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Wed Dec 5 2018 01:21:41

Trump Task Force Thinks Outside the Mailbox

By: Ina Steiner

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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.

Comments (29) | Leave Comment | Permalink
Readers Comments

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

by: Chicago48 This user has validated their user name.

Sat Dec 8 07:57:19 2018

Privatizing mail boxes means what exactly?  Anywho, down the street from where I am in Chicago....there was a USPS outpost owned privately by an Indian family.  They sold supplies, stamps and shipped.  That business, which was modeled after the UPS store, lasted one year.  I cannot imagine how they would privatize the USPS beyond what they did above.

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

by: ZZ This user has validated their user name.

Mon Dec 10 00:53:02 2018

I had a rather large amount off clothes to ship across country so I knew Fedex was the cheapest at $56. I cut down the 4 sides of the box to remove empty space, and being a big box I wasn't able to make sharp folds to the new top. They weren't out of square but just a little curvy. I took it to one of thise Kinko's-Fedex locations where the clerk had to yell in the back to whoever was doing the Fedex part.
She told me I would have to put that box inside another box, because it was curvy on the top edges. I didn't argue; just told her she cost Fedex $56 and drove it to the Post Office and paid the $65 for parcel post. BTW,  for all my packages under 5 lbs that I sell on ebay, the USPS rate for Priority and 1st Class is always lower than the competition.

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

by: Tiffee Jasso This user has validated their user name.

Mon Dec 10 02:51:27 2018

"Finally, as international mail and packages play a relatively small role in the overall economic performance of the USPS, representing 3.7 percent of total USPS revenue..."  
I think this is a erroneous statement. At 50 million packages up to 4 pounds delivered for pennies on the dollar per year, Asian packages do constitute a huge lost in revenue for the Post Office. I pay $20.05 to ship a 4 pound box across the US. To ship a 4 pound package to China would cost me $82.25. A Chinese seller ships the same box at 4 pounds to anywhere in the US for about $1.60.
Anyone who believes or states this has no bearing  on the financial health of the US Post Office is either ignorant or has pocketed lobbyist money.  

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

This user has validated their user name. by: thehosst

Mon Dec 10 04:54:07 2018

by: toolguy "Amazon pays $2-$3 for a package that costs me as a small seller $6-$10 to ship"

Sorry mate, you are being generous. Amazon pays less than 20 cents per package, up to 3 lbs. Just look a some of the Masked Amazon accounts on eBay and everywhere used to dump the excess inventory, which they claim was damaged, screwing naive Amazon sellers. All those claims that side with the buyer, when the merchandise is returned, yes, they end up in Amazon profits.

If Trump is serious about the postal reform, and hates Amazon so much, he should investigate and end this trick. But we all know how it will play, Bezos is going to get his pocket change and use it as a dog treat to feed Trump. He will move his tail, bark a little and roll-over, and we all end up paying to subsidize the Amazon "paid" postage.  

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

This user has validated their user name. by: thehosst
Web Site

Mon Dec 10 04:58:59 2018

Hey, just look how amazing it works for the Royal Mail (https://postandparcel.info/99222/news/royal-mail-has-target-price-cut
-by-deutsche-bank/)

After
4 years of privatization and amazing Postal Reform, they are about to go out of business. They added banking and insurance services, doubled the postage price and still, in less than a year in the stock market, they are being kicked out, for being such a ridiculous "company". Yea, lets make the Postal Service "GREAT" again.  

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

by: glasspackaging This user has validated their user name.

Mon Dec 10 10:05:14 2018

ahh... so they spent a fortune to not realize they are pricing themselves out of the business on priority mail? ..  shipped a package to CA last week - our contract rate on UPS - $17.49 ...  USPS - $37.40 ...  yet they still call on me and tell me they will make themselves competitive...  drop the deals with Amazon and China - and perhaps you CAN make yourself competitive .. stop losing money to service them.

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

by: Patricia This user has validated their user name.
Web Site

Mon Dec 10 11:23:24 2018

The Trump administration is destroying everything it touches as far as ordinary Americans are concerned.  We are definitely NOT "winning"....only big business and huge corporations are.  If they get their hands on the USPS it will go the same way...changes that will hurt us and benefit big business!  Trump is "assuring us" as he does so well...while doing the opposite!  Be aware!

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

by: epuise This user has validated their user name.

Mon Dec 10 16:56:23 2018

I would rather think of Trump "out of The White House" than think what "outside the box" ideas these money driven "people" may use to line their pockets at the expense of the American people & the USPS.

Perminate Link for Trump Task Force Thinks Outside the Mailbox   Trump Task Force Thinks Outside the Mailbox

by: Grady This user has validated their user name.

Tue Dec 11 22:12:15 2018

Trump talks a big game, but I have seen how many times he has backed down to the Chinese and everyone else. He's just like the rest of them.

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