But the quasi-governmental agency’s hunt for badly needed revenue streams is
coming at the expense of private-sector competitors, undercutting the basic
principles of the American free-market system, critics contend.
In October, the Postal Regulatory Commission signed off on a plan allowing the
Postal Service to deliver groceries in San Francisco, working with mega online
retailer Amazon.com to do it. The test project eventually could be expanded
nationwide.
While the commission capped annual revenue from the USPS’ new delivery service
at $10 million, for now, free-market advocates are concerned about the incursion
on the private marketplace by a competitor that already holds a
government-granted monopoly on mail delivery.
“We think this is a huge overreach on the part of the USPS,” David Williams,
president of the Taxpayers Protection Alliance, told Watchdog.org. “We already
have companies that are doing this (grocery delivery). The Postal Service should
deliver the mail, to get back to its core business, not this mission creep.”
In its approval order, the Postal Regulatory Commission said the “record
contains no indication” that USPS’ involvement in grocery delivery would disrupt
the market, but the results are not final.
“The Postal Service began its Customized Delivery Test Market Test on November
1, 2014. At the present time, the Commission has not evidence of an adverse
competitive impact,” Gail Adams, spokeswoman for the commission said in an email
in response to Watchdog.org’s question.
It’s not clear whether the USPS is on track to hit its revenue projections,
Adams said. But the information is expected to be included in the agency’s
latest quarterly report, due out soon.
Several USPS programs are federally prohibited from engaging in an “unfair or
otherwise inappropriate competitive advantage for the Postal Service,”
particularly in going up against small businesses.
Peapod, which launched its grocery delivery business in 1989, appears to be
taking the Postal Service competition in stride.
“We’ve always known the potential for this model of online grocery shopping,”
Carrie Bienkowski, chief marketing officer for the Skokie, Illinois-based
company, wrote in a statement to Watchdog. “Competition is not unexpected, and
there is plenty of space in this category for multiple providers.”
Online grocery accounts for about 3 percent of the total food-grocery market,
which stands at about $600 billion, according to Bienkowski. She said Peapod is
first and foremost a food company. That mission focus will make a difference,
she said, as more competitors jump into the market.
“… (T)here is an art to getting grocery right, especially in an online
environment,” Bienkowski said. “Maintaining a proper cool-storage chain,
optimization of routes, enabling choice of delivery — weekday, weekends,
mornings, etc. — is quite complex and demanding. We’ve had 25 years to perfect
our model.”
The Postal Service has had a bumpy start to another partnership venture with
Amazon: Sunday parcel delivery service.
[to top of second column] |
A report by the U.S Postal Service Inspector General late last
year found problems during Sunday deliveries with “scanning,
sorting, vehicle loading” and more at 40 of 134 hubs inspected in
four districts. The OIG said the primary problem was management did
not always enforce policies and procedures and supervision was
“inconsistent.”
“As a result the Postal Service spent 17,446 more hours from June 15
through July 13, 2014,” than was required to conduct Sunday delivery
operations, the report states. Improving efficiency could reduce
operating costs annually by $356,736 in the hubs inspected, the
report found.
Postal Service employees have complained about the increased
demands.
“We are in favor of the Amazon delivery business and Sunday
parcel delivery — it’s fabulous and we want it to continue,” Jo Ann
Pyle, president of Branch 79 of the National Association of Letter
Carriers in Seattle, told Geekwire in December. “But we have not
staffed up properly. We have some employees working seven, 14, or 21
days in a row, and sometimes 12 hours a day. Even though we want the
business, that’s an unacceptable way to treat employees.”
The USPS has had struggles with other test ventures, too, such as
Metro Post service. The idea was to allow retailers to take orders
and have them delivered the same day. That test market in New York
and San Francisco seems to have failed miserably. In the initial
test, USPS earned $760, while incurring costs of $10,288. In all,
the Postal Service delivered 95 packages in five months before the
program was suspended.
Critics like Williams, of the Taxpayers Protection Alliance, say the
Postal Service’s expanded services are making it lose sight of its
core mission — delivering first-class mail to anyone in the United
States at a flat low rate. But that service has helped lead to
annual multi-billion dollar deficits.
While it is true the USPS has operated independently since 1971
federal taxpayer money, Congress does give the Postal Service $100
million a year to compensate the agency for providing certain
services for the government.
And in 2009, the Postal Service began borrowing from the U.S.
Treasury to deal with its debt problems, including billions of
dollars in pension and health care benefits.
Now, the USPS is entertaining the idea of providing banking
services, including payday loans.
U.S. Sen. Elizabeth Warren, D-Mass., has pushed the idea that the
Postal Service get into check-cashing business, an idea opposed by
many in the banking industry.
Mark Dimondstein, president of the American Postal Workers Union,
says he wants the Postal Service to bring back postal banking, a
service USPS provided up until the 1960s.
“Basic postal banking is done in many countries around the world,
and in many of those countries it’s a revenue-driver for the post
office,” Dimondstein told the Huffington Post. “We think it’s a
win-win-win situation. It’s great for the public. It’s great for the
post office. And it’s great for postal workers.”
All of these expanded services by the government-backed Postal
Service are a lose-lose proposition for private enterprise and
taxpayers, Williams said.
“They need to get back to doing what they did, which is delivering
the darn mail,” the taxpayer advocate said.
[This
article courtesy of
Watchdog.]
Click here to respond to the editor about this article |
