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Print 67 comment(s) - last by lexluthermiest.. on Feb 11 at 7:50 PM

It will save USPS $2 billion annually

Many aspects of our lives have made a digital transformation over the last decade or so. We no longer rent physical movies from the video store; we watch them on Netflix or Hulu. We no longer get subscriptions for or pick up the daily newspaper; we read the news online. We don't run to the bank as often for daily finances; we jump on our smartphone, tablet or computer for online banking.

The U.S. Postal Service (USPS) is seeing these shifts in technology as well, but can't seem to keep up. Many letters, bills, etc. can now be sent electronically rather than through the mail. Hence, in an effort to save some serious money, USPS will no longer deliver mail on Saturdays starting August 1, 2013.

Cutting mail delivery down to five days per week will save USPS about $2 billion annually. For fiscal 2012, USPS saw a net loss of $15.9 billion (three times the loss record one year previous).

While mail delivery is getting axed, USPS plans to continue package delivery on Saturdays since this particular area has seen a 14 percent increase since 2010. Mail will also still be delivered to P.O. boxes six days per week as well.

In addition, post offices will remain open on Saturdays to allow customers to drop mail/packages off, access post office boxes or buy postage stamps -- although hours will likely be cut.


USPS is expected to give an official announcement today without explicit congressional approval. Lawmakers have said this approval is necessary for a change like cutting Saturday mail delivery, but the USPS is arguing this claim.

As far as the American people go, USPS expects some opposition from those like rural communities that worry a change in scheduling could make low-cost deliveries of items like medication a thing of the past, and publishers who will have to adjust schedules with publication deadlines.

Just last month, it was reported that USPS wanted to be more digital-friendly in order to keep up with the times. The agency is working on a digital platform called MyPost, which will allow customers to log in and view all packages that they'll be receiving as well as those they've already received instead of searching several different sites that the packages may be coming from.

However, Paul Vogel, president of digital solutions at USPS, revealed that his office is like "a San Jose startup," with only 15 Android/Apple developers, consultants coming and going, one computer and his BlackBerry smartphone. Technological restrictions make upgrading hard to come by.

A few other major obstacles are legislation needed to get permission for new digital products, the USPS' huge instruction manual for just handful of current products (adding digital products and security certifications would turn that 1,500 page book into something unimaginable), and USPS' losses of nearly $16 billion last year led to legislative proposals to keep making cuts (hence, more digital tech may not be in the cards right now).

Source: Boston Business Journal



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RE: Dont blame the internet and email
By Motoman on 2/6/2013 10:59:27 AM , Rating: 2
Yes and no. Email essentially destroyed the informal letter between friends and family...but that probably was only a tiny percentage of what the USPS dealt with by the advent of the internet anyway.

Unions, bureaucracy, and having to put up with Congress' stupid oversight are probably the biggest problems.

Anyway, cutting Saturday delivery probably isn't enough...my guess is that the USPS should:

1. Only deliver 3 days a week...like Mon/Wed/Fri. No one will notice the difference.
2. Raise the cost on bulk mail. It's by far the biggest burden on them, literally, from a volume standpoint - and volume drives cost-to-serve. Make it expensive enough where a lot of it just goes away because the advertisers don't want to pay that much...then the volume (and cost-to-serve) goes down. Then, whatever remains is more profitable too because they're being paid more to process it. On top of that, citizens will be infinitely happier because they're getting less junk mail...and even the environment is better off because of fewer trees getting killed. Everybody wins.
3. Compete with UPS and FedEx...stores. Obviously, USPS competes with UPS and FedEx delivery services, but look at all the other stuff you can do at a UPS store. Any reason the USPS couldn't do similar stuff? Well, yes...the reason is Congress is in the way of progress.
3a. Bring up the point of removing USPS from congressional control. I'm not sure that privatization is the right answer, but having to plead to Congress every time you want to do something will never work out.
4. Get rid of the unions.
5. ???
6. Profit.


RE: Dont blame the internet and email
By bah12 on 2/6/2013 11:11:17 AM , Rating: 2
See my other post below, but add to your list.

7. Stop using FEDEX as your #1 supplier, by a HUGE margin. Not sure, but when your direct competitor is your top supplier there are some pretty big f'in problems.
http://www.huschblackwell.com/images/PostalResourc...

8. Stop servicing ALL boxes daily for pick-up. Fedex/UPS doesn't come unless I call, why do we still require the USPS to drive around looking for little red signs.

I don't agree with #2, that is the only thing keeping them alive is bulk mailers.


RE: Dont blame the internet and email
By Motoman on 2/6/2013 11:58:34 AM , Rating: 2
quote:
I don't agree with #2, that is the only thing keeping them alive is bulk mailers.


It's incredibly low-margin. That's the problem. Make it cost more to send bulk mail, and the volume goes down - meaning you need fewer resources to process it. And because it costs more, the margin you make on what remains is much better.

A lot of the time you can do this sort of thing and wind up making the same overall revenue number, but have much better margin on it.


