Why do we need a postal service?

Do we need a Post Office? That is the question I will be asking when I keynote and moderate PostalVision 2020, a one-day conference in Washington on June 15 along with Google’s Vint Cerf and other players and experts from the industry.

The answer to this question is probably yes. But I don’t think it should be answered until we reconsider the delivery industry from the ground up, seeing what is no longer needed and what the market can provide in the digital age.

My involvement with this project came through a side door. John Callan, who organized it, is a respected consultant and veteran in the industry. He read What Would Google Do? and, I’m glad to say, thought it had lessons for his industry. He came to the book because, at another conference, he heard the head of the UK’s Royal Mail ask the question, “What would Google do if it ran the Post Office?” Ruth Goldway, head of the US Postal Regulatory Commission, answered that she thought Google would give everyone a computer and printer (eliminating the cost of delivering now-obsolete correspondence). Callan thought Goldway had read my book. She hadn’t. But he did. So he contacted me; I was intrigued with the speculation, and we’ve been collaborating since.

Since then, I’ve worked with Callan and company on a project for the USPS Office of the Inspector General. And now I’m honored to be part of the event Callan has called in Washington to ask the big strategic questions about the fate of the Postal Service and the industry.

Who should attend? Obviously people in the delivery industry. So should its customers: retailers that ship directly to customers, Amazon, banks, lawyers, and media companies—including advertising agencies and their clients. Companies that are disrupting the industry should be there. That includes, for example, Facebook, which believes it is redefining and replacing the idea of mail; Google; email companies; new transactional and billing companies; telecoms whose bandwidth replaces trucks; even online media and digital agencies (who should understand what would happen if media and advertising become too expensive to deliver by mail). Entrepreneurs who find opportunity in the disruption of the industry should be there, of course. This includes companies that are rethinking such activities as paying bills and merchandising. Plus, of course, government officials and regulators will need to be there.

I intend to set the tone by proposing some obvious but difficult trends (like these for media), starting with this rule: If it can be digital, it will be digital. Anything that can be delivered by bits will have to be because that costs essentially nothing. That will continue to kill first-class mail and as it declines, its subsidy to the rest of the system disappears, which will raise both prices for customers and losses for the USPS. That trend is already accelerating. The USPS’ loss reached $2.6 billion in the first quarter alone, up from $1.9 billion the year before and volume of first-class mail fell by more than 7%. The USPS says it will be insolvent by September.

This is urgent.

Just as I tell newspapers they need to imagine turning off their presses so they discover where their real value lies, I am saying that the delivery industry has to imagine building itself over because it can and must. Or entrepreneurs will. There are countless new efficiencies to take advantage of. We can’t afford not to.

Do we still need the Postal Service’s guarantee of universal delivery? Likely yes, but it’s worth asking whether that obligation to get deliveries to remote outposts should be carried out with offices and trucks owned by the government or through subsidies to private industry. Does the Postal Service have a role to play in and identity (could it be a guarantor?) and security (our mail is protected from warrantless spying but our email so far is not). What are the principles and rights to privacy and security that should govern even private and electronic delivery? What impact does all this have on broadband policy?

There is much to discuss. This is a starting point, to identify the issues, needs, and opportunities and start the discussion around them. I’ve found the challenge fascinating, more than I’d ever have guessed.

If you are remotely connected with delivering messages, transactions, and goods; if you are the disrupted or the disruptor; if you see the opportunity to invest in the arena, I hope you’ll come.

  • James

    Jeff – OK as someone in logistics and supply chain, I’m not really sure that we need to do without the USPS because there are things that just CAN’T be done digitally and are too expensive to use overnight shipping companies for. Example – If I have a title to a car or a house I could send this via FedEx or UPS or (if international) DHL – but the USPS has given me an alternative with Priority Shipping that I can track and trace this item with less cost than the bigger named services. Where we also need to look at this is UPS has a Mail Service delivery system – where they move it the UPS network and then deposit it in the local mail system.

