The U.S Postal Service (USPS) is going broke. That’s not entirely new. Throughout the last few decades, our official government mail carrier has faced a myriad of financial woes which almost put it under.
What I find interesting this time is that a complete lack of foresight and innovation is leading to this once proud institution’s downfall. And, because Americans still depend on their daily mail, we’re also going to see the Federal Government provide yet another bail out very soon. Truthfully, it’s too bad that we can’t take a laissez faire approach, and just let the USPS die a normal institutional death like other organizations which simply aren’t able to keep up with what the market needs, or their competitive set.
The main storyline behind this is that those eggheads who lead the USPS never had the ability to foresee a couple of key factors that impact business:
1) The economy eventually goes down – When that happened, Americans stopped spending so much on first class mail. That’s one of the key ways the postal service makes money. Sending out tons of junk mail is the other money maker for the postal service. Our recent recession turned the junk mail spigot off. Everything else that the USPS sends out from daily letters to big packages, are money losers. In fact, because it charges only 44 cents per letter, regardless of how far that letter has to go, when volume increases, this organization loses money.
2) We are moving towards an email, paperless society – Yet, our postal service is in the stone age when it comes to digital products (meaning: they have none) Ever hear of e-letters? Many national postal services throughout Europe (like Sweden, France and Norway) have. Each has modernized its product offerings, making lots of money and profit because they innovated years ago when everyone saw the writing on the wall.
What’s amazing is that if the USPS was a real company, it would be the 29th largest on the Fortune 500 list. It employs 571,566 workers as well. It also is $15 billion in debt, owing $12 billion to the Federal government. And what’s really ironic is that it spends over $25 million on advertising to promote how mail should be used as a marketing tool (i.e. bring back demand for junk mail). Unfortunately, none of that seems to have helped because all the marketing in the world won’t make a dent in the bottom line when the business model has failed.
I guess we shouldn’t be surprised. Many of the USPS’ senior management (including its current Post Master General) came up through the ranks of this governmental bureaucracy. Without any outside business training or real experience in running other behemoth organizations, it’s very difficult to bring in new ideas or perspectives that have worked elsewhere.
My take has always been to let the strong survive and the weak… well let them figure it out for themselves. Of course we know that FedEx, UPS and the others couldn’t readily step in and just take over the enormous daily mail needs that the post office provides (rumor has it that the USPS delivers 40 percent of the world’s mail). But, there certainly has to be a better solution than forcing the tax payer to pick up yet another bill to save an institution that hasn’t been right since the days of the Pony Express.