Monday, October 31, 2011

Ending the Postal Monopoly: Lessons from Europe; Germany Has Sold 99.9% of Its Post Office Buildings

New York Times  -- "With the United States Postal Service facing insolvency, and one of the postal workers’ unions hiring consultants on business restructuring, it is looking toward Europe for new operating models, even though American legislation currently precludes adapting some of those innovations.

After selling off all but 24 of 29,000 post office buildings in the past 15 years, the German postal service is now housed mostly within other business “partners,” including banks, convenience stores and even private homes. In rural areas, a shopkeeper or even a centrally located homeowner is given a sign and deputized as a part-time postmaster.

At the same time, many European postal services, including the one here, have developed a host of electronic services that are increasingly making traditional post offices and mailboxes obsolete. Bills and catalogs can go first to digital mailboxes run by the post office on customers’ computers, and the customers can tell the post office what they want it to print and deliver. And while Americans are asked to send in suggestions for what celebrity should grace the next stamp, Germans can buy virtual postage from their cellphones. 

European postal services vary widely in their degree of adaptation to the digital age. “But the U.S.P.S. is probably the best example of a pure monopoly that has seen the least change,” said John Payne, the chief executive of Zumbox, a Los Angeles-based start-up that offers virtual mailboxes for personal computers in the United States on a private basis and that has sold the program to foreign postal services."

43 Comments:

At 11/01/2011 1:43 AM, Blogger Scammaj said...

"start-up that offers virtual mailboxes for personal computers"

Like using some sort of electronic mail? Weird.

 
At 11/01/2011 7:51 AM, Blogger Larry G said...

my understanding is that the Postal service has to meet much tougher pension funding standards than other businesses..

what's the truth?

also.. postal workers in Europe have universal health care and a guaranteed pension so are we proposing the same for a restructured operation here?

 
At 11/01/2011 8:19 AM, Blogger Jet Beagle said...

Larry G: "my understanding is that the Postal service has to meet much tougher pension funding standards than other businesses.."

If that's true, why should that be the case? Why should USPS have "tougher" pension funding standards than FedEx?

Larry G: "postal workers in Europe have universal health care and a guaranteed pension so are we proposing the same for a restructured operation here?"

I start collecting my FedEx pension this week. If I had a choice, though, I would have preferred that FedEx instead have put the pension money into my 401K plan.

Had I worked for FedEx until age 65, my transition from FedEx health plan to Medicare would have been uninterupted. So what's the difference? That we should expect USPS workers to work until age 65? I have no problem with that.

 
At 11/01/2011 8:23 AM, Blogger Larry G said...

here's a question:

In terms of health care and pension benefits - how does USPS in the US compared to the postal systems in Europe that are being held up as a model for the USPS to go to?

do folks who work in the European systems have better or worse health care and pensions than USPS or FedEx?

 
At 11/01/2011 8:31 AM, Blogger Jet Beagle said...

Larry G,

Why don't you do find the answers to your questions yourself, and then inform the rest of us?

 
At 11/01/2011 8:45 AM, Blogger truth or consequences said...

Larry, aren't present US Postal workers already covered by some "gold plated" gov. healthcare plan? And given their government employee status they probably have a very good pension plan already, don't they?

The process described has been going on for a LONG time in Canada. Post Offices closing and postal "kiosks" apperaring in all kinds of businesses...staffed by those businesses' employees, not unionized poatal workers. It's not something that can be accomplished overnight...unless you want to have a "war" with the union. It works but it takes a long time.

Last year the head of Canada Post was hired to become the new boss of the Royal Mail(UK) and is expected to implement the same changes there. It's going to be a challenge.


Frankly I'm surprised the US would even consider following a European model about anything. Everybody knows Europe is just a bunch of failed socialist nanny states...LOL

 
At 11/01/2011 8:53 AM, Blogger Larry G said...

@jet - because they are real questions that I do not know the answers to.

