What If the USPS Disappears?

Once, there was a Constitution-ordained, universal delivery service of hard-copy, print communications called the United States Postal Service. It was affordable, reliable and the most efficient of its kind in the world. Direct mail was its bread and butter, and many brands that sought to find and keep customers in a very targeted manner used the service avidly.

Once, there was a Constitution-ordained, universal delivery service of hard-copy, print communications called the United States Postal Service. It was affordable, reliable and the most efficient of its kind in the world. Direct mail was its bread and butter, and many brands that sought to find and keep customers in a very targeted manner used the service avidly.

Then a century marked a transition. Change was revolutionary: A new form of communication—soft copy—emerged in a few short years to dominate marketers’ mindsets. It was instantaneous, almost universal and largely perceived to be secure, private and nearly free. Suddenly, the communication engine of hard copy sputtered, financial losses mounted at the Postal Service and an infrastructure for hard-copy delivery was bloated. Commercial and nonprofit organizations that largely paid USPS’s bills were questioning the cost of doing so any longer.

Welcome to the world “after” the Postal Service. Or is it?

Last year, the United Kingdom sold Royal Mail. Many other rich-world posts are already private. Could the USPS—the biggest of them all—really be next for “privatization”?

The ‘P Word’
Mailers, for one, appear mixed on the topic.

“When I look at privatization, I look at Canada Post—which is closer to the U.S. geographically and demographically than any of the European posts,” says Charles Howard, VP of postal affairs at Harte Hanks, an integrated marketing services provider which handles several billion pieces of targeted advertising mail each year. “And that’s when I realize I still have problems with privatization. In March of this year, Canada Post will raise rates as high as 35 percent in some categories.”

“In reality, it would be very difficult for any business to replicate the USPS’s infrastructure for delivery to every doorstep in America,” says Joel Quadracci, president and CEO of Quad/Graphics, a leading provider of print and multichannel media solutions. “Yet, the USPS continues to behave like a monopoly. Case in point: the exigent rate increase, which will negatively impact volumes, resulting in a situation where further price increases will be necessary to cover costs. Ultimately, this will drive even more volume out of the mailstream.”

Even mailer organizations are uncertain about privatization.

“I doubt America will ever decide on full privatization,” says Hamilton Davison, president of American Catalog Mailers Association. “There are too many complications. However, the relentless demand of the marketplace is forever increasing efficiency and value. Unless the Postal Service responds to this challenge, greater outsourcing, or even licensing, of its functions to third parties is a realistic alternative.”

The Direct Marketing Association concurs. “I believe it will be very difficult to privatize USPS at the moment,” said Peggy Hudson, EVP of government affairs for the DMA. “It is a $60-plus billion annual operation, but it is facing declining demand. That declining demand forecast makes it difficult to see USPS privatized, or at least the ‘universal service USPS’ that has been a staple of the U.S. for its entire history.”

The ‘U Word’ Is Important, Too
Universal service is the everyday delivery of mail to all delivery points served by the USPS—nearly 153 million delivery points in 2013, up more than 700,000 last year alone. What constitutes “universal service” most unlikely will be different in five years’ or 10 years’ time, say postal watchers.

“Assuring affordable universal service should be a top priority for the USPS,” says Paul Ercolino, president of U.S. Monitor, “but the Postal Service must be allowed to meet the evolving needs of the American economy and to set its prices in a way that reflects the cost structure of the delivery industry.”

“I cannot imagine remote areas of the U.S. being as connected as the urban U.S. in 2025,” Hudson says. “Thus, there must be some form of universal service. Moreover, with online and mobile purchasing increasing, universal product delivery will continue to be demanded by Americans.”

Parcel delivery is indeed one of the bright spots in USPS business and finances, as the Postal Service continues to gain market share from private couriers, such as FedEx and UPS. As e-commerce has grown, so has the demand for affordable, reliable and efficient fulfillment.

“Six-day service for all mail will not survive by 2025,” Hudson says. “The reduction in demand for hard-copy delivery will necessitate that. Marketers and charities will adjust to a less-than-six-day delivery schedule. There may be one exception—parcels. ”

Is There No Cure for Congress?
Yes, this subhead has two meanings: First, a demand from mailers (USPS customers) that Congress approves postal reforms that “free” the institution from its financial ills—many of which were imposed by Congress in the first place the last time a major postal reform law was passed in 2006. Second, a demand also from mailers that Congress (then) get out of the way and allow the Postal Service to act as a truly independent organization.