    Perhaps what we need is a hodgepodge… We still have local mail carriers that bring items to your door and use government backing for those services, but the internal supply chain is contracted out to another party (UPS, FedEx, TNT, DPD) by the US Government on a 4-5 year contract. That would enable the government to have a fixed price on some of the most costly part of the transaction and a medium contract would enable those providers to at least have some stability in the flow – that being said we could get some really nice benefits from a system like that. Imagine the tracking and tracing options of a FedEx or UPS for just regular mail – yes you may not know if it made it to the front door, but you know for sure it made it to the local post office.

    I realize in saying this that we’re talking about people’s jobs and livelihoods here… My Uncle both worked for the USPS, and I know that it wouldn’t be the same – but we’re in a point of deficit and spending that we have to find better solutions… perhaps this is just one

    (also realize I’m just shooting from the hip here, I didn’t do any real research – and this would really need to be investigated)…

  • http://watershedchronicle.wordpress.com Dan Meadows

    Get rid of the USPS and we’ll be looking at a 100% markup in prices from the private carriers, at a minimum. To be certain, a lot of what it does is becoming unnecessary, but does anyone reasonably think we’ll be paying less that $2 to mail a basic letter? The private carriers don’t have the infrastructure to go door to door every day like the USPS does, and even with digitization, it’s going to be a long while before most of what we get in the mail is no more. Of course, higher prices could wipe out most of that wad of junk mail we get everyday. I’m sure the already struggling publishing/printing industry will just love this idea.

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  • http://www.DyspepsiaGeneration.com Tim of Angle

    We need a postal service for the same reason we need every government activity outside of the armed forces and the legal system: Because the government exists to hire and pay government workers. Don’t be deceived by fanciful speculations on the part of political scientists and so-called ‘experts’; look at what the government actually does, and you’ll see the truth of this for yourself.

  • Vixy

    They fail becuase they are a monopoly plain and simple.

  • Elaine

    I’ve actually been thinking a lot about this (and intending to blog about it, right after I pave the road to hell). Yes, I think we need a postal service, but I would suggest you’re asking the wrong question.

    I think the real question should be, does the postal service need all that expensive real estate? Why can’t it locate in a mobile van that stops in different neighborhoods on different days or at different times of the same day? Why can’t it be located in a supermarket, especially in an urban area where deliveries are done by foot and it doesn’t need a lot of room for vehicles? Why couldn’t it be in the local library, or town hall, or community center?

    Point is, it still performs valuable services, but, like newspapers, it no longer needs all that physical plant to do that. What it needs is to be maximally accessible to its customers. That opens up endless possibilities, in my opinion, if it can unshackle itself from the standalone-brick-building-with-loading-bays paradigm.

  • Terry

    * Everyone (EVERYONE) gets a single computer/chrome book/ whatever
    * It’s internet connectable, but should be usable offline for those with no connection (until we can get it made into a utility)
    * It serves ONE purpose… to get mail (digital, or e)
    * You can also use the Postoffice “app” on your own computer, if you choose.
    * If you don’t have a connection, the postal carrier loads up a USB thumb drive for every customer at the post office in the morning and delivers it to your mailbox. You plug it into your computer, it auto loads all your “mail”. You put the USB back in the mailbox… maybe each person gets a 5 drive limit? In your “mailbox” you have incoming and outgoing boxes, so the postal carrier knows which drive to pick up.
    * If you DO have a connection, you can opt out of the USB drive and just get things delivered directly to you via email… or if there are certain really large files, the Post Office can still deliver the drive.
    * This way, the Post Office becomes the gate keeper… an email server. And each person/household has their own USPS email address, that they are free to do with as they please.
    * Also, since you still have some delivery people, they can deliver packages as well.