I'd like to see apple-to-apple comparisons and I tend to think that the crux of the issue with privatization and unions in the US is not a major issue with countries that have health care and pensions separated and taken care of regardless of where people work.

there are two very different systems.

do we want a system like Europe but without the health care and pension benefits?

In other words - do we want a system that is not like Europe at all but we choose to tout Europe as a model for business but not how they do health care and pensions?

I guess my view is that privatization of the postal service hinges on the want/need of workers who want health care and pension benefits - just like their counterparts in Europe do - and get.

In that regard, we're not proposing a European model for privatization since their version includes by default health and pension benefits.

so I do ask the question as to what we are really proposing when we give Europe as a model.

 
At 11/01/2011 8:55 AM, Blogger Larry G said...

re: " Larry, aren't present US Postal workers already covered by some "gold plated" gov. healthcare plan? And given their government employee status they probably have a very good pension plan already, don't they?"

@T&C

well... would you consider the Canadians and Europeans health care and pension plans similar to our Postal Service benefits?

I think it's a whole lot easier to privatize things like the USPS if the workers had guaranteed health care and pensions which are the two biggies that drive most unionization.

right?

 
At 11/01/2011 9:08 AM, Blogger Jet Beagle said...

Larry G: "because they are real questions that I do not know the answers to."

I assumed by asking the questions you were expecting someone else to do the research work for you. You could probably find the answers using Google - if you really wanted to know.

Larry G: "do we want a system that is not like Europe at all but we choose to tout Europe as a model for business but not how they do health care and pensions?"

It is a NY Times writer who is touting a European model. As I see it, the U.S. has very good business models in place for USPS to emulate: FedEx and UPS.

 
At 11/01/2011 9:14 AM, Blogger Larry G said...

@jet

" It is a NY Times writer who is touting a European model. As I see it, the U.S. has very good business models in place for USPS to emulate: FedEx and UPS. "

perhaps the writer is being sneaky about touting the non-union European health care and pensions?

but a real question for you:

does Fed Ex and UPS provide health care and pension benefits in Europe/Asia/Australia or do they leave that to the govt?

 
At 11/01/2011 9:17 AM, Blogger Larry G said...

@jet

did you know that Fed Ex and UPS will leave a package at the Post Office?

they do with some packages I have delivered.

I'm not sure how this "works" - do you know?

 
At 11/01/2011 9:46 AM, Blogger Jet Beagle said...

Larry G,

I left FedEx about 15 years ago. I'm not completely familiar with their current policies and benefits.

We did not leave packages with the post office during my employment period. Right before I left, I was working for a FedEx VP who was trying to develop a partnership with USPS. We proposed moving USPS priority mail and pacakges across the country in FedEx planes in 1994 - and this proposal was eventually accepted by USPS. That long term relationship between FedEx and USPS may have evolved into a much closer alignment which now includes FedEx package drop-off.

 
At 11/01/2011 10:10 AM, Blogger Buddy R Pacifico said...

What about the effrots to privitize Japan's Post Office (Japan Post Office Group)?

"Return To Sender"

Japan's postal privitization is failing and the reason is:

Japan Post Office Group is also the world's largest Bank! The Post Office Group is Japan's largest buyer of Japanese government bonds. The bonds help finance Japanese welfare offerings, and these could be threatened under private control.

 
At 11/01/2011 10:15 AM, Blogger Jet Beagle said...

Unionization and mail delivery are not incompatible.

Two-thirds of United Parcel Service employees in this country are represented by the Teamsters. Yet the company has been an outstanding success by nearly any measure. The company always earns a profit. UPS has a solid reputation for reliability. United Parcel Service offers health and pension benefits which are comparable to those offerred by other large corporations.

 
At 11/01/2011 11:01 AM, Blogger VangelV said...

do folks who work in the European systems have better or worse health care and pensions than USPS or FedEx?

In both cases you have massive unfunded liabilities and looming bankruptcy. There is actually no need to go down this rabbit hole because the argument made is sound. The US Postal System should not have a monopoly. Let it compete and give customers are a choice about where to buy their services from.

 
At 11/01/2011 11:10 AM, Blogger Jet Beagle said...

VangeIV: "In both cases you have massive unfunded liabilities and looming bankruptcy."

You are not referring to FedEx, are you?

 
At 11/01/2011 11:25 AM, Blogger Buddy R Pacifico said...

VangeIV: "In both cases you have massive unfunded liabilities and looming bankruptcy."

You are not referring to USPS, are you?

Postal customers are complaining of rate hikes to fund annual pension funding -- despite the retirement being overfunded by $50 to 75 billion dollars.

 
At 11/01/2011 12:06 PM, Blogger Benjamin said...

The GOP never talks about it but a major reason the USPS loses money is rural delivery. It is not economical to deliver a letter for 49 cents to BackwoodsButt, Montana.

Anyone can make money on city service.

It is part of of the rural pink state empire. Roads, water systems, power systems, telephones, postal services---all subsidies by Uncle Sam. Add on farm subsidies.

The pinkest Americans live in rural areas. Dr. Perry should think about the propaganda that goes into that situation.

 
At 11/01/2011 12:20 PM, Blogger VangelV said...

You are not referring to FedEx, are you?

No. I have not looked at the FedEx pension plan status. While it may be underfunded, there are strict rules about changing contributions to meet its obligations to the employees in the defined benefits plan. To avoid problems FedEx moved away from a defined benefit to a contribution plan.

 
At 11/01/2011 12:25 PM, Blogger VangelV said...

You are not referring to USPS, are you?

Postal customers are complaining of rate hikes to fund annual pension funding -- despite the retirement being overfunded by $50 to 75 billion dollars.


I have not looked into the USPS issue in enough detail. I believe the argument is about the accounting. The Post Office wants to treat its pension obligations in the same way as the government and use a pay as you go system rather than using the accrual accounting that private companies have to use.

The solution is simple. Allow for competition and have the USPS operate under the same rules as UPS or FedEx.

 
At 11/01/2011 12:27 PM, Blogger VangelV said...

The GOP never talks about it but a major reason the USPS loses money is rural delivery. It is not economical to deliver a letter for 49 cents to BackwoodsButt, Montana.

You don't know that it is not economic. You only know that the USPS can't do it under the existing rules. As I argue above, let competition in and you will see the market price determined much better than the current system.

 
At 11/01/2011 1:16 PM, Blogger Jet Beagle said...

Benjamin: "The GOP never talks about it but a major reason the USPS loses money is rural delivery. It is not economical to deliver a letter for 49 cents to BackwoodsButt, Montana."

I don't think your first sentence is exactly correct.

Both UPS and FedEx deliver packages to every geographical zip code in the 48 continental states and Hawaii. And they both earn a profit.

Where FedEx and UPS differ from the USPS is that they are both free to set the prices and terms for such delivery.

It is not rural delivery which makes USPS unprofitable. It is government interference in the market. And the GOP does talk often about government interference in markets.

 
At 11/01/2011 1:22 PM, Blogger VangelV said...

Where FedEx and UPS differ from the USPS is that they are both free to set the prices and terms for such delivery.

Actually, FedEx and UPS want the monopoly on first class deliveries to end. But if that happened the USPS would wind up bankrupt.

 
At 11/01/2011 1:44 PM, Blogger Larry G said...

so do Fed Ex and UPS employees in Europe and Asia get health care and pensions from the corporation instead of the govt?

I'm not opposed to further privatizing of USPS but I'm skeptical that some kinds of mail like legal summons, jury, state/local taxes, DMV, etc could be conducted in a non USPS process - or if they figured out how - it's virtually certain that costs would double, triple or more...

right now... USPS will not allow people to have multiple delivery addresses.

In a non USPS-world - does that mean that people could elect to have multiple places to received mail and/or change it whenever they wanted to?

I know that some entities want to know your street address.

well .. your street address is determined by USPS... and that address is used by Fed Ex and UPS... even though USPS is responsible for operating and maintaining the street address system.

I do not hear many, if any Republicans saying that USPS should be dissolved and let Fed Ex/UPS take over the functions.

Who in Congress has this position?

 
At 11/01/2011 2:04 PM, Blogger Jet Beagle said...

Larry G: "right now... USPS will not allow people to have multiple delivery addresses."

Really? I have simultaneously received mail at my home, at the retail store I owned, and at my corporate workplace. All that mail had my first and last name on it.

 
At 11/01/2011 2:13 PM, Blogger Larry G said...

re: multiple addresses.

try to get multiple addresses from USPS though.

I have a P.O. Box and they will NOT let me have a street box at the same time.

And if something is addressed to my street address - USPS does not redirect it to my P.O. Box but instead returns it to sender...

But I did talk to them and they told me that you cannot have more than one address... and they check.

by the way, I PREFER paying extra for the P.O. Box....

:)

also - were you aware of carrier routes?

it's a big deal in marketing and USPS sells it but way too cheap:

http://www.postalcarrierroutes.com/

 
At 11/01/2011 3:02 PM, Blogger Mike said...

Larry,

"http://www.postalcarrierroutes.com/"

If the USPS sells carrier maps, they won't sell them to me, you have to buy them from a private company. Read the link you posted.

What the USPS should do is sell opt-out for carrier routes,
I'd pay at least $10 a month to keep that crap out of my mailbox.

 
At 11/01/2011 3:08 PM, Blogger Larry G said...

re: carrier routes.

correct. they sell them to other companies and I don't have a link but I have read that some feel that the price they charge is too low.

it's not just the carrier routes - it's the demographics associated with them.

It allows mass mailers including political parties to target specific demographics - with a demographic granularity right down to the street level....

you might also be aware that the cable and satellite TV companies do the same thing... right down to the carrier route level.

 
At 11/01/2011 3:19 PM, Blogger Mike said...

The field I work in uses direct mail quite a bit, so I'm very familiar. I'm not 100% certain that the USPS sells this information at all...they must, but I'd bet it's a matter of recovering costs and not a profit motivation. I don't believe the USPS maintains demographics...I think that's added by the company you purchase the routes from.

Demographics and addresses can be obtained for businesses and zips, by businesses at your expense. The census actually has a department that will discuss demographic areas, businesses and the amount of money they make/products they ship and import....all for free.

 
At 11/01/2011 3:26 PM, Blogger Larry G said...

USPS does not provide the demographics, the Census Bureau does and it's done on a per address basis.

and I don't know if it is free or not but both sets of data - the demographic per address.. and the address system itself would be highly proprietary (and expensive) if the private sector held them

 
At 11/01/2011 3:28 PM, Blogger Larry G said...

correction - not sure if it is done on a per address basis - but for a particular carrier route - things like average salary, age, etc... are provided.

It occurs to me that if this info was better appraised as to value then USPS may well be able to turn a profit just by charging appropriately for this data.

 
At 11/01/2011 3:35 PM, Blogger Mike said...

I think you're right. I think if they combined forces with the census, they could sell a very valuable and highly accurate product for a decent profit. Combine that with my idea of opting out for a fee, zone pricing, reduced delivery days and you may be talking about a profitable USPS. I think that's what has so many people irritated with their seemingly incompetent nature.

 
At 11/01/2011 10:41 PM, Blogger Richard said...

Mark,

Until 1 july 2010 Deutsche Post did not have to pay VAT, while its competitors did.

At the same time, Germany does not have a minimum wage -except for mailmen. That prevented foreign competitors from competing too much.

Only after a.o. TNT treatened to skip Germany all together the bundestag changed the VAT law.

http://www.rtl.nl/%28/programma/bureaumisdaad/crimenieuws/%29/components/financien/rtlz/2010/weken_2010/13/20100329.1052.TNT-krijgt-per-1-juli-vrijstelling-Duits-BTW.xml

 
At 11/02/2011 2:51 AM, Blogger Ron H. said...

Jet: "I start collecting my FedEx pension this week."

Well, congrats!

 
At 11/02/2011 3:07 AM, Blogger Ron H. said...

"I'm not opposed to further privatizing of USPS but I'm skeptical that some kinds of mail like legal summons, jury, state/local taxes, DMV, etc could be conducted in a non USPS process..."

Why not? Are you aware that important documents in real estate transactions are often sent via FedX to ensure timely and secure delivery?

"right now... USPS will not allow people to have multiple delivery addresses."

Nonsense. You can have mail delivered to as many locations as you wish. Mail is delivered to an address, not a person.

 
At 11/02/2011 6:40 AM, Blogger Larry G said...

" Mail is delivered to an address, not a person"

that's probably true...

 
At 11/02/2011 10:21 AM, Blogger sethstorm said...

Mind that the debt would be non-existent if Congress didnt ask the USPS to pay a ton.

 
At 11/02/2011 10:27 AM, Blogger sethstorm said...


You don't know that it is not economic. You only know that the USPS can't do it under the existing rules. As I argue above, let competition in and you will see the market price determined much better than the current system.

The problem is that the price will go stratospheric and out of the reach of said market. These people would be considered customers to safely drop since nobody will pick up the service.

Better to keep the USPS.

 
At 11/02/2011 2:07 PM, Blogger VangelV said...

so do Fed Ex and UPS employees in Europe and Asia get health care and pensions from the corporation instead of the govt?

Why does this matter? A company and its employees come to an agreement about total compensation. The details depend on local market conditions, regulations, supply, etc., and are always unique.

I'm not opposed to further privatizing of USPS but I'm skeptical that some kinds of mail like legal summons, jury, state/local taxes, DMV, etc could be conducted in a non USPS process - or if they figured out how - it's virtually certain that costs would double, triple or more...

There has never been any evidence provided that a government monopoly is better and cheaper than a competitive market.

 
At 11/02/2011 2:58 PM, Blogger Larry G said...

re: fed ex/ups, benefits in countries that provide health care and countries that don't.

if you want an apple-to-apple comparison... and you are a person who believes that unions are bad karma... I think it matters.

re: can a private provider do ALL of the USPS mission?

I note that few Republicans or Conservatives want to dissolve USPS even ones that want to get rid of the Dept of Ed, Energy, HUD, etc...

so there must be a reason.

 
At 11/02/2011 3:18 PM, Blogger Jet Beagle said...

sethstorm: "These people would be considered customers to safely drop since nobody will pick up the service."

As I said above, both FedEx and United Parcel Service deliver packages to every geographic address in the U.S. Your assertion that "nobody will pick up the service" has already been proven wrong.

The price to deliver a letter to a rural route after privatization might increase relative to urban prices. Or it might not. The higher volumes that FedEx would deliver to rural routes would change pricing structures simply due to economies of scale. The company would likely discover that offering a nationwide flat rate for non-priority letters is more economical than variable rate pricing. That's because the cost of assigning and auditing variable rates for a low revenue item would exceed the extra revenue which could be earned.

 
At 11/02/2011 3:53 PM, Blogger VangelV said...

I note that few Republicans or Conservatives want to dissolve USPS even ones that want to get rid of the Dept of Ed, Energy, HUD, etc...

so there must be a reason.


Not true. Ron Paul has said that he will start by getting rid of five departments, including Energy and Commerce.

 
At 11/02/2011 4:16 PM, Blogger Larry G said...

did Ron Paul advocate getting rid of USPS?

 

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