Gyroscopic Investing

I often criticize my local post office. Misdelivered mail, lost items that were sent certified -- this actually ended in a shouting match, something I never get into, and ended with my asking someone for her supervisor's phone number. Mail that *is* delivered is often stuffed into my door slot incompletely, letting the cold air in until I come home and discover it. It happened today, in fact.

This Esquire article gives you perspective on the whole enchilada. They're still pretty impressive, the USPS. I want to go out and buy some of those $1.10 global forever stamps after reading this.

http://www.esquire.com/features/post-of ... ble-0213-2

They're not allowed to make stamps with individuals unless they're dead.  If congress would just change that law and sell some of the available slots to the highest bidder, they could really collect.  Imagine how much a Justin Bieber stamp would bring in (even if he is from Canada) from fans all over the world.  And Wall Street titans can brag while they're in prison about the bump up in price of their stamps after they got arrested.  Why wait until people are dead to have all the fun?

I actually rely heavily on the USPS for my business due to the high volume of shipping I do, and maybe it's just my local office, but I've had fairly positive experiences. Even for the uninsured, untracked First Class International Parcel service, not a single one has ever gone missing, and I ship to a lot of, shall we say, less than developed countries.

The biggest problem I have is the recent rate hike, which was especially tough to stomach for international shipping because it comprises a large proportion of my patronage. Every time my shipping costs rise, my products become less attractive to EU buyers because it lowers the price differential in shipping and taxes between buying from me and paying an EU merchant shipping plus the outrageous VAT rates.

My understanding is that the Post Office is forced to do a job that is probably inherently not profitable or on very thin margins these days.  With the electronic revolution letters and even junk mail are less relevant.  The USPS has to have suffered a major hit to market share in the package delivery market.  I can count on one hand the number of packages I've ordered in the last 5 years that have been delivered by USPS.  They've all been small enough to fit in a mailbox.

The USPS is necessary as long as we want the ability to send letters.  If that market was profitable, FedEx and UPS would be pushing for market share.  I'm assuming there's a public employee's union for the USPS that is probably not helping their profitability either.

RuralEngineer wrote: My understanding is that the Post Office is forced to do a job that is probably inherently not profitable or on very thin margins these days.

Only a government agency could have a complete monopoly and yet still fail to break even, much less make a profit.  The USPS's level of ineptitude is astonishing.

RuralEngineer wrote: The USPS is necessary as long as we want the ability to send letters.  If that market was profitable, FedEx and UPS would be pushing for market share.  I'm assuming there's a public employee's union for the USPS that is probably not helping their profitability either.

There are many private companies that would love to be able to deliver First Class mail.  It's not they they don't want the market share, it's that Congress won't let them have the market share.  It's actually against the law for anyone other than the USPS to deliver First Class mail.  If it weren't, the USPS would have gone extinct a long time ago.  As Howard Stern once said, "Imagine if Donald Trump ran a company that competed with the USPS.  Postage would cost and nickel, and you could gamble with the stamps."

And don't even get me started about government unions...

The biggest problem with the USPS is their inability to react to a changing environment.  A lot of that lack of flexibility is likely because of their unionized workforce. 

There are several things that could make them more efficient, IMO.  For one thing, why on earth do we need 6 deliveries per week?  I use the USPS often because of my business, both sending and receiving and I would be perfectly fine with 3-4 deliveries per week instead. 

rocketdog wrote:

RuralEngineer wrote: My understanding is that the Post Office is forced to do a job that is probably inherently not profitable or on very thin margins these days.

Only a government agency could have a complete monopoly and yet still fail to break even, much less make a profit.  The USPS's level of ineptitude is astonishing.

From the article:

The postal service is not a federal agency. It does not cost taxpayers a dollar. It loses money only because Congress mandates that it do so.
...
Five hundred thirty-five members of Congress ultimately decide how to run the postal service: what it can charge for postage, which services it can offer, how it operates. Donahoe is the person who implements their policies, despite the postal service not being a federal agency or taking any taxpayer money; it runs solely on the postage it sells — or lately, doesn't.
...
Take the most contentious issue: the seventy-five years' worth of future-retiree health benefits that in 2006 a lame-duck session of Congress legislated the postal service prepay over the following ten years as part of a broad overhaul of the way the postal service operates. No other government agency must do this, and most private companies would have spread those payments over forty years. But the postal service was flush at the time...

dualstow wrote: http://www.esquire.com/features/post-of ... ble-0213-2

Cool story.  The USPS is a historic anarchronism of central planning.  It would be a shame to see it go as we'd never ever again see such an institution dedicated to serving the public, instead of making a profit.

I'm all for privatizing the USPS, but it appears that a succesful plan will first have to be thought of to preserve rural delivery.  It didn't work for airline deregulation and it hasn't worked for high speed Internet access.

BTW, with UPS SurePost, the USPS delivers a lot of UPS's packages in exchange for drastically lower shipping costs to customers.  That's how you see those $3.99 and $4.99 flat rate shipping deals online.

USPS is already a private company... just one that's heavily regulated by the government and given special privileges in return.

Like the Federal Reserve.

dualstow wrote: From the article:

The postal service is not a federal agency. It does not cost taxpayers a dollar. It loses money only because Congress mandates that it do so.

Wrong!  The post office is explicitly authorized by our Constitution.  Additionally, if it weren't a government agency then Congress would not be issuing it mandates on how to operate.  USPS employees have to pass a civil service exam, and they receive other government benefits.  Plus, the USPS has directly received taxpayer dollars in the past (up until 1980), so at best the author should have stated "It no longer costs taxpayers a dollar." 

