GDP and the Postal Market


With the decline in First Class Mail, businesses in the postal market have become increasingly sensitive to the economy as advertising and parcels generate an increasing share of volume and revenue of firms in the industry. The GDP numbers released today present good news for the postal market. In particular, the numbers suggest: The probability of a double dip in the economy drops closer to zero. Consumer spending is rising smartly.  In the third quarter, consumer real final sales of domestic product increased 3.6 percent. Business investment is very strong.  Non-defense capital spending grew by 16.7% in the quarter. Businesses capital investments suggests that businesses are making significant investments in [...] Read more »

UPS vs. FedEx: UPS Earnings Shows How USPS Gives FedEx an Edge Today

UPS Logo

In its earnings announcement today, United Parcel Service reported a third quarter with flat domestic volumes. During a nearly comparable period, FedEx domestic volume has grown by over 6%. The shift in market share reflect very different strategies in serving the B-2-C market FedEx’s Strategy FedEx has focused its domestic parcel business on serving the growing demand for business to consumer (B-2-C) deliveries. This allows it to go after the rapidly growing e-tailing business from both firms that sell exclusively on the web and those that have developed a strong web presence to meet consumer preference for web-based shopping at brick and mortar outlets. In choosing this strategic direction, FedEx [...] Read more »

The Incredible Shrinking Postal Serivce

USPS volume-gao-10-11-crop

In its letter to Senators Joseph Lieberman and Susan Collins. the GAO illustrated the seriousness of the Postal Service’s financial problems and the need for a solution that will make most stakeholders uncomfortable in a single chart.   The chart is even more disturbing when it is compared to similar volume projections made in the Postal Service’s Strategic Transformation Plan: 2005-2006 and the Postal Service’s Action - published September, 2005 Ensuring a Viable Postal Service for America: An Action Plan For The Future -  published March, 2010 In both documents, the Postal Service presented multiple forecasts for the future of postal volumes.   In each document, the most pessimistic forecast was the most accurate.  [...] Read more »

Request for Criticism

I happy that this blog has been successful.   I am now averaging well over 30,000 hits a month and 100,000 if I write something that grabs the attention of the postal or parcel delivery market.  However, I would like to see what I can do to make it better. I know that I can’t spell and am an awful editor. Part of the problem is that after writing for a few hours, my readthroughs before posting miss an awful lot.  I am convinced I read the correct word whent the wrong word clearly is there.    If there is someone who would like to volunteer to help, e-mail me. I am [...] Read more »

GAO Lays Out the Options – What Matters and Who Loses


In a letter to Senators Joseph Lieberman and Susan Collins, the GAO laid out three basic options for postal reform based on current projections for Postal Service volume and revenue. These options are 1) government subsidized federal agency; 2) the current structure with additional flexibility; and 3) postal services provided by a private sector business or businesses. These options are basically 1) return to the policy framework prior to the Postal Reorganization Act, 2) a limited modification of the status quo, or 3) put the Postal Service on the same path as liberalized national posts in the rest of developed world.   The postevaluates the GAO options and concludes:  Capital and [...] Read more »

GAO’s Description of Privatization Creates a Straw Man


Liberalized national posts have illustrated viable privatization or corporatization options. All of these options maintain the integrity of the national post and have retained most of the pre-liberalization workforce of the enterprise. Furthermore, these privatization approaches have generated a profitable, self-sufficient, national post that pays corporate taxes, and in cases in which the government still owns shares, dividends to the government shareholder. Restructuring of transportation and telecommunications seems to work best if the resulting entities are national entity. In trucking, regional carriers merged over time to take advantage of opportunities to offer better service to meet customer needs and minimizing costs in order to offer competitive prices. In rail, mergers [...] Read more »

Amazon’s Threat To Parcel Select Goes Live


Geek Wire has reported that Amazon’s parcel locker system has gone live in both Seattle and New York City.  The Amazon website says that they are live in London, UK as well.  Amazon has installed 8 locations in Seattle and its suburbs and 8 in Manhattan.  Both locations are in states that Amazon currently charges sales tax so ownership of the lockers does not affect the sales tax status of items picked-up in a locker.  Geekwire has posted the maps of locations shown below Seattle Locations The Seattle locations can be found in both the downtown area and in the suburbs.  I do not know yet if Amazon is using any locations [...] Read more »

No Windfall Possible for UPS and FedEx from USPS Problems


In a story published today, Reuters stated that “United Parcel Service Inc (UPS.N) and FedEx Corp (FDX.N), which have long been undercut by the U.S. Postal Service’s low prices for package delivery, could have much to gain as the agency faces a painful restructuring.” Unfortunately, the article bases its conclusion by assuming that all or a significant share of the Postal Service’s parcel revenue would shift to these companies. In fact, the problems facing the Postal Service creates added risks to both companies business strategies given UPS’s and FedEx’s relationship with the Postal Service as both a customer and supplier. Reuters Overestimates the size of the Postal Service’s Parcel Revenue. [...] Read more »

Two New Conservative Aproaches to Postal Reform

Proud Conservative-crop

Two commentaries on the future of the Postal Service represent different approaches to the future market.  These commentaries illustrate that it is possible to both develop policy alternatives from a conservative perspective that from the non-nonsensical and are easily dismissed to the logical and require more careful consideration even among those that think of themselves as moderates or liberals. Here are their conclusions – It is not hard to figure out which is which. Carrie L. Lukas – Managing Director, Independent Women’s Forum In her blog post, Time to Close Down Our Out-Dated Postal Service, Ms Lukas  writes: The simple fact is that the Post Office, which enjoys a government [...] Read more »

WSJ: Is the Postal Service Worth Saving?

In a video entitled, “Is the Postal Service Worth Saving?” [See below] WSJ Marketplace Editor Dennis Berman and Mean Street host Evan Newmark suggest that the only reason Congress doesn’t put the Postal Service out of business is that “saving the USPS could put votes in politician’s pockets.” Both Mr. Berman and Mr. Newmark express an incredible ignorance about the postal market and why national posts worldwide are profitable and remain an integral part of a nation’s infrastructure. The Wall Street Journal’s Understanding of Postal Policy in 5 Bullet Points Mr. Berman presents the basic argument is as follows: The Postal Service is a quasi-social welfare apparatus. It is bedrock [...] Read more »