No pain no gain. The U.S. Postal Service has reduced spending over the past decade but it has come with a downside, notably a reduction in service. Over the past decade the Postal Service has reduced labor costs by $10 billion, improved productivity, and generally reined in spending.

That’s the finding of our latest white paper, Peeling the Onion: The Real Cost of Mail, which took a close look at the Postal Service’s cost-cutting efforts since 2006 – the year the Postal Accountability and Enhancement Act became law. With volume and revenue in decline over the ensuing decade, the Postal Service certainly had to focus on spending less. It responded by redesigning its network of processing plants, retail locations, delivery routes, and transportation systems, as well as modernizing some of its workforce labor practices.

When total cost is adjusted for inflation and the Retiree Health Benefits prefunding obligation is excluded, the Postal Service has decreased its total costs by $13.7 billion since 2006, our paper found. More than 70 percent of the savings has been from labor expenses.

But the Postal Service’s focus on spending less has come at a cost in modernization and service. On average, the Postal Service has decreased its annual capital expenditures almost 16 percent in the past 8 years. By comparison, UPS has decreased its annual capital investments at a much smaller pace, just 5.4 percent, while FedEx has increased its capital spending 2.3 percent annually on average.

Furthermore, service performance appears to have suffered as a result of cost-cutting initiatives.  

Future Postal Service success will require excellent service, both in delivery and in customer service. The Postal Service will need to make capital expenditures to modernize its existing network, including digital integration, to support 21st century postal demands. USPS stakeholders and management need to develop ways to generate adequate revenue so the Postal Service can build for the future.

What else can the Postal Service do to reduce costs? What does it need to consider on the revenue-generating side of the house?

Comments (15)

  • anon

    Here is an idea for you guys to save money. Make a big contract deal with an online merchant (after of of course you've signed a new contract with the the rural carriers and after you've counted the routes at the lowest volume first quarter then write into that contract that there is not going to be another count until 2018 work these poor fools who are already barely keeping their heads above water for an additional 10-12 hours a week and here the best part you'll get them to work for free those 10-12 hours every week because they are paid a flat amount of hours per week no compensation for extra hours or workload they'll be making less than the teenagers at the fast food places and it's fail safe for you for two years! Think of all the money you'll save Oh wait.... You already thought of that right? Shame on you all a person should be paid for the hours they work 6 day work weeks no holiday pay just a day off with double the workload the next day with not even the pay for the time we work really how is this legal? It's hard enough listening to the city carrier complaining about having to work overtime jeez makes me sick I can't even afford food and my bills I walk to work because I can't afford to fix my car... I come to work everyday even when I'm sick don't get breaks cause there's always a time I have to be back so they can use the vehicle for a cca to carry the remainder of a route for the city boys who don't want overtime. How and why is this legal. Go find another job right? Nope I was trying to find another job but now not knowing when I get off each day I can't find anyplace to get another job so I have just one question which one of you heartless souls came up with this idea?! How do you sleep at night?

    Oct 13, 2016
  • anon

    Significant increases in postage for a first class letter seem to be needed. With the volume of mail down it is reasonable to assume that the cost to mail a letter is greater. When processing centers are consolidated to save money the public suffers in very significant mail delivery delays and the greater potential for lost mail and dissatisfied customers. Substandard postal services cost many citizens much more than an increase in postal rates. The letter that had to be fedexed, the bill that had to be hand delivered across town, the cost of a stop payment on a check that did not arrive, and late fees for payment that were delayed excessively. These potential costs and lack of confidence in the postal system would seem to be greater to the customer than increasing the cost of mailing a first class letter 5 cents. However, increasing the cost of mailing packages significantly may not be advisable due to direct competition with UPS and Feddex. But, the letters are still primarily mailed through the post office. So, increasing the cost of first class letters might help some. For the increase to achieve the result, it will be necessary for USPS to provide dependable and accurate mail services. I am satisfied with the customer service at the front counter at my local post office. They are friendly, courteous, and professional. However, I understand some post offices are losing money. Adding basic postal banking to the existing branches would be a win- win situation. These postal banks (similar to some other countries) could offer basic low fee checking accounts, debit cards, savings accounts, direct deposit, online bill pay option, Christmas savings plans for savings accounts, and possibly later retirement savings plan accounts from income deposits. To avoid risks to the system, no loan services should be included. These services would provide a niche to the population currently without checking accounts with a lower cost option. I would suggest starting these services in a limited number of preselected post offices were there may be a greater need. By adding these services branches may bring in enough money to meet their expenses.

    Sep 04, 2016
  • anon

    Get rid of the cluster boxes. They are a big pain. Mail used to be delivered door to door and you got your mail. Now the crooks can be lazy. They just have to bust open a cluster box and they get everyone's mail at one time. Ours has been broken into twice and from what i read, the thieves are running rampant in my city of Modesto. We just received a new much stronger cluster box, but some one has already stuck something into the key slot of the parcel box. Therefore, i could not retrieve my package that is in there.

    Aug 09, 2016
  • anon

    had my mail on hold, got notification of delivery, didn't get my mail. called the post office and they cut the call off. call all of the numbers you are suppose call and had to wait 40 min. to talk to a person. they told me they could not get my mail delivered until the next day. they gave me a number for customer service and it took two days to hear from them. she said she was to busy. the postmaster the next day and said the carrier was having personal problems and that she told her to tern her cell phone off. when the mail arrived I tried to talk to the carrier and she call the postmaster. I called the postmaster and she told me the carrier was having a nerves brake down. wanted to fill a complaint form and it asks for the name. called postmaster and she said hippa wouldn't allow her to give me her name. and that I was harassing her.

