Wednesday, December 31, 2014

US Postal Service Reform: A Dead Letter in 2014

Throughout 2014, we read warnings about yet another crisis at the US Postal Service.  Aspects of Congressional regulation regarding prefunding of employee healthcare do have the effect of showing paper losses, and the postal union suggests that removing the prefunding requirement by itself would put the USPS in a healthy condition.

Unfortunately, this isn't the case. Meanwhile, as Congressional bills like Carper(D)/Coburn(R) languish without coming to the floor for a vote, it is clear to anyone who uses the Post Office that delivery times from Minneapolis to New York, for example, which used to be 2-3 days for First Class mail are now 5-7 days, while rates have gone up.

There are too many small post offices, too little self service, and the delivery fleet itself is outdated and antiquated.

The Postmaster-General admitted that its commercial bulk rates were not competitive enough to win share from online retailers like Amazon.  The USPS recently cut rates for holiday shipping by large shippers, and it did take share from FedEx and UPS, much to their chagrin.

Delivering groceries with the current expensive workforce, work rules, and antiquated fleet seems ridiculous. Handling returns for online retailers should help fixed cost coverage and make some money.

However, without dramatically reforming employee heath and welfare benefits, this is all the usual posturing with no real reform.  Carper/Coburn makes noises about bringing these programs in line with other Federal agencies and about enrolling some beneficiaries in Medicare, but why should this be done solely for USPS, when Congress itself and the Federal government are all on gold-plated plans?

The bill also suggests that these proposed reforms are all subject to bargaining.  Goodbye to any meaningful reform.  Look for continued decline in the speed and quality of service ordinary consumers enjoy, and look also for more glum faces and surly workers at the post office.

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