saturday’s too. No way Jose!
How about this instead? When we lower the price of stamps, demand will pick up. So let’s crank our high speed delivery infrastructure up. Way up. Let’s run it 24/7. Maybe if instead of cutting Saturday delivery we keep the place humming all the time. Maybe even on Sunday’s too.
Cutting the big stuff, like our automated high speed infrastructure right now is like
buying a Ferrari, which gets repossessed. Worse, it gets repo-ed before you take it out to see what it can do. In a word, dumb!
Lower prices stimulates demand. It always does. Of course, this isn’t to say we can’t reduce some infrastructure. We just need to be smart about it.
I read where a small postal facility is slated to be closed, which eliminates the ZIP
code. The problem is it costs $86,000 to operate but only generates $30,000.
Genesis Hobby distributes product to 415 hobby shops. 85 of these retailers generate about 80% of our wholesale business. Since 83 stores would be exactly 20%, it’s proof positive we’re nothing special because Pareto distribution applies.
Moreover, this power law (better known as the 80-20 rule), is found throughout the business-world. Examples abound; like 20% of customers requires 80% of the hand holding, 20% of products generate 80% of total sales, etc.
Raise your hand if you think the USPS immune to Pareto distribution. They’re not immune any more than we can repeal gravity. Eliminating ZIP codes reduces the QOS (quality of service), which we citizens are accustomed to. Bad idea.
Killing the Golden Goose
Perhaps somewhere in the world there’s a businessman who would dump 80% of his customers because they only generate 20% of the income. In our case, dumping 330 of our 415 hobby shop customers would be profoundly stupid.
Stupid because fewer retail locations would reduce sales opportunities. Stupid because it would hinder our customer service for which, we’re famous. Moreover, the 20% haircut would likely put us out of business. In toto, it would be akin to killing the Golden Goose.
USPS bureaucrats, intent on closing both larger and smaller facilities, plus reducing Saturday delivery would reduce the QOS for which the USPS is justly famous.
This is why we love the USPS. Citizens find the idea unpalatable. This, despite the fact cutting costs are always a good idea.
I’ve lived and used 3rd world postal service – in comparison – it’s stinks. Thus, in all this, bear in mind the present USPS management is perfectly capable of killing off the best postal QOS in the world . . . if we answer incorrectly.
Sadly, Congress may let them, which seems bizarre because modest alternatives may preserve that for which the USPS is justly famous.
With respect to the above mentioned facility, I wouldn’t close it – not yet. Instead,
let’s see how we may offer similar service for $30,000 versus $86,000.
For example, perhaps a local hardware store or beauty salon would be pleased to
devote a little bit of space to hosting mailboxes (and selling stamps). After all, during these cash-flow difficult times this may be a tidy addition to their bottom line, so they win too.
Remember, once upon a time (before bureaucrats and stand-alone post offices), this is how a lot of postal business was done. Before eliminating smaller ZIP codes let’s first try to substitute do with less for do without.
Finally, let’s discuss change at the top.
Postmaster of the United States
This problem isn’t insurmountable. As I taught my middle-school math students, the way to solve big problems is by first breaking it down into smaller problems.
I’m unwilling to see my postal system ignobly dismantled. Not if a better guy can fix it. Solutions are what count. Lower the price of postage to stimulate demand. Right size physical plant instead of shutting it down.
However, if none of this floats your boat, since present USPS management hasn’t gotten the job done, here’s my last proposal. If Herman Cain looses his bid for the Presidency, I hope the President has the sense to appoint him to the job of Postmaster of the United States.
Offer it to him on a Dollar-a-year basis because he’s made plenty of money already. That, and anything we offer would be an insult to the man. He’ll accept because he’s a patriot.
Ultimately, the guys presently at the very top of the USPS have driven us into a ditch. increasing the price of stamps, mothballing facilities, and reducing Saturday delivery isn’t what we want.
It’s time for a change. Let’s do it soon too. Let’s do it before they drive us off a cliff.