MachineGhost wrote: Cool story.  The USPS is a historic anarchronism of central planning.  It would be a shame to see it go as we'd never ever again see such an institution dedicated to serving the public, instead of making a profit.

If the USPS is your idea of "serving the public", then you must live near a very unique post office.  Some of the most arrogant, indifferent, and incompetent people I've ever encountered have been postal employees. 

Have you ever had to wait in line at the post office because there was only one or two windows open?  How often did they send someone out from the back to open another window to serve their customers more quickly?  In my experience, almost never (and I say that based on my experiences at multiple post offices on both the East and West coasts).  I make it a point now to avoid the counter altogether whenever possible and instead ship my packages using those UPC machines instead.  Contrast that with a privately run store without a monopoly, like a grocery store.  Whenever there's a big line, they call up additional employees to expedite the check-out process because they actually value their customers' time, because they know if they don't that their customers will shop elsewhere.  But when you have a monopoly and there is no "elsewhere", then you can pretty much treat your customers however you like because you know they have to do business with you no matter what.  That's also why going to the DMV (another government-run agency) is usually a miserable, time-consuming experience. 

MachineGhost wrote: I'm all for privatizing the USPS, but it appears that a succesful plan will first have to be thought of to preserve rural delivery.

Why would you assume rural delivery would be at risk if mail delivery were privatized?  If there's money to be made, someone will figure out a way to do it.  The founder of either Fedex or DHL (can't recall which) was initially told by his business professor that his idea would never work.  In fact, the man who founded the company I currently work for started this company when he couldn't get his current employer to take on the smaller customers that he saw needed their services.  They told him you couldn't make money serving those small local businesses, so he started his own company to prove them wrong and now he's a billionaire. 

Never underestimate the power of the free market. 

MachineGhost wrote: It didn't work for airline deregulation and it hasn't worked for high speed Internet access.

Not sure what you're referring to here?  What exactly "didn't work" with airline deregulation or high speed Internet access?

Not sure what you're referring to here?  What exactly "didn't work" with airline deregulation or high speed Internet access?

Government subsidies to private corporations.  Rural access is not profitable and subsidies don't fix the problem.

99%+ of the mail that moves through the Postal Service is delivered more or less when it is supposed to be.

I actually think they do a pretty good job, though there are obviously a lot of wacky things about the way the Postal Service does business.

My understanding (didn't read the article) is that the post office is basically well-run now.  They made a huge mistake many years ago with their pensions.

dragoncar wrote: My understanding (didn't read the article) is that the post office is basically well-run now.  They made a huge mistake many years ago with their pensions.

It's more like Congress made a huge mistake several years ago by forcing them to pre-pay into their pension fund on an extremely accelerated basis during a time when they were flush with cash. Then the great recession hit, their revenues fell, and they started butting up against the asinine law. Congress strikes again. 

The Postal Service, like the car companies and the airlines, entered into some poorly thought out labor agreements in the past that are hurting them now as well.

MachineGhost wrote: Government subsidies to private corporations.  Rural access is not profitable and subsidies don't fix the problem.

I agree: subsidies don't fix the problem (or any other problem, for that matter).  But I don't think we can say rural access isn't profitable.  Like I said, if a profit can be made, an entrepreneur will figure it out. 

A few ideas:

1. Charge postage based on a combination of weight and distance traveled.
2. Set up centralized postal centers in rural areas where mail can be picked up.
3. Decrease delivery frequency to rural areas (perhaps every other day, or twice a week).

Some of these might add some inconvenience for mail customers, but living outside major urban areas is already filled with inconveniences: You're farther from schools, hospitals, fire stations, and shopping; lack of infrastructure like sewers, natural gas lines, or cable TV; no snow plowing, police patrols, trash pick-up, and so on.  People have to accept the trade-offs that come with one's choice of residence. 

MediumTex wrote: The Postal Service, like the car companies and the airlines, entered into some poorly thought out labor agreements in the past that are hurting them now as well.

Absolutely.  Which is why unfunded liablities are so dangerous when institutionalized (witness similar problems with Social Security, Greece, California, etc.)

rocketdog wrote: ...

A few ideas:

1. Charge postage based on a combination of weight and distance traveled.
2. ..

Sure, but of course one of the points that is repeated many times in the article is that Congress won't let the post office change the price of postage. Not without permission.

I just posted in this thread, and a few minutes later, in comes an email from cnn alerts:

No more mail on Saturdays.

dualstow wrote: I just posted in this thread, and a few minutes later, in comes an email from cnn alerts:

No more mail on Saturdays.

Good they made the change, but why are they waiting until August to implement it?  And why a stupid date like August 5? 

When dripping blood from a wound time is of the essence.  February 28 or even March 31 makes better sense.  And they should spend more time extracting themselves from the kind of inflexible congressional oversight that got them into this trouble to begin with.

smurff wrote: And they should spend more time extracting themselves from the kind of inflexible congressional oversight that got them into this trouble to begin with.

If only it were so simple to extricate oneself from congressionally-created messes. 

dualstow wrote: I just posted in this thread, and a few minutes later, in comes an email from cnn alerts:

No more mail on Saturdays.

We are really on the cutting edge of things here.

We discuss events before they even happen.

Has anyone else noticed USPS tracking numbers not working for the last few days?