RE: Dont blame the internet and email
By bah12 on 2/6/2013 12:14:17 PM , Rating: 1
quote:
A lot of the time you can do this sort of thing and wind up making the same overall revenue number, but have much better margin on it.
Except they would not be allowed by the unions to cut the workforce to make up for the loss in volume. In principal it works, but they are too in bed with the unions to properly lay off the workforce no longer needed. Coupled with the fact that they still have to travel the miles to look for little red flags (and thus cannot lay off any of that workforce), and quite frankly they are better off with the higher volume lower margin as their model does not scale well with volume.


RE: Dont blame the internet and email
By Motoman on 2/6/2013 12:46:11 PM , Rating: 2
Yes, which is why one of my points was getting rid of the union too.


By bah12 on 2/6/2013 12:58:40 PM , Rating: 1
Totally agree there, but if you still require them to drive by each box daily the volume reduction only impacts inter post office miles, and sorting. You'd still have lots of un-productive miles. IMHO they really do need to be allowed by congress to implement a call for pickup model. Do that, and then you can kill all bulk discounts.

Take a look next time you drive out of a subdivision on how many mailboxes have a flag up, yet the postman still has to weave through the entire area looking for them. Luckily he has some revenue generating bulk in his bag or those miles would be all cost.

You and I are on the same page, but I don't think many people really understand just how complex the issues are. It isn't just a management issue. In fact very little of it is. The vast majority of their problems are Congress driven.

Several drastic changes need to occur for them to recover, but alas the union lobby will eventually kill them.


By nshoe on 2/7/2013 12:11:11 PM , Rating: 2
quote:
Make it cost more to send bulk mail, and the volume goes down - meaning you need fewer resources to process it.


The problem there is is already costs less to process bulk mail. I have actually been involved in prepping a bulk mailing that a non-profit I volunteered for was mailing out. You have to use machine readable mailing labels, you have to presort the mail by zip code and bundle based on those zip codes. Basically all the post office has to do is throw the bundle in the correct pile, then sort and deliver at the final destination.


RE: Dont blame the internet and email
By fic2 on 2/6/2013 11:59:57 AM , Rating: 2
The USPS attitude about bulk mailers seems to be we loose money on every transaction but we'll make it up in volume.

I have gotten an offer letter from AmEx every two weeks for the last 8 years. Even after I did the take me off the pre-approved credit card lists AmEx still sends their crap to me. I would be happy if the USPS raised bulk rates at least 1 or 2 cents. From looking at the price list bulk rates can be as low as 12.6 cents - although I didn't make it through all 53 pages of prices.

I get a thing in my mail yesterday telling me what my "official" address is. Well, since I have lived there 15 years I am pretty sure I knew it already. The zip code didn't even include the extended 4 digits that they want everyone to use.


RE: Dont blame the internet and email
By bah12 on 2/6/2013 12:18:21 PM , Rating: 2
quote:
The USPS attitude about bulk mailers seems to be we loose money on every transaction but we'll make it up in volume.
But that has to be their attitude, if there were no bulk mailers how quickly would they run out of money if they were still required to drive by your house every day to see if you had a package to send. At least with bulk they get some revenue daily from your box, without it it would simply be impossible to drive by each day. UPS/FEDEX spends millions yearly to reduce route miles, USPS doesn't have that HUGE leg up, as they are required to re-actively see if you have a letter going out today, rather than proactively only driving by if you call for a pickup.


RE: Dont blame the internet and email
By Dr of crap on 2/6/2013 12:54:44 PM , Rating: 2
Answer, don't have pickup at EVERY address.
Like UPS and FEDEX, use drop off mail boxes for out going mail, then the only reason the USPS trucks need to come to your house would be for a delivery.

AND charge those bulk mailers more. Make them pay more for the truck to go to every address and that will cover the losses they are having.

OR, just get the damn govt out of the way. Nothing messing the post office up more than having to go to the govt,
slow and expensive!


By bah12 on 2/6/2013 1:00:25 PM , Rating: 2
Spot on, but you and I know the union lobby will never let any of this happen. My bet in less than 5 years the USPS will be back on the government teet.


By Solandri on 2/6/2013 5:37:21 PM , Rating: 2
quote:
7. Stop using FEDEX as your #1 supplier, by a HUGE margin. Not sure, but when your direct competitor is your top supplier there are some pretty big f'in problems.

I don't see the problem. FedEx doesn't deliver to every address every day. The USPS does. It makes perfect sense for them to accept money from FedEx to deliver those packages for them. Since they're going to be going to that address anyway, it's very little additional work for the USPS, and the next best thing to free money.

The USPS may want to increase how much they're charging FedEx. But it'd be stupid for them to turn away FedEx's business.


By Mint on 2/6/2013 12:23:41 PM , Rating: 2
I don't see how #1 will help. 10 guys delivering 3 days a week will need more trucks than 6 guys delivering 5 days a week.

Eliminating Saturday delivery, I presume, reduces overtime pay, and that's where the savings come from. Otherwise, it seems to me that reducing hours worked throughout the week is more efficient.


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