Congress should not expand responsibilities of postal service

It’s not like Congress hasn’t seen this movie before.

The Postal Service is swimming in red ink again, and the only thing that seems to increase faster than its debt is the level of dissatisfaction with its service.

{mosads}And yet again, the Postal Service’s response is not to improve the service and reduce costs in its congressionally mandated monopoly business of last-mile delivery of first-class mail, but to set up a series of side businesses to try to cover the losses.

If you have a monopoly on a business people used 155 billion times last year, that should be your core business and you should look to it for efficiencies.

Instead, we get Metro Post, the service in big cities that delivers groceries to customers, and a proposal, now encapsulated in three different pieces of legislation, to deliver alcohol through the mail.

Also, there’s the deal to deliver packages for Amazon and the operation in New York City where postal workers load seafood from a local fish market for delivery to restaurants by 11 a.m., and even the wacky proposal by Sen. Elizabeth Warren (D-Mass.) to have the Postal Service enter the consumer loan market.

People are less concerned with the Postal Service turning a profit than with receiving their mail reliably and on time. And that’s not happening. A recent report suggests the number of letters arriving late has jumped by almost 50 percent since the start of the year, and that’s with the Postal Service’s new, more-relaxed on-time delivery standards.

The Postal Service can deliver those fish in New York by 11 a.m., but it is unlikely to deliver any piece of mail to any address in one day anymore. But up to 15 percent of the mail that is supposed to arrive in two days now does not make it on time, and mail that is supposed to arrive in three to five days, now takes longer up to 44 percent of the time.

In all, 484 million pieces of mail were delivered late through June … that’s up 48 percent in just one year.

It’s gotten so bad the Postal Service has stopped closing post offices and mail sorting centers until delivery times improve.

The Postal Service says it must pursue these outside interests to compete with Fed Ex, UPS and other carriers because first-class mail no longer generates enough income to operate. Its leaders say the only option is to use its unique and existing assets – a coast-to-coast, house-to-house delivery system – to generate additional revenue from the revolution in e-commerce.

First-class mail volume did decline 2.2 percent through the first three quarters of this year and is a fifth lower than a decade ago, according to the Wall Street Journal.

But the volumes, as Steve Hutkins, whose blogs on the Postal System, “are still immense.” Checks, medicine, magazines, mail ballots, newspapers, greeting cards, court documents and communications from non-profits all travel through the mail and will for the foreseeable future.

The reach for outside dollars is misguided, and the Postal Service’s package delivery business – easily the one that comes closest to complementing its core business – provides a good example of why.

The Postal Service’s package business is booming, and is, in the words of Keith Byrd, a shipping consultant, “absolutely taking market share from the small parcel carriers, especially on lighter-weight e-commerce.” Revenue from these operations has increased 10.6 percent over the last year and now accounts for $3.56 billion of the Postal Service’s $67.8 billion in revenue.

But because the Postal Service is not truly set up to run a package business – its leaders are right now shopping for 180,000 more package-friendly trucks – it lost money on the venture. Labor costs alone rose by $8.8 billion in one year, and the Postal Service’s own chief financial officer said the added time it takes to deliver packages in dense urban areas, which planners had not factored in, accounted for most of the increase.  

This follows a long pattern of the Postal Service failing at side ventures because it launched them without adequate cost-benefit analysis. 

For example, Metro Post, the grocery delivery service, generated less than $1 in revenue for every $10 invested and, in one my five-month period, delivered only 95 packages, according to the Postal Service’s Inspector General. But the Postal Service wants to expand it even though it does not have enough financial data to even estimate its revenue.

Congress is about to get to weigh in on this through the three measures to lift the Prohibition-era ban on shipping alcohol through the mail, which could come up this fall, and reauthorization, which is just around the corner.

It should make clear the Postal Service is there not to deliver fish in Manhattan or to dole out consumer loans in Boston, but to deliver first-class mail on time and intact six days per week.

And it means looking for efficiencies where they are most likely found – in the collection, handling and delivery of those 155 billion pieces of first-class mail every year.

McNicoll is a conservative columnist and freelance writer based in Alexandria, Virginia. He is a former senior writer for The Heritage Foundation and former director of communications for the House Committee on Oversight and Government Reform.