We all know where the United States Postal Service seems to be heading — down, down, down. Plunging volume and layoffs have been the norm. Going by the numbers, the years between 2010 and 2015 were mediocre [source: USPS]:
- From 2010 to 2015, 90,527 total career employees were lost (from 583,908 to 493,381).
- Total mail volume decreased by 16.7 billion units.
- Annual revenue actually increased from $67.1 billion to $68.8 billion. Despite the other losses, more than $1 billion has been funneled into USPS in about six years.
So it's no wonder that the USPS is desperate to figure out a sustainable solution to continue operation. As email, fax machines, commercial package delivery companies and even 3-D printers edge out the need for a hearty postal service, the USPS has tried marketing campaigns, selling merchandise and trademark rights. (Basically, they're doing all the things your college band attempted in order to hit it big.)
The USPS, of course, exists as an independent establishment of the executive branch of the U.S. government. No tax dollars flow its way. Rather, it operates as a business. A board of governors made up of the postmaster general, the deputy postmaster general and nine governors who are appointed by the president (with the advice and consent of the Senate) lead the organization. It competes for business in the communications, distribution, delivery, advertising and retail markets.
So let's dive in. Come rain or shine, we will find out how the United States Postal Service works.
History of the USPS
In Colonial times, mail was simply delivered by friends, merchants and Native Americans. Because colonists needed to send mail back to England, the first official postal service was established in 1639 when the General Court of Massachusetts designated Richard Fairbanks' tavern in Boston as the official mail drop for overseas parcels. Using a tavern for the mail may seem odd, but it was common in England for taverns and coffeehouses to be used as mail drops. Most local authorities began establishing their own routes between the colonies, but it was not until 1683 that William Penn established an official post office in Pennsylvania. In the South, private messengers relayed mail between plantations.
A more centralized postal organization came about in 1691 when the British Crown gave Thomas Neale a 21-year grant for a North American postal service. In 1707, the British government bought the rights to the North American postal service and appointed local deputy postmasters general. This continued until 1774, when the colonists' dislike for British control led to the establishment of a Constitutional postal service for intercolonial mail. The people paid for this service, and all revenues went into its improvement.
The Boston riots in 1774 led to the creation of the Continental Congress and the beginnings of an independent government. In 1775, the Continental Congress appointed Benjamin Franklin as the first postmaster general, in charge of the newly created Post Office Department. Franklin had proven his abilities when he was appointed postmaster general in Philadelphia in 1737 and had brought new organization, speed and reliability to the service.
The Pony Express and Eventual Reform
In the early 19th century, as the country's population began moving westward into the newly acquired territories of Louisiana, Oregon and California, the mail had to travel a much greater distance — particularly during the California gold rush. To meet the needs of the quarter of a million people who now lived in the West, the Post Office Department awarded a contract to the Pacific Mail Steamship Company to carry mail to California. Mail traveled by ship from New York to Panama, moved across Panama by rail, then went on to San Francisco by ship. It should have taken three to four weeks for a letter from the East to travel to California, but it usually took longer. There were also two stagecoach routes — the Southern and Central Routes. The Central Route was shorter but couldn't be used year-round. The Butterfield Overland Mail Company had a government contract to carry mail using the Southern Route, which took 25 days.
The Pony Express was founded in 1860 by the Central Overland California and Pike's Peak Express (COC&PP), a freight company that supplied goods to the western part of the United States. COC&PP wanted the Overland Mail Company's million-dollar government contract that used the Southern Route, so it set out to prove that the shorter Central Route could actually be used all year long. Original Pony Express mailing rates were $5 per half-ounce, but that was later lowered to $1 per half-ounce.
Eighty to 100 Pony Express riders made $100 a month to cover the 1,966 miles (3,164 kilometers) from St. Joseph, Missouri, to Sacramento, California — through Kansas, Nebraska, Colorado, Wyoming, Utah, Nevada and California. They crossed the Missouri River by ferry. At any given time, two riders were traveling on the route, one in each direction. They changed horses every 10-15 miles at one of the almost 200 stations located every 5-20 miles along the route. The riders went 75 to 100 miles before stopping and handing off the mail to the next rider. They averaged 10 miles per hour and completed the route in only 10 days, proving that the Central Route was faster.
While it was ultimately a financial failure for the company, the Pony Express succeeded in proving that the Central Route could indeed be used year-round. But the contract remained with the Overland Mail Company. The government asked that Overland begin using the Central Route. The COC&PP received a subcontract to continue the Pony Express between the Missouri River and Salt Lake City, while the Overland Mail Company operated it from Salt Lake City to California. This was short-lived, however. On Oct. 24, 1861, the transcontinental telegraph line was completed, allowing people to send messages in minutes rather than days. So the Pony Express was shut down after only about 18 months in service, and COC&PP eventually sold it to Wells Fargo.
