Is the Postal Service Destined to Fail?

Minyanville has a fresh observation of the risks that a failing Postal Service would have for the American economy and the companies that rely on it today in the column, "Why the USPS is destined to Fail". 

The article describes how the use of mail has changed base on a quote from the Seinfield character, Newman

 “Because the mail never stops. It just keeps coming and coming and coming. There's never a letup, it's relentless. Every day it piles up more and more, but the more you get out, the more it keeps coming. And then the bar code reader breaks. And then it's Publisher's Clearinghouse day!” 

This quote fairly describes the nature of the demand for mail when Seinfeld was on television between 1989 and 1998.  The nature of competition for document and parcel delivery is not longer the same as it was in the 1990's.  The forecast completed by Boston Consulting Group suggests this quote will be even less descriptive of the Postal Service in 2020.


The Minyanville article identifies some surprising losers if there is not a successful transformation of the USPS.Losers if there is not a successful transformation of the Postal Service into a viable enterprise,   The losers the article identifies include:

•  FedEx and UPS who transport mail by air and rely on the USPS for delivery of parcels under 5 pounds
• Amazon,  NetFlix and Ebay that rely on the Postal Service for handling deliveries

The article just touches the surface of the economic impact of the failure of the Postal Service.   Numerous business both large and small that focus on serving limited geographic areas (e.g. pizza delivery, dentists, furniture retailers, opticians, and home repair firms) use mail as their primary means of advertising.   Replacing the USPS with alternative delivery would be difficult for either the losers that Minyanville identified or those that were not.  

The Minyanville column suggests that the Postal Service will Fail because the legislative and regulatory process will not move fast enough to allow the Postal Service to handle a wave of change that is similar to what has already devastated newspapers and magazines.  This viewpoint is not without merit as the Postal Service's proposal is similar to other proposed policy changes designed to transform an industry in that the benefits are diffuse (i.e. all businesses and households that would use a universal mail delivery network in 2020), and the costs are concentrated (i.e. job cuts, higher postage rates, changed retail presence).   Those who will bear the costs will find it easy to raise the funds necessary to argue why change is not necessary or harmful to the nation's interests.    Those who receive the benefits most likely will not even realize the value of the change to themselves or their business and will likely be silent.

Change will require champions in Congress and the White House, and a significant independent record available for those champions to use.   While the studies prepared by the Accenture, Boston Consulting Group, and McKinsey and Co. provide some of that record, more work needs to be done confirming their findings in order for change advocates to prevail.