    I don’t know… just spit-balling here…

  • Daniel

    My fellow Americans, were do I start. Yes we need a Postal Service. The real problem is the American people do no have a clue of what the Postal Service does or understand the whole operation. If they did there would be no question, do we need a Postal Service. The US Postal Service is the best in the world. And they are still the best value. If you would live in any other country, you can bet it is going to cost you alot more than 44 cents to mail a first class piece of mail. When the gas prices went up, did you see a surcharge on your letter or package.
    No you did not. BUT you sure seen two other companies that did. The other issue I am reading is about using trailers and getting out of the brick buildings. Well the Postal Service delivers to Millions of addresses each day. And that would be Millions of Letters,flats, and parcels that have to be sorted each day. And the customers that have PO boxes, they like and depend on the service they receive and the security at there local Post Office. I read about privatizing the Postal Service. There are countries that did that very thing, And went back to a non-private Postal Service. I dont think the American People would like to pay a Dollar or more to mail a letter within there own country. But there is countries that pay that much. Also this person from fox news, talking about a bail out for the Postal Service. I really would love for these people to get there facts straight before they say things they dont understand. The Postal Service does not need to be Bailed Out. They just need to be paid all the money that they over paid the US GOV for the last 20+ years. The United States needs a U S Postal Service and Postmasters to be sworn in as Postmasters for every US Post Office, like it has been since 1776. God Bless America!

    • goodsign

      Interesting reasoning: we need the postal service because they are the best?

  • http://newsafternewspapers.blogspot.com Martin Langeveld

    Hi Jeff, I wrote about this at NiemanLab 2 years ago:
    http://www.niemanlab.org/2009/02/could-shrinking-the-post-office-help-newspapers/

    I’m not sure I agree with myself there anymore. Home delivery really needs delivery experts, just like printing needs printing experts and news gathering needs reporters and editors. Putting all those things under one roof means that not all of it will be done well.

    The one big revenue stream still sustaining newspapers is preprints (the last category where they still have some monopoly pricing power). That category overlaps with direct mail which sort of sustains the Postal Service.

    But preprint and direct mailer advertisers (like big box stores and catalog sales outfits) are looking very hard at finding ways to transition to digital delivery. Tablets are very promising for that purpose.

    Once that transition begins, the final rugs get pulled out from under newspapers and USPS.

    For both, I think there is a solution: deliver just one or two days a week; go digital the rest of the time. That implies/requires an outsourced solution, since once a week is not a full time job.

    I see a gradual transition to a Post Office with much less real estate, much fewer locations, outsourcing of delivery, stamp sales, package mailing service centers, etc. In any locality, the same contractor could be delivering mail, UPS, Fedex, newspapers, prescription delivery, etc. Greener, cheaper.

    Either that, or continuation of a “universal delivery” service that’s very expensive to the consumer.

    • echyone

      Once a week is a full time job. My garbage is picked up only once a week.

  • marty

    you have got to be kidding me right? obviously im a postal employee. do you know how many people still wait for their mail on a daily basis? just because morons like you enjoy zero human interaction and want to do everything with a computer, dont jam it down the rest of americas throats. twitter is the dumbest thing ever invented…. tell me how does a family member living in say cape verde get stuff to the united states? the mail you idiot!! there are countless reasons why the mail is needed. its too bad americans are so thick headed to realize that if they actually shipped their packages with the usps instead of those other two companies, which are out to make money for their stockholders and CEOs instead of trying to keep their prices down for the customer that the cost of a stamp would stay low, also the stamp hasnt gone up in what two years now! also the usps was at one time the second largest employing organization in this country. men and woman coming home from wars were actually hired and given a chance to keep some pride in themselves if they had an injury. the usps allowed those proud individuals a chance to still thrive in america instead of just sitting at home waiting for a paycheck and not working. i could go on and on, but sadly americans could care less about anybody but themselves, that is why this country is in so much trouble. a third world nation we are fast becoming… lastly jeff, how come nobody in the media has the balls to attack advertising? now there is a huge waste of american money. like i need to see commercials while watching tv, or pages of wasted paper for all the magazines with all those adds in them! go after that if you want to attack waste, this country wants to go green but dam pick up any womans magazine and 3/4 of it is advertising! talk about TONS of waste of trees!!!!!!!!!!!!!!!

