It’s probably not news to anybody that the United States Postal Service (USPS) is in trouble. Their financial situation is growing ever darker and now they’re laying off 28,000 employees and shutting down numerous mail-processing centers:
The US Postal Service is shutting more than half its mail-processing centres in a £3bn (£1.9bn) cost-cutting drive expected to shed 28,000 jobs.
Vice-President David Williams told a news conference that the closures were designed to stave off bankruptcy next year.
Out of 461 mail-processing centres across the US, 252 will be shuttered starting from next April.
So what happened?
Customers were increasingly using the internet for bill payment and other communication, he said.
From nearly 100 million in 2006, first-class mail volume was down to 78 million and expected to half by 2020.
USPS is sinking because the product they offer isn’t in as high of demand anymore. Basically we can look at this situation by pretending the Internet is the Ford Model T and mail delivery is a horse and buggy. In our example USPS is a buggy whip manufacturer and instead of moving into the business of manufacturing tires for the Model T they continue to stick to their hopeless belief that this whole automobile thing is just a fad and will go away soon.
Even though USPS maintains a complete monopoly on first class mail delivery they have agile competitors in other areas of package delivery. How often do you receive a package from USPS? Most packages I receive are either from UPS or FedEx (although once in a while I’ll get something from a regional deliverer like Speedy). When I wish to ship packages I find UPS and FedEx are almost always cheaper and less hassle. Now it appears as though they’ll also be quicker to get your package from a drop-off point to its destination since USPS is closing down half of their processing centers.
It’s not entirely USPS’s fault in this case. USPS stands in a precarious situation having to please the demands of the federal government while receiving no federal funds. The federal government demands that USPS pay its employees federal wages, pensions, and benefits while keeping the cost of letter delivery very low. Yet the same government making demands about how employees are compensated for their time are also saying USPS has to be self-sustaining. Were UPS or FedEx subjugated to these same conditions they to would face failure.
They only option to fix USPS’s woes is for the federal government to completely cut the cord. That is to say remove any input into the operations of USPS and let the business be run like a business. Either way USPS is on the slow road to complete failure and the only option the federal government will have is relinquishing their monopoly on first class mail delivery less no letters be delivered upon USPS’s complete collapse. USPS also needs to move into another business, which is likely very difficult when the federal government controls everything you do.