Throughout the Covid-19 pandemic, there has been one constant to connect people to some semblance of a normal life. That constant is the parcel industry, which has been there to provide them with all the goods they needed during the lockdowns.
This lifeline really has gone two ways. In addition to meeting the needs of consumers, it has also allowed retailers to stay afloat during a period of store closures and mandatory shelter-in-place orders.
Now, a portion of that lifeline is under threat from President Trump. I am referring to his ongoing attacks on the U.S. Postal Service (USPS). The USPS is one leg of the three-legged stool—the others being UPS and FedEx—that constitutes the nation’s parcel-delivery network. But the president apparently doesn’t see it that way. In April, he told White House reporters that “the postal service is a joke” and reiterated demands that the agency quadruple its package rates, mostly as a political vendetta against Washington Post owner Jeff Bezos, whose main business, Amazon.com, makes heavy use of USPS package services.
Let’s face it. The postal service by name is a service and not intended to be a money-making venture. And a money-maker it is not. The USPS is expected to lose around $23 million over the next 18 months. But contrary to common belief, the postal service receives no tax dollars. It must fund its operating expenses from the sale of postage stamps, revenues from its products and services, and loans. Packages are by far the most profitable segment of its business, accounting for 5% of USPS volume and 30% of its revenue, according to postal experts.
Raising rates to the degree proposed by the president would create hardships for smaller shippers and retailers who lack the volume—and, thus, the negotiating clout—to obtain better rates from the big private-sector parcel carriers. Just having the USPS around as a package-delivery option assures a more competitive marketplace.
Here is an idea. Instead of killing off the golden goose of parcel (the most profitable part of the USPS’s operations), why don’t we address those areas that are no longer profitable? People do not send many physical letters anymore. First-class mail volumes last year were only 70% of what they were in 2010, and they continue to drop. If there is such reduced demand, why don’t we look at cutting operational costs by going to three-day-a-week residential mail delivery, such as a MWF schedule for half of the addresses and TThS for the others? Most of my home mail consists of bills and advertiser pieces anyway. I can certainly wait an extra day for those to arrive in my mailbox.
