How much are you willing to pay - and sacrifice convenience - to save the Postal Service?
It is a question that Congress is going to have to answer sooner or later before the entire system becomes insolvent.
The first step is to recognize the importance of a viable Postal Service. Even though technology is drastically changing how we communicate, the Postal Service is still a necessary player. It is the only mass delivery service that reaches every home in America on a routine basis.
The second step is to rethink the Congressional mandate in 2006 that requires the Postal Service to fund its retiree benefits decades ahead of schedule. There is no other federal agency - quasi or full-fledged government agencies - with such a costly and burdensome requirement. It would be the equivalent of requiring UPS or FedEx to factor $1 billion a year as set aside in their business plans. Rest assured they would have significantly higher rates.
That addressees the necessity and some costs. It still isn’t enough to cover annual losses that hit $5 billion last fiscal year.
The first step to add revenue is to let them compete with FedEx and UPS. You may think they do, but they don’t. The Postal Service has something neither private concern has - the nation’s No. 1 local delivery network.
The Postal Service already does what is called “last-mile” delivery for UPS and Fed-Ex. They should go after more. And if they can’t get any additional business from those two sources, they should openly encourage other firms that want to start local delivery networks to partner with them.
Having the Postal Service become a local delivery service for local firms such as drug stores might just open a revenue stream as well as put the Postal Service at the cutting edge of the delivery industry instead of being the one that is constantly cannibalized.
The Postal Service also needs to raise the price of first-class stamps.
Right now it is 45 cents. Congress, in its infinite wisdom, passed legislation in 2006 restructuring rate increases to no more than the rate of inflation. Funny how Congress beat their collective chests about making the Postal Service an independent agency but then can’t resist putting chains on mail delivery options at every turn.
Of course, raising the price of a first class stamp significantly can be tricky. A lot of the remaining first class volume is in people sending checks to pay bills. Obviously they have issues with doing it over the Internet. The question is what would fly before people would turn to automatic bill paying via phone that is easy to set up and is done without a charge. The Postal Service should do something bold such as jump the price to 60 cents and then build the rest of its revenue model from there.
After that, cuts may still be needed.
If cutting a day of home delivery is on the table, everyone shouldn’t assume it should be Saturday. What is the day that makes most sense from a business perspective? It is obviously the day that historically has the least volume and it is the day that has the least amount of use by big mailers that are still crucial to the Postal Service’s success.
If steps taken to bolster business and to restructure the current system as it exists by cutting a day of service doesn’t do the trick, then the Postal Service needs to start shutting down sorting centers and post offices.
The reason this should be a last resort is painfully obvious except, of course, to those in Congress who don’t want the Postal Service “to compete” with business while at the same time want it to run like a business.
The Postal Service is essentially carrying out a mandated universal service obligation. In short, the demand is that the Postal Service must perform a social service of sorts.
Give the Postal Service flexibility to succeed. If not, then Congress had better figure a way to subsidize the service or else watch it go out of business just like a real business would that isn’t nimble or innovative enough to compete in the marketplace.
This column is the opinion of managing editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at email@example.com or 209-249-3519.