    Jun 29, 2016
  • anon

    "$13.7 billion reduction. 70% of which is labor costs." So..........If usps is using less labor how much of a reduction has USPS demanded in the Congressionally gamed prefunding scandal because the labor numbers have been changed? CNC clerk highlights a continuing trend in USPS....CYA reports and functions continue to fester and drain resources from our basic function. Management above does not trust management below who don't trust their workers. Therefore they need these stupid cya's. Trust works both ways.....If you don't trust me, why should I trust you. 95% of the people in USPS want to do a good job....But these inane, non-productive requirements suck the will out of us.

    May 26, 2016
  • anon

    I just tried to get customer service on the line. The recording said no one was available at this time. Why the time distinction? One of the key reasons people turned away from using the post office, long before email dropped the level of pieces, was the lack of customer service. My passport application has not been delivered; the automated system won't say why and I can't reach customer service. NEVER again. Never will I entrust USPS with a vital document, check or package. Poor customer service and poor management led your customers to look for alternative delivery methods, which led to a decline in revenue, which leads to a further decline in service. You blame the operating cuts but that has nothing to do with poor management. Improve delivery -- get the mail where its suppose to go, when it's suppose to arrive, and maybe people will consider doing business with you again.

    May 19, 2016
  • anon

    It is clear from other industries that cost-cutting and modernization usually result in service problems. It has to be remembered that this is, at the end of the day, a service - people use it because they have to, not because it is a luxury that they might want in their lives. It would be good to look at practical ways to serve the consumers and find out what they really need, rather than focusing entirely on cost-cutting measures.

    May 12, 2016
  • anon

    Audit your Postal Inspectors. My experience dealing with the Postal Inspector for my address of 26 years did nothing for all the reports of stolen mail, false change of address, nothing. This happened for years, I was contacted once. In my opinion, it wasn't from the Postal Inspector, the post office box it was sent from was 2 numbers different than my estranged husband's post office box. You tell us to report misconduct, etc, to the Hotline, been there done that. How can you report the misconduct and fraud, when the people in charge are involved?

    May 11, 2016
  • anon

    I get that budgets have been cut, but how does that explain why your employees continuously lie about doing their job? I PAID for overnight shipping for an item. I was home all day waiting for the package when lo and behold I get a notice (email) saying that delivery was attempted and to bring the peach slip with me to pick it up or re-schedule delivery. Guess what No delivery was attempted. No peach slip. Nothing. Why? B/c your employees lie about doing their jobs and therefore are ripping us off! We PAID for this type of shipping... Save your budget cut excuses. If you offer service. Do it well or just don't offer it

    May 01, 2016
  • anon

    we just got those cluster boxes. what a farce. I do not see my newspapers fitting in their. I guess I should cancel. that will help your bottom line. and that package concept. good luck at Christmas. I am going electronic. not a very smart way to keep customers.

    Apr 26, 2016
  • anon

    Make it easier to report USPS employees stealing mail. Provide a phone hotline, not just an online form.

    Apr 26, 2016
  • anon

    Time to take from the ranks that don't touch the mail. The P.O. is to top heavy.

    Apr 26, 2016
  • anon

    Why don't. U.S.P.S. Utilize email,web design,web hosting,etc. And other technology I mean still offer services as mail delivery but maybe even buy a 5% stake in federal express and UPS to help U.S.P.S. Better do its duty .

    Apr 25, 2016
  • anon

    USPS already delivers to your door 1/3 of the parcels ordered for delivery through UPS and Fedex. We are now the primary delivery service provider for Amazon and will soon be doing the same with Walmart. The only issues we truly have are being top heavy and a 75 year prefunding obligation for retirees that no other company or corporation in the country has.

    Apr 26, 2016
  • anon

    Get back to focusing on the job that needs done. For example: 10 years ago, I walked out to the Blue Box, got the Mail and dispatched it. I was a big boy, and they trusted me to do my job. Efficient. No, I go to the Blue box, take out the Mail, scan the barcode. The scanner then asks me to scan 7 pieces of Mail, but the time I get done sorting through the pieces with no barcode, the ones with barcodes it does not accept, or which won't scan, several minutes have passed. Then I have to download the scanner, go into the office, get on CPMS to be sure the scan shows on the internet. Then, just to be sure we can prove the scan was done, in case it somehow magically disappears from the internet, we must print it out to prove we scanned it if questioned. Then, heaven forbid something ever happens and the scan actually didn't go through or somehow did magically disappear. They will not accept the fact that the paper was printed out, but someone has to drive back tot he office to scan the box again. And, since the person had done what was really important, and dispatched the mail from the box, the person who went back to the office must take an empty bucket and drive to the plant to prove there was nothing in the Blue box {you can't make this stuff up}. That is one example of the layers of redundancy, and doing things only for the reason of increasing the "scores" of higher managers. The employees tasked with labor in connection with the mail can no longer do the job and provide service- they are inundated with scans and reports and samplings, and calls from the district to drop everything because a service talk needs to be certified that it was given. Productivity is out the window, and the physical movement of the Mail is bogged down by ancillary activities.

    Apr 25, 2016

Recent Comments

Share this post


Monthly Archive