By the mid-1960s, the Post Office Department was in trouble. Its management had little control over operations, and it was a sinking ship in dire need of reform. As a part of the ensuing reform, the Post Office Department officially became the United States Postal Service on July 1, 1971. At that time it became an independent establishment of the executive branch of the U.S. government rather than a part of the cabinet. It began operating more like a corporation, but with the benefit of the official mail monopoly that was established under the Private Express Statutes in 1792. Package delivery and express services do not fall under this law, making it possible for other companies to offer those services.
The 21st Century Post Office Landscape
As the numbers show, the Postal Service is facing some serious problems. Offices are closing (more than 1,000 between 2006 and 2015) and employees are being let go. And even though its revenue has been increasing, the Postal Service had a net loss of $5.1 billion in 2015 [source: Minaya].
The biggest problem for the Postal Service is simple: declining mail volume. The number of letters and packages being sent has steadily fallen, since a high of 213.1 billion pieces of mail in 2006 [source: USPS]. (Most of the postal service revenue comes from first-class mail [source: Nixon].) Remember that it's not just the fact you're getting an email from your relatives in Uganda now instead of a letter; it's that you can go online to check out the newest couches at Ikea instead of waiting for a catalog and that a desire to be "green" resulted in a request for all-paperless electronic bill payment.
But it's not as though nobody needs mail or package delivery these days. In fact, UPS and FedEx are both posting profits [source: Sondag and Picker]. Instead, it might be a signal of bigger flaws in the way USPS is run. One is that labor accounted for 80 percent of USPS expenses in 2011, compared to 53 percent for UPS and 32 percent for FedEx (USPS cut its labor costs by $10 billion between 2006 and 2016 [sources: Greenhouse, Katz]. Postal workers have traditionally received more generous health benefits than most government employees as well; thus, the post office is desperate to cut pension and retirement plans, as well as execute layoffs.
The brand of USPS has suffered, as well. No longer is it seen as dominant in customer satisfaction. UPS and FedEx both score higher in the American Consumer Satisfaction Index polls (with scores of 80, 82 and 74, respectively, according to a 2016 ACSI report.
And there might be something to be said about the loss of post offices as town centers. With the declining mail volume, a small town or neighborhood no longer depends on going to the post office for a daily stop to collect mail and gossip. It's hard to quantify how lack of mail has affected the social aspect of post office centers, but we do know that since 2006, post office visits from customers have dropped from 1.24 billion to 919.5 million, while online revenue has increased from $454 million to $1.05 billion [source: USPS].
From the 1930s to the early 1960s, the volume of mail — particularly business mail — grew significantly, and the need for a better system became apparent. On July 1, 1963, the USPS introduced the ZIP code (Zone Improvement Plan) system. In 1967, ZIP codes became mandatory on all mail.
A ZIP code is a five-digit number representing a specific location in the United States. The extended ZIP + 4 code adds a hyphen and four additional digits for an even more precise location. Here is how it works:
- The first digit represents the state. Numbers increase as you move west. Several states share each digit — 2, for example, represents the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and West Virginia.
- The second and third digits represent regions within the state — the first three digits create the Sectional Center Facility (SCF) code. SCFs are the regional headquarters for mail sorting and distribution.
- The fourth and fifth digits represent more specific areas, like post offices and postal delivery zones within a city or town.
- ZIP + 4 has four extra digits that identify a specific segment of the five-digit delivery area — like a city block, office building or individual high-volume mail receiver.
So with all of that manpower and infrastructure, what actually happens when you drop a letter into a mailbox? Here is a brief rundown:
- You've properly addressed your letter and added the appropriate postage, so you place it into your mailbox. (You could also drop the letter into a public collection box or take it directly to your local post office.)
- A postal carrier collects your letter from the box along with the rest of the mail and takes it to the post office. There, all of the mail is placed on a truck and taken to a mail processing plant.
- At the mail processing plant, machines separate mail by shape and size. They also orient the packages so their addresses are right-side up and facing the same direction. Your letter gets its postmark, and machines print cancellation lines across postage stamps to prevent them from being reused.
- A unique fluorescent bar code is imprinted on the back of each piece of mail. An optical scanner scans the address, and then a bar code representing the specific address is sprayed on the front of the envelope. If the scanner can't read the address, the letter is manually sorted.
- Other processing machines read the bar codes and direct the letters into bins based on ZIP codes — this indicates the next processing plant, in the region where the letter will ultimately be delivered. (Each post office is served by a mail processing plant.) From the bins, the letters are sorted into trays by ZIP code and flown or trucked to the next processing.
- At the final processing plant, sorting machines read the bar codes and sort the letters by carrier and into delivery order for that carrier.
- The letters are taken to the individual post offices, and the carriers load the trays into their individual vehicles for final delivery.
To take advantage of automation and its optical scanners, the USPS has guidelines for addressing letters. Your letter won't be thrown out if you don't follow the guidelines, but using them can speed up delivery.
- First, print both the delivery and return addresses on the same side of your envelope or card and make sure they're running parallel to the longest side.
- Second, the address must be legible at arm's length, so typing or printing clearly with a pen or permanent marker is helpful. And don't use commas or periods when you address your letters, regardless of what your English teacher said.
- Finally, make sure to include