    • Samuel Cohen

      Marty,

      Jeff likes to pretend he is changing the world. He asks a lot of questions, but fails to look at details. The devil is in the details, and that is where his rants fall apart. He likes to hear himself talk and if you read his twitter and blog you would realize he’s all about the soundbites. It all about self promotion, book sales and making himself the authority on ‘social media’. Your just wasting your time.

      • http://www.buzzmachine.com Jeff Jarvis

        Well apparently all you do is insult. Any substance to share?

    • http://www.buzzmachine.com Jeff Jarvis

      Oh, I think we need mail. I just want to make it as efficient as possible and I don’t really want to subsidize junk mailers and media with first-class mail, which is going away anyway. Yes, we’ll have mail. The question is: who should deliver what’s left of it after digital takes on all it can? You may not like my answer.

  • Nanker Phelge

    >>>he heard the head of the UK’s Royal Mail ask the question, “What would Google do if it ran the Post Office?”

    If Google ran the Post Office, it would read everyone’s mail.

  • Pat Farrell

    Before you can hope for an answer, you have to ask how important universal delivery is. If its important, then you are going to need a Federally subsidized delivery service. Profit making delivery services can’t be cost effective to the last percent or two of the addresses.

    In part, the USPS is a jobs program. Perhaps that is good, perhaps bad, but you can’t ignore this as a critical fact in the political life. The USPS is first and foremost a political animal.

    For more than a decade, the USPS has known the first class mail is economically infeasible. The USPS gets the funds to keep the lights on with third class mail, aka junk mail. Part of any serious discussion has to include how the advertisers can deliver their message to the population. Just because you and I hate junk mail, don’t think that the USPS shares our view.

    Some of the comments up thread complain about ads and magazines that are 3/4 ads. That is the goal of a magazine, not a problem. The business case of a magazine is to deliver eyeballs to ads. The subscribers are not the customer, they are the product. The customers are the advertisers.

  • http://TonyNews.com Antony Last

    Until the digital signature is fully functional, secure and in common usage, documents will continue to be delivered by hand.

    • Pat Farrell

      Digital signatures have been mature technology for two decades. At least 15 years ago, the USPO tried to grab a big piece of the CA market. They found that there was no market for digital certificate authorities.

      I recently had a company require that I use a fax to send in something so they could get a reliable signature. Rather than pointing out than any 8 year old can scan, copy and paste a signature and fake out a fax, I just submitted it so the bureaucrats could check the box.

  • http://TonyNews.com Antony Last

    For non-documents, like chocolates for example, let private enterprise deliver those.

  • TomG

    Jeff, have you read the history of the American Letter Mail Company run by Lysander Spooner (an anarchist)? It was a long time ago, but the primary reason why the USPS has no direct competition (legally) today, is because they wanted it that way. The ALMC was forced out of business by the government.

  • Matt Roche

    I agree with Elaine. Pose the question as “Do we need Post Offices.”

    We are already closing many, and it is doubtful we need what we have. Right now the only essential job they have (as a facility with retail floor space) is weighing and pricing packages. A scale with a decent Internet connection and a screen could probably deal with that.

    The rest of the floor space is retail, and that cannot possibly be their core competency.

    I get where Vixy is going but I don’t agree. Capitalism is an amazing system for allocating resources optimally for efficiency. But the sad fact is that there are some services that capitalism doesn’t optimize. Mostly those that provide service to everyone equally and have huge capital requirements. Roads, military, schools, hospitals, and other right-of-way services like power distribution have the illusion of better performance under Capitalism, but not the reality.

    This is not to say that Government does it efficiently, just that the “competitive” function that is an absolute requirement for Capitalism is absent, so, in these areas, private enterprise models lead to higher, not lower costs. Capitalism operates properly when there are “customers” for whom they compete, and not when there are “citizens” for whom there must be universal service.