“Congress likes to load up the Postal Service with requirements, but does not provide funding to cover these mandates,” Davison explains. “Sometimes, Congress does things that are counterproductive or downright costly and wasteful. Requiring barely used post offices remain open is an example. Blocking the agency from dropping a delivery day is another. To the extent that Congress elects to micromanage the mail service, its future is bleaker.”

Howard says a seemingly easy fix is stuck. “Congress needs to realize that the Civil Service Retirement System pre-funded retirement costs already paid into the fund, based on current Postal Service employment trends, would be sufficient to be considered fully funded now,” Howard said. “Were the Postal Service allowed to have its own healthcare program, it would save $8 billion immediately every year … Even the labor unions are supporting this effort. Congress should pass this now.”

The mailing community is clearly supportive of recent efforts of Postmaster General and CEO Patrick R. Donahoe and USPS management efforts to reduce costs, right-size infrastructure and improve delivery performance—but failing to listen to customers may cause some unwelcome Postal Service backsliding toward a “bailout” mentality.

“It is still [about] the overall cost structure of the USPS,” says Joe Schick, director of postal affairs at Quad/Graphics. “Its platform needs to continue to be right-sized in order to bring down those costs. The USPS’ greatest challenge is getting ahead of the curve and anticipating industry and volume changes before they are here.”

DMA’s Hudson says the USPS needs to recognize its role as a supplier to the American economy, and—like any supplier—work with its customers, and “not treat them like the enemy—listen, don’t dictate.” She says, “Get excess capacity out of the system by doing it now. Eliminate door delivery. Don’t look to the customers’ pocketbooks to fix all ills. Don’t be afraid to lay off excess workforce.”

Rainmakers Needed
“Two to three years ago, we had a perfect storm,” says Howard. “There was a recession, inconsistent [USPS] delivery performance, young people only using digital media—and even when clients still loved to use the mail, their CFOs told them they couldn’t. Marketers were forced to look elsewhere.

“Now,” he continues, “we have excellent USPS service performance … and young people, deluged with digital messages and becoming turned off there, actually are discovering mail. Marketers have been coming back to mail, and using it wisely in an integrated way. The timing couldn’t be worse for congressional inaction and steep postal hikes.”

Clearly more is needed to enliven the Postal Service, and mailers are getting anxious and looking elsewhere.

Chet Dalzell is a New York-based freelance communications consultant with extensive ties to the direct marketing field. He also writes the Marketing Sustainably blog on targetmarketingmag.com. Reach him at chet.dalzell@yahoo.com and follow him on Twitter @chetdalzell.

Author: Chet Dalzell

Marketing Sustainably: A blog posting questions, opportunities, concerns and observations on sustainability in marketing. Chet Dalzell has 25 years of public relations management and expertise in service to leading brands in consumer, donor, patient and business-to-business markets, and in the field of integrated marketing. He serves on the ANA International ECHO Awards Board of Governors, as an adviser to the Direct Marketing Club of New York, and is senior director, communications and industry relations, with the Digital Advertising Alliance. Chet loves UConn Basketball (men's and women's) and Nebraska Football (that's just men, at this point), too! 

5 thoughts on “What If the USPS Disappears?”

  1. "DMA’s Hudson says the USPS needs to recognize its role as a supplier to the American economy, and—like any supplier—work with its customers, and "not treat them like the enemy—listen, don’t dictate." She says, "Get excess capacity out of the system by doing it now. Eliminate door delivery. Don’t look to the customers’ pocketbooks to fix all ills. Don’t be afraid to lay off excess workforce.""

    Apparently, Mr. Dalzell doesn’t have a problem dictating the fate of an industry without which his would not exist… Try not being a douche for a few minutes and read the following, after which a short ‘thank you’ will suffice.

    The federal govt subsists solely on taxpayer monies. It and our country are $17.5 TRILLION in debt. The federal govt doesn’t prefund its retiree healthcare AT ALL. They pay as they go and dump the rest on Medicare. That is why Medicare has over $80 TRILLION in unfunded liabilities. The federal govt only funds its retirements, CSRS/FERS, @30%.

    The postal service subsists solely on profits generated by the sales of postage and postal products. It has received NO taxpayer monies since 1983. They were forced by Congress in 2006 to prefund retiree healthcare benefits for 75 YEARS, through 2081, which would include theoretical future employees who haven’t even been BORN yet. No other public or private entity in the WORLD does this.

    Postal CSRS/FERS are funded at over 100%, again forced by Congress, even though the Fortune 500 gold standard is 80%. There is already enough in the retiree healthcare benefits fund for every living postal retiree and currently employed future postal retiree. Short version, there is NO reason to continue prefunding at any rate, over any period of time.

