Postage Due to Changing Market

Sioux City is losing out to Sioux Falls as the USPS tries to figure out how to stop hemorrhaging money. However, Sioux City cannot itself afford to find out precisely why the changes are being made:

Sioux City officials say they won’t pay the U.S. Postal Service nearly $831,000 to see how and why the postal service decided to close Sioux City’s mail processing center and move the work to Sioux Falls, S.D.

I would guess that it makes sense to keep the Sioux Falls processing center because that location is better suited to serve a larger area because of its distance from Omaha. Then again, I’m supposing that cold business logic–and not politics–is the reason behind this change.

Perhaps the folks in Sioux City could read this article to get some general insights which no doubt have specific application to their situation:

The USPS is a wondrous American creation. Six days a week it delivers an average of 563 million pieces of mail—40 percent of the entire world’s volume. For the price of a 44¢ stamp, you can mail a letter anywhere within the nation’s borders. The service will carry it by pack mule to the Havasupai Indian reservation at the bottom of the Grand Canyon. Mailmen on snowmobiles take it to the wilds of Alaska. If your recipient can no longer be found, the USPS will return it at no extra charge. It may be the greatest bargain on earth.

It takes an enormous organization to carry out such a mission. The USPS has 571,566 full-time workers, making it the country’s second-largest civilian employer after Wal-Mart Stores (WMT). It has 31,871 post offices, more than the combined domestic retail outlets of Wal-Mart, Starbucks (SBUX), and McDonald’s (MCD). Last year its revenues were $67 billion, and its expenses were even greater. Postal service executives proudly note that if it were a private company, it would be No. 29 on the Fortune 500.

The problems of the USPS are just as big. It relies on first-class mail to fund most of its operations, but first-class mail volume is steadily declining—in 2005 it fell below junk mail for the first time. This was a significant milestone. The USPS needs three pieces of junk mail to replace the profit of a vanished stamp-bearing letter.

If you have a bit of time, please go and read. You may be surprised at the number of things you simply didn’t know you didn’t know about the postman.

UPDATE

Smaller towns may soon be losing out as well:

The U.S. Postal Service is considering closing more than 1 in 10 of its retail outlets. The agency announced Tuesday it will study 3,653 local offices, branches and stations for possible closure.

As painful as this change will be, I am afraid that it will not be enough.

2 thoughts on “Postage Due to Changing Market

  1. The Post Office is also going to have to adapt itself to a radically different technological environment or it will go the way of the Pony Express.

    Some quick thoughts on one possible way to do this here: http://pnrmiscellany.blogspot.com/search?q=post+office

    But whether they do something along those lines or something different, they have to adapt in a way other than raising the rate of 1st Class postage

    1. True. Raising prices for a product whose sales have been dropping anyway is a surefire way to make our way even more quickly to collapse of the system.

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