Recent reports that President Trump’s proposed budget changes would allow the US Postal Service to eliminate Saturday mail deliveries is sending shock waves into the Millennial community. There is no question that eliminating Saturday delivery of basic mail services has been on the US Postal Services radar for quite some time now. Let’s face it, who needs their bills and loads of junk mail delivered 6 days a week? Isn’t 5 days more than enough?
The US Postal service continues to rack up huge debt year after year primarily as a result of having to prefund its retiree health benefits. While these costs are a huge drag on the postal services operating costs, there is another side of their business we really don’t hear much about. That side is the business of providing Last Mile Delivery Services to a growing number of parcel expeditors, aggregators, and consolidators including FedEx, UPS and of course Amazon.
The US Postal Service actually has a variety of options to allow these carriers, as well as individual shippers to induce their packages into the postal service’s network for final mile delivery. USPS will actually tailor services to meet a customer’s unique business needs. Under a USPS Negotiated Service Agreement, the postal customer and USPS sign a contractual agreement to provide specific delivery services with customized pricing incentives as well as incorporating other arrangements. Each such Negotiated Service Agreement must however be reviewed and recommended by the Postal Regulatory Commission and approved by the USPS Board of Governors. The main reason for this oversight is to ensure that these agreements do not have a “negative financial impact on the USPS”. Now, isn’t that a novel approach to business!
What we find interesting is that if the US Postal Service took this same financial approach and applied it to ALL of its business segments, wouldn’t they finally become a profitable operating entity?