on Mar 11th, 2013 in Ideas Worth Exploring | 8 comments
 

The U.S. Postal Service adds more than 600,000 new delivery points each year, mostly in the form of new residential homes. While most new residences include cluster boxes rather than to-the-door delivery to reduce costs, delivery remains the Postal Service's largest cost center. Canada Post, which has suffered losses recently after years of profits, has introduced a $200 per address charge that it is assessing housing developers for installing community mailboxes. Canada Post claims the charge “is in keeping with how other infrastructure costs are shared by utilities and other services." Canada Post, which adds almost 200,000 new addresses a year, could earn tens of millions of dollars from the fee and it would offset the added costs of new delivery points. Housing developers in Canada have been fighting the charge, arguing that it is unfair to assess new homes only, which they say receive substandard delivery service compared to older homes and apartment buildings that get delivery to the door. In the United States, the Postal Service does not charge a fee to set-up and deliver to a new address. New delivery points are generally more profitable than old ones because they generate on average more volume and revenue and they cost less due to the increased use of lower cost options such as curbside and cluster boxes. Still, other utilities, such as gas, electric, and cable companies, charge customers a new service fee when they move or start service. Cities and counties also often charge an administrative fee for services, such as water, when a customer changes or adds a new address, sometimes in the $50 range. The City of Mountain View, CA, charges a hefty administrative fee of $195 to change or add a new address. Should the Postal Service recover the costs associated with new delivery points by charging customers a one-time “set-up” fee for their new home or business location? Or does that effectively penalize a new homeowner for receiving what is usually a more cost-effective form of delivery (cluster boxes)? If the Postal Service were to charge, should it only charge for the administrative costs it incurs to set up new addresses, such as completing and reviewing Postal Service forms and updating to the Address Management System and Delivery Sequence File? Should it charge the developer as Canada Post is doing? Or should it retain the status quo and keep it so that costs are shared by all ratepayers? Are there other solutions?

8 Comments


Yes this is a good idea. More revenue for a service that takes up a lot of time and effort on the Postal Service side.

I am not sure that charging a new address service fee is the right approach since cluster boxes cost the Postal Service less to deliver to than to-the-door mailboxes or mail slots. It might make more sense to charge an annual "utility fee" to those homes that want to retain their mail slot delivery. Further, it might be time for the Postal Service to stop thinking about new delivery points as cost centers only and start thinking of them as new customers. How many other businesses have built-in growth in customers (600,000+ a year!) without lifting a finger? While each new delivery point might not get as much mail per stop as 10 or 15 years ago, the mail that does come to new delivery points is often high-contribution mail pieces. The utilities and cable companies etc. are sending invoices and service announcements to the new residents and then advertising mail soon follows. Although more people are paying bills online, they tend to still prefer receiving hard-copy invoices in the mail rather than move to online bill presentment. I think the better question might be how the Postal Service could maximize the potential of these new "customers" rather than think about them merely as an added delivery cost.

I think you bring up a good point about viewing new addresses that USPS creates as potential customers. That said, the reality is that while USPS bears the cost of creating these new addresses, UPS and FedEx also get to service these customers as well. So USPS is forced to pay for these costs but its competitors get to receive the benefits. The two best and fairest options are for either the developer/homeowner to pay for the service of creating a new address or have the other delivery companies also share in the burden of paying for the creation of new addresses/the creation of new customers.

This idea is outside the box and I applaud this type of thought provoking topic, but like other ideas it only focuses on "taxing" someone to create small revenue to try to mask the real problem, spending; the real issues that need to be addressed are their healthcare plan, retirement prefunding and 6 day delivery costs, all Billion dollar cost savings areas. Unfortunately, but factual, 80% of their costs are not being touched for one reason or another and we focus on cutting the 20% left over. If we want new revenue ideas, it must be big ideas such as digital opportunities, or utilizing their nationwide footprint to offer government related services such as background checks and identity management, secure email “certified mail” type of transmissions, etc.

If you did the quick math, a new customer fee of 25 dollars (like a utility may charge) would only raise 15 million dollars (using the 600,000 new delivery points per annum) in an agency losing billions of dollars. This would not even be a rounding error on their books. Also, DSF2 is licensed out to those wanting to know these new delivery point benefits at 100,000 dollars per site/platform, per annum per licensee. Some firms already pay Address Management hundreds of thousands of dollars for access to this data.

Lastly, on the question at hand, if you want to tax a consumer who in reality we really want to feel the value of owning a mailbox and receiving paper based communication (as a mailbox would for the most part not affect e-commerce deliveries) just for adding a new delivery address, I fear the backlash would be people would say fine, don't put one there. The beauty of marketing mail today, is it costs consumers nothing to get mail sent to them as it is paid for by the sender who wants to obtain business from that household. Digital communications cost money in terms of internet access, mailboxes (at a home) usually are free.

15 million dollars is a lot of money, I think a bigger problem than paying good money to laborers is the concept that we shouldn’t try to save some from across the board and instead should make gargantuan cuts to a few essential programs. Additionally if the USPS charged a fair more inline with our Canadian friends to the north it would actually be over 100 million dollars.

Perhaps we need to start charging for change of address like CanadaPost does….
Residential:
Within the same province $79.95 for 12 months
$47.95 for 6 months
Outside of province $99.95 for 12 months
$59.95 for 6 months
U.S.A./International $225.95 for 12 months
$135.95 for 6 months
Also for holding mail:
Residential:
$20 for the first 10 weekdays.
$8.50 per additional week (5 weekdays).

Does Google Charge? Yahoo? Fed X or UPS does not charge?
Why do you feel you are entitled to charging to deliver 3rd class or Non-Profit, much less standard mail to an address? This effort something that should be contracted out. If someone executes a hold mail notice, immediately, a bonded outside mail contractor should handle all disposition. Including storage of mail. The post office does not have the time to manage such silly requirements, and from my experience after dealing with my parents estate, they do an extremely poor job of it. Any subject accountable mail would therefore absolve the post office of discretion, while disposition would end when transported to subject postal district office or distribution location.

I think revenue earning and trying to balance out this loss is a lost cause. But I do think the extra charge for newer routes might not be a bad idea. It shouldn’t be done to correct or balance the books that have been severely skewed for so long. It won’t be the end-all to the post office financial woes!

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