    The threat of a looming taxpayer bailout is a red herring/straw man/crock of s#1t. Between monies squirreled away, somewhere north of $300 BILLION at last count, real assets, intellectual assets, etc, the United States Postal Service has a net worth of around half-a-TRILLION. How the hell does this equal ANY amount of unfunded liabilities?

    FedEx and UPS could not exist without very lucrative, multi-billion dollar contracts with the postal service. 40% of their ground shipments are delivered last mile by the USPS. The USPS processes the combined annual volume of FedEx and UPS twice a WEEK!!! Without the postal service, the $1 trillion/year bulk mailing industry, which supports 10 million jobs, would not exist…

    Does the postal service owe the government $15 billion in loans? What about the law Congress passed in 2003 which forced the postal service to pay its own military obligation? No other federal entity, all of which are supported by taxpayers, is required to do this. This cost the postal service $27 billion.

    Outside of the DoD and Wal-Mart, the postal service is the largest employer in the country. Surprising as they’ve cut 42% of their career positions, from over 850,000 to under 500,000, since 2000. The postal service is THE largest employer of veterans. The postal service processes over 40% of the WORLD’S entire mail volume more efficiently and cheaply than all but the very smallest of the world’s posts.

    Lastly, look up U.S. Code; this is federal law on the books as it currently reads, title 39 section 101. EVERY SINGLE THING postal corporate has done thus far to destroy first class mail service standards is illegal. The majority of postal legislation in front of Congress today is bad and most of what it recommends is also AGAINST THE LAW! The sad part is that short of the prefunding requirement, which postal corporate counts as a loss even though they haven’t paid it in two years, the postal service is in the BLACK and none of what’s being proposed is even necessary…

  2. Howard said. "Were the Postal Service allowed to have its own healthcare program, it would save $8 billion immediately every year … Even the labor unions are supporting this effort. Congress should pass this now."

    This is an absolute lie. The postal unions DO NOT support this at all.

    A bunch of crap in this article.

  3. Of all the foolish propositions out there to "save" the Post Office, none is more ill conceived than eliminating door to door delivery. Getting your mail safely and securely delivered to your front door is the whole point of a postal service. Otherwise, you are a mall.(As in congregating the masses at one delivery point; sometimes called cluster boxes.)

    Have you read about home invasions, hacked computer systems, assault and battery, elder abuse, lost children, home fires, unreported injuries in the home, mail theft, and mayhem? Your postal carrier in part solves all of these daily occurrences and more. Picture a cluster box,….YOUR cluster box, located some 500 yards from the nearest residence. It’s dark; you’re running late; you’ve got to stop real quick to grab your mail. You might even have skipped a day or two. There are a few cars parked nearby; a few people milling about…….probably just reading their own mail, you tell yourself. What could possibly go wrong for you, there alone, or perhaps with small children in the car; maybe your Grandmother getting her own mail because nobody visits anymore……..

    The point being, in eliminating door to door delivery, you are setting up a wild west scenario, where anyone could wind up delivering your mail,(if it gets delivered at all), and virtually anyone can take your mail, as opposed to the system in place now where you can safely and securely access your mail, delivered to your front door, by a federal employee who is paid sufficiently to ensure the sanctity of your mail, be it checks, medicine, magazines, packages; what have you.

    Or perhaps you are one of those wide eyed optimists, who envision a minimum wage worker dedicating a lifetime commitment of service to safeguarding your valuables from point A to point B. Look, we ALL want to save money; we want the best value for our dollar. But as the old saying goes, you can be penny wise and pound foolish. You already get the most bang for your buck with the Post Office. Replacing letter carriers with cluster boxes is so beyond stupid, it should not even come up in serious discussion. Think about it.

  4. The article states, ostensibly quoting Charles Howard , VP of postal affairs at Harte Hanks, "…In March of this year, Canada Post will raise rates as high as 35 percent in some categories." I went to the link to pursue this claim directly with Charles Howard but the only result I could find was to be referred directly back to this same article. So I would like to question the author of the article: Could you please specify the categories (plural) that Canada Post will raise as high as 35 percent? Thanks very much!

  5. The loss of the USPS would be a crime against our nations future.
    The other carriers would raise rates beyond comprehension.
    The truth is package shipments are on the rise as more people buy online. So the USPS should be doing the same as other carriers and signing up big online shippers such as Amazon, eBay, etc. to pay the bills and then lower rates for other shipping to garner still more sales.
    Cutting back USPS as the fools in Washington keep talking about is just plain stupid, as cutting back basically runs any business into the ground.

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