Casual observers may be excused for regarding the U.S. Postal Service as a basket case.
They know it reports multibillion-dollar losses, routinely raises postage rates and threatens to cut Saturday delivery and close post offices. They have been annoyed by bored clerks and plagued by deliveries of unwanted junk mail. They have seen fast-delivery services such as UPS, FedEx, DHL and now, maybe, Amazon steal market share away from the 239-year-old institution.
But if they looked closer, they’d see there’s life in the post office yet. And there are levers that can be pulled to restore some of its vigor.
Let’s start with that loss. It’s a big number — almost $5 billion last year. The Postal Service, indeed, is strapped for cash.
But the biggest cause of its problems is not entirely of its own making. The heavy burden was, instead, imposed by Congress. It’s the prepaid benefits mandate.
Congress, concerned about the decline in first-class mail volume and by the Postal Service’s legacy of workforce obligations, in 2006 imposed a unique requirement upon the quasi-public agency. It ordered the Postal Service to prepay health benefits for 75 years’ worth of employees’ and retirees’ health benefits within 10 years. Not pension obligations, mind you, but health benefits. That means that the Postal Service has been required to set aside more than $5 billion a year to meet a mandate imposed on no other federal agency.
Take away that prepaid benefits mandate and the Postal Service currently runs an operational profit. Its revenues rose last year to $67.3 billion. And its revenues come from customers, not taxpayers. It’s a healthier economic engine than most people think.
Of course, the Postal Service remains a challenged agency, a bureaucracy that shows little evidence of entrepreneurial agility. It is plagued by much higher labor costs than its competitors. Yet, despite the rise of email and other digital communications, there are opportunities it may grasp.
As the head of Alibaba Group’s ecommerce group wrote recently for Quartz, a growing volume of goods are sold online and delivered by producers across great distances to customers. The products have to get there somehow.
Post offices, not just in the United States but around the world, can benefit from this. If they invest in effective technology and improve their coordination with shippers and other postal agencies, they can grab more than their fair share of a growing pie.
Indeed, shipping and package revenue for the U.S. Postal Service grew 8 percent last year, to $12.5 billion. You could win a bar bet with that bit of knowledge.
And possibly the Postal Service could use it to win its survival, if it were allowed to operate like other American businesses.