USPS Down the Tubes

As a former employee of the good ol' Post Office, the coverage of their problems are of some interest. It sure looks like they are continuing to slide down the slippery slope of complete failure. Most of their suggestions are just stopgap measures designed for short term continuance of current marketing strategy and fiscal planning.

Rate hike? Raise the price of stamps? How does that increase their market share, reduce costs, or include some sort of productivity enhancement? How does the continual begging for more money help their image with the public? Hey, I'd like to get a raise every time I run short of money before the next paycheck, but that isn't the way the real world works. Welcome to the real world, USPS management.

I'm just a simple country boy, with nothing other than Econ 101 in college to buttress my knowledge of the global economy. I didn't even sleep in a Holiday Inn Express last night. All I know is what I learned while in the aforementioned august assembly's employ. I really tend to come down on postal management and their missteps more than the various unions. The USPS has to deal with several unions - the APWU (American Postal Worker's Union), the NALC (National Association of Letter Carriers), and the National Postal Mail Handler's Union - the three largest. They are all affiliates of the AFL-CIO, but due to the personality conflicts of their leadership, none of them get along. It would seem to me that the USPS could have played them off against each other, but they have been largely unsuccessful in this regard. I can remember the NALC settled a contract dispute and the APWU didn't - but it made but a ripple in the larger scheme of things.

And, I'm not saying I'm pro union either. Far from it. Yep, the union contracts have tied management's hands in a lot of ways. But, they signed the dotted line - management did agree to abide by the terms of their various contracts. Do they? Are you kidding me? The corporate attitude is screw the unions and individuals every chance they get. A management up and comer won't get anywhere without a few greivances under his/her belt on their 991 (USPS form for the standard resume). The attitude is that when the punishment finally is meted out by an arbitrator, they will have moved on to other things and the damage won't be noticable. Management will have realized their short term plan, even though it was against the contract. If, as an up and coming supervisor, you get a reputation as someone who is "easy" on the rank and file - well, you are screwed as far as advancement is considered.

But you won't get fired. If there was an organization that embodies the Peter Principle, it would be the USPS. Anectodes do not make evidence, but in the ten years I was there, I never saw any member of management fired for any reason. Yeah, they were generally transferred - but usually to a higher paying job insulated from any decisions that got them in hot water in the first place. Since Western Kansas is not exactly on most urban professionals' hot list for places to live and work - we got a lot of people who were basically banished to Siberia for a time.

Plus, there is definitely a double standard applied to management personnel. For instance - we had a postmaster who had problems with her vertebral arteries plugging. This made for some interesting interactions when she was attempting to lead - she'd forget the order just given and threaten dire consequences for continuing the action she had just ordered, then an hour later be back - upset that the original order was not being followed. I'm not trying to be heartless - she finally got the medical help she needed, but her superiors didn't care about her spotty performance. After she actually retired, she was kept on the employment rolls as our postmaster until her sick leave and vacation time were used up. Easily over a year. So, we had a succession of substitutes looking to "pad their 991s" by changing some process just before a normal spike in mail volume to claim the application of their intellect caused the increase in productivity. Which meant we had no continuity in our job processes. And, as an aside, do you think a rank and file union member would be allowed to be considered "present" in order to use up their accumulated sick leave?

Like I said, I'm no fan of unions. Their constant nit picking about issues that were more about "not respecting my authoratah" than much of anything else got on my nerves as well. The USPS created the need for the unions by their cavalier attitude towards their employees, and their refusal to give and take put them in the penalty box with the rather liberal federal arbitrators. They made their own beds. And, just a thought, when you hear about how the USPS is hamstrung by their contracts with the various unions and how their costs are just out of control because of said sad condition, let me ask you this question. How is it that the UPS's employees are unionized and they don't have this trouble?

I'll just leave that issue with this thought: When management is actively trying to piss off their employees, what sort of response should you expect? But before I drop it, just one more dig. The "rank and file" employees are overpaid and underworked, according to USPS management. However, their pay scales have to be competitive with the rest of the business world. When considering the salaries of the Postmaster General and other high echelon positions, you should be looking at what other large corporations are paying their top managers. Gotta be competitive, doncha know. If you want to attract talent, you gotta pay. The rest of their workforce? Crush 'em.

So, yeah, I'm giving management a hard time, but they deserve it. They are the supposedly responsible parties in the equation. Like a lot of businesses, they have been obsessed with short term results rather than using long term thinking. IE: tracking packages. When their competitors invested in the technology to track packages and keep the consumer informed about the probable deliver time - well, that should have been a clue. The original decision was made to concede that part of the parcel business to their competitors rather than actually try to maintain their market share. Later, they saw their error and have been rather belatedly attempting to catch up. A consumer is still unable to send a package and have it tracked all the way from A to B. Priority Mail has the extra expense option to track when the package is handed over to the sending post office, and then when the package reaches the destination address, but not between. If you want true tracking that UPS and FedEx offers on everything, you have to use the premium and much more expensive USPS services (think Express Mail - yeah, the overnight or two day option). So, back when that fateful decision was made, UPS was a pretty small entity. Look what they and FedEx have become with just a small window of opportunity.

But, but, but - the USPS claims they are self supporting! They are the only government entity that doesn't get taxpayer funding! Well, hold on there buckaroo. Shall we look back on the anthrax scare in 2001? That was just $5 billion between friends. And, that was hardly the only time. Independent? Not so much.

Lets look at another poor decision just for kicks. In 1997, the USPS and Emory Worldwide (now a division of UPS), reached a historic agreement.

After conducting a three-year study on creating a separate, outsourced network to improve delivery times, the Postal Service reached an agreement with Emery Worldwide in 1997 to process and transport Priority Mail.

Four years later, the Postal Service’s Inspector General’s office audited the contract and concluded that “Priority Mail processed through the network cost 23 percent more than Priority Mail processed by the Postal Service without a network,” and that Emery “was not meeting overall delivery goals.”

Furthermore, the auditors found that network subcontractors had abandoned Priority Mail in Seattle, rather than transport it to Alaska as required in the contract. The audit also said that the contractor did not perform security screenings as required in the contract. (IG reports DA-AR-99-001 and MK-AR-01-003).

In November 2000, the Postal Service and Emery agreed to an early end to the contract after the private contractor tried to charge 40 percent more than the USPS expected to pay. The work was brought back in-house the following January.

Ending the contract cost the Postal Service $66 million in termination fees and another $235 million as settlement for Emery’s claims of underpayments.

Turns out Emory was headed down the tubes. Did anyone at the USPS ever read a balance sheet on Emory? Do you suppose any USPS honchos heads rolled over this?

Another issue that really resonates with people is the junk mail issue. I cannot tell you how many people would come in and bitch about how much crap they got and wanted it stopped. The customer is always right, correct? Why doesn't the Postal Service stop delivering junk mail to individual customers?

Well, when you are the recipient of mail, you are not the customer. The person or entity that sent that mail is the customer in the Postal Service's eyes. They paid the postage. Not you, hapless Joe Sixpack on Generic Drive. You just happen to have the mailbox at the address that is on the piece of mail. And maybe the name isn't the same? John Doe moved out over two years ago, and your name is Joe Sixpack? Why are you still getting HIS mail? WTF? Welp, look at the fine print. Deliver to addressee or current resident. Guess what - Joe Sixpack is the current resident. The mail was delivered correctly as far as the actual customer is concerned.

But, that is really all beside the point. For years, consumer advocates have held that the Postal Service gives mass mailers a sweetheart deal. They say that First Class mail - the mail the average schmuck (that means you and me) uses actually supports the costs of handling junk mail.

Picture from here

"Standard Mail" is the postal euphamism for junk mail. Look at the piece count comparing first class to standard. Roughly equal. Look at the weight. Standard mail weighs significantly more. Standard mail generally is held to a lesser delivery standard - up to a point. Most of the time, it is handled separately from first class mail. So, the latest JC Penny sale catalog can sit on a pallet for a day or two at a mail facility before delivery requirements say it has to be out the door. On the other hand, if you have a local non profit mail permit, and take your church bulletin in to be mailed on Tuesday, the bulletin is treated at first class mail and delivered on Wednesday.

The issue is with the very large mailers and the rates they are charged. The mass mailers have a very good lobbying front that keeps their issues in Congress's ears. They claim that any rate increase will cause them to take their ball and go home - they are already stretched too much paying what they already are. They threaten to use other advertising avenues. The Postal Service listens to this. So, the marketers have the heaviest load, and roughly half the piece count, only paying about half the postage. Most standard mail isn't shipped by air like first class, but once standard class mail is introduced into the mailstream, it is considered first class.

I ran one of several CSBCS machines - they are letter sorting machines capable of sorting carrier level mail into the delivery sequence. I spent many an afternoon running standard mail through those puppies, and the extra weight and thickness of the majority of those mailpieces was very hard on the mechanicals. High wear items wore out much more rapidly - belts broke more often, and feed strips and belts ground down in a hurry. There were more labor hours associated with handling that mail. The standard rule for the Postal Service and labor costs associated with classes of mail can be summed up with: "Don't burn overtime on junk mail," which means it's ok to do so with First Class.

I'm for thinking that standard mail rates should be cheaper than First Class Mail, but not as cheap as it is. Running your infrastructure into the ground to keep a loud minority happy is no way to run a business. The mass mailers might take their ball home, but not for long. Their own studies show how effective mass mailings are. Mass mailers could cut their costs considerably if they actually kept better databases on correct and current addresses. They're supposed to, but the reality is a bit different. The way they try to control their mailing costs pretty well tell me how much they consider the cost of mailing vs the cost of their spray and pray advertising (as opposed to tighter controls on targeting their potential consumers). It's cheaper for them to waste a significant portion of their mailings than it is to actually hit what they are aiming at.

There are plenty of other examples of mismanagement and excessive spending - but these will do for now. I blame a corporate culture obsessed with keeping themselves in power no matter the cost, a culture of obstinate employee relations, and very short term thinking. The unions have their share of blame as far as the continual nitpicking of largely inconsequential greivances, for instance. I think Moe Biller and Vince Sombrotto were dickheads. But, management is supposed to manage. They failed.

So, I'm sure there will be a postal bailout in the news soon. Why fix the problems when y'all can just toss more money in the mix? That's a recipe for success...