The United States Postal Service has a monopoly on the mailbox, but what if it could monetize it as a means of generating more income? That's one of the "out of the box" ideas published in a report out on Tuesday by President Trump's task force on postal reform.
The report itself was a reminder of how badly reform is needed (not that lawmakers haven't known that
for the past decade or so), detailing many of the challenges facing the Postal Service - especially financial woes.
There was no talk of directly privatizing the Postal Service, but there were many revolutionary ideas on how to overhaul the organization.
Of special interest to readers: the report directly addressed small sellers, attempting to reassure them. On page 55, the report states:
"Given the current structure and capacity constraints of the package market, the Task Force recommends continuing a government-supported package delivery service (at least in the short-term) to ensure that small and medium e-commerce vendors can exist alongside large e-commerce vendors."
The report summarizes the task force's recommendations in Appendix A on page 64. We cherry-picked some of the recommendations focusing on changes to pricing and services of interest to small shippers:
- Require price increases, reduce service costs, or exit the business for any mail products that are not deemed an essential service and do not cover their direct costs. (Administrative)
- Price competitive products in a manner that maximizes revenues and generates income that can be used to fund capital expenditures and long-term liabilities. (Administrative)
- Redefine mail classes by creating products defined by the type of sender and the declared purpose of the mail item. (Administrative)
- Provide greater flexibility to determine mail and package delivery frequency. (Legislative)
- Maintain current discretion to determine mode of delivery consistent with a financially sustainable business model. (Administrative) (Currently, delivery of mail occurs door-to door, via curbside mailboxes, or via centralized delivery such as cluster boxes or post office boxes.)
- As a means of generating more income, the mailbox monopoly could be monetized. (Administrative)
- Explore and implement new business lines that generate revenue, and that present no balance sheet risk to the USPS. (Legislative)
- Evaluate areas of USPS operations where the USPS could expand third party relationships in order to provide services in a more cost efficient manner (e.g., mid-stream logistics and processing). (Administrative)
Note that "Legislative" means Congress would have to enact such changes, while "Administrative" indicates the task force believes the Trump administration could mandate the changes. However, when the USPS itself tried to make some significant changes in the past (moving to 5-day delivery, closing postal processing plants), it ran up against opposition from lawmakers.
The report includes many other recommendations, including some doozies, such as taking away collective bargaining rights from postal workers.
A lot of people were looking for signs that the Task Force might single out Amazon, given the President's tweets about the marketplace, and certainly many of the recommendations would have an impact on the retail giant.
We found this excerpt interesting:
"To be clear, the USPS should not single out individual commercial customers for disparate treatment. Rather, it must better differentiate its strategies for commercial customers that use postal services based on a return on investment, versus customers who use postal services because they have no other delivery options."
The Package Coalition, of which Amazon is a member, issued a statement in response
to the President's Task Force recommendations.
"The Package Coalition is concerned that, by raising prices and depriving Americans of affordable delivery services, the Postal Task Force's package delivery recommendations would harm consumers, large and small businesses, and especially rural communities.
"We are particularly concerned with the proposals to limit access or increase prices on package delivery services - directly or indirectly by changing costing rules or forcing USPS to create a separate package business - which would needlessly reduce efficiency and force the Postal Service to raise prices.
"The Postal Service's package business is a bright spot that is growing and profitable. In 2017, postal package delivery services contributed a $7 billion profit to the US Postal Service's overall bottom line - a result of USPS' unparalleled ability to deliver packages to more than 159 million points of delivery, seven days a week.
"We look forward to working with Congress and other policymakers to support and sustain reliable, affordable postal package delivery services for all Americans."
That last paragraph may be an attempt to serve as a reminder that while Congress hasn't acted on postal reform, many members may be loath to allow unpopular changes to go unchecked.
The report focuses a lot on the Postal Service's Universal Service Obligation (USO), which it says is not clearly defined in the United States.
"The generally accepted attributes for defining the USO include specifying the geographic coverage for postal delivery, frequency of delivery, processing standards, mode of delivery, range of required postal products, level of access to post offices, and rules for affordable postal rates."
Among the task force's recommendations regarding the USO: "Clearly define the USO. Provide a targeted definition of minimum, essential postal services, that due to specific social and economic needs have a basis for government protection."
It also advocates creating a new business model for the Postal Service, declaring the current model outdated.
"The Task Force believes that the reformed USPS business model must embody a new public policy goal, recognizing that private products and competitive markets increasingly meet the country's communications and commerce needs. The new policy goal should have the more targeted function of correcting the failures and inefficiencies of these private markets.
"Future postal strategies for products, pricing, competing, and operating should be centered on meeting the needs of mail and package customers who are not reasonably served by commercially available products."
Other recommendations: the task force says no to a postal bank, but yes to supplying services to Federal, State, and local government entities that have substantial scale ("For example, the USPS could expand government services by processing certain licenses, such as those for hunting and fishing.")
Other ideas: "The USPS could also capture additional value from its existing retail offices by converting post offices into contract post offices or by co-locating with or renting space to complementary retail establishments."
To get back to the idea of the USPS monetizing its monopoly on the mailbox, the report states:
"The Task Force recommends that the USPS explore franchising the mailbox as a means of generating revenue. This could be done by retaining the mailbox monopoly and allowing regulated access, for a fee, to certified private companies. These "franchisees" would be granted access to the mailbox for the delivery of mail and small parcels."
We found that especially interesting in light of comments made by a reader who is a letter carrier. Lindentea wrote on the AuctionBytes Blog
on Tuesday that postal carriers consistently find parcels inside mailboxes "misdelivered by companies carrying for Amazon." The reader said the USPS has instructed carriers to bring Amazon carrier-delivered items found in mailboxes back to the post office to be charged postage due.
Perhaps there is demand from companies that want to deliver packages inside mailboxes rather than leaving them on front porches.
If you have time, spend some time perusing the report
and let us know what you think.