HELLO FEDEX – AT 9:25 A.M. ET:   Will the Post Office go the way of the pony express?  The prospects are grim, and not likely to get better in this economy.  From the Washington Post: 

SEATTLE — The financially strapped U.S. Postal Service is proposing to cut its workforce by 20 percent and to withdraw from the federal health and retirement plans because it believes it could provide benefits at a lower cost.

I think they call that competition.  Glad the Postal Service discovered it.

The layoffs would be achieved in part by breaking labor agreements, a proposal that drew swift fire from postal unions. The plan would require congressional approval but, if successful, could be precedent-setting, with possible ripple effects throughout government. It would also deliver a major blow to the nation’s labor movement.

In a notice informing employees of its proposals — with the headline “Financial crisis calls for significant actions” — the Postal Service said, “We will be insolvent next month due to significant declines in mail volume and retiree health benefit pre-funding costs imposed by Congress.”

During the past four years, the service lost $20 billion, including $8.5 billion in fiscal 2010. Over that period, mail volume dropped by 20 percent.

COMMENT:  I suspect e-mail has a lot to do with dropping volume.  The Postal Service must make changes, and they will be painful.  Say goodbye to Saturday delivery.

Look, we aren't anti-union here.  I'm a union member myself.  Unions have done good things, and some not-so-good things.  There are fine unions, and shady ones.  But it's clear the Postal Service must make changes in work force rules to reflect the reality of market conditions.  There will be those who say that they can just keep raising rates.  But you can raise your rates to the point where you price yourself out of the market.  E-mails, after all, are seen as essentially free, or remarkably inexpensive as part of internet packages. 

We hope that labor changes produce as little pain as possible.  We also hope the Service comes up with new and innovative products that attract customers.  I'd hate to see the Post Office go, or be reduced to three-day-a-week delivery, which has been mentioned.  Watch for major changes.

August 12, 2011