    Universal service for capitalism is treated as a monopoly, and tends to lead to exploitation and extraction of wealth because competition is the only effective governor in that system. Such services are by no means maximally efficient under democratic institutions, and they often lead to exploitation via corruption, but at least they have transparency and a level of ballot-box accountability that corporate capitalism lacks.

    Private delivery services are efficient because they do not go to every home. They are competitive, and they can select markets and customers and optimize for price and delivery. If FedEx had to stop at every house every day (except Sunday), it would be no better than the PO.

  • http://www.mdesaulles.net Martin De Saulles

    Just a UK perspective but I guess the issues here are similar to the US. Whilst I welcome my daily mail deliveries (mainly of bills and bank statements) it is hard to see them continuing in the medium term. I suspect they will die a slow death like daily milk deliveries. I don’t know about the US but in many towns in the UK we have round metal plates about 18 inches in diameter in the pavement outside older houses. When I was young I asked my mother what they for for and she said it was so the coal man could deliver coal to the houses through this hole which went down into a cellar under the house. The cast iron plates are still there but no longer used. I suspect any grandchildren I might have will be asking me what those rectangular holes in front doors were for.

  • Nanker Phelge

    >>>>>>he heard the head of the UK’s Royal Mail ask the question, “What would Google do if it ran the Post Office?”

    If Google ran the post office, it would make lots of money delivering ads for dubious Canadian pharmacies.

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  • marijane white

    I would like to suggest that anyone looking for a historical perspective on the Post Office should find a copy of Wayne Fuller’s _The American Mail: Enlarger of the Common Life_. The Post Office played a role in the expansion of newspapers in the US that few Americans today realize.

    • Pat Farrell

      I’m a big history buff. But the question on the table is do we need a Federal postal service today and tomorrow. The discussion has to focus on the needs of today and tomorrow, not a warm memory of years gone by. It makes sense that newspapers and the postal service have a joint history. Perhaps its fitting that they are on the same death march.

      If the USPS didn’t have junk mail (what we in the tech world consider spam) the service would either be already gone, or be charging UPS/FedEx rates.

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  • PJ Smith

    Lets see whatthe real problem is…. 80% of the USPS is salary. 32% of FED-Ex is salary.

    Do the math!

  • http://www.falconvalleygroup.com Gayle Falkenthal

    Yes, we still need a U.S. Postal Service, at least in the short term. There are many Americans who are not digital literate today that would be very much left behind. Exhibit 1: my mother, a 76 year old woman who has never used a computer (or even a fax machine) and has zero interest in doing so. No doubt there are many other Americans in the same circumstances. There are others who only have computer access via their local libraries or other public means. We are going to need to cycle through another generation before everyone is technologically literate enough to consider doing away with print source delivery. Assuming this to be true for the next 10 to 20 years, it seems logical to consolidate service into fewer sites, deliver four or five days a week at most, and see what sort of concessions union personnel will make.

  • Cosmo

    I don’t thing the post office is going away any time soon. Right now the jobs are too important to lose. However, I think they should try to lessen their work load, which should lower their operating costs. For example, I think a good idea would be to give their largest customers that produce mail incentives if they could reduce their mailings by 25%, 40%, even higher IS possible when you think about it. All my utilities, and most of my bills are paperless. Another idea would be to no longer allow advertising circulars that are mass mailed to “Resident”. Let a private delivery service deliver those. This would create jobs locally all over the country. Oh, and by the way, I don’t think Uncle Sam will never give up the power of being able to open our mail anytime they want to. Think about it.

  • gets your facts straight

    Why would the post office try to get their biggest customers to reduce their mailings? That is how they make their money….on the contrary to what most people believe the post office is self supporting. The post office is not dependent on tax dollars but the “mass mailings” as you call them. what needs to happen is the government needs to stop funneling money out of the post office into pension or medical funds that are for employee’s that aren’t even working their yet. The Post office could do really well if the government didn’t have anything to do with it. Which the American people should already know, anything the government has there greasy hands on gets screwed up. Sorry but you are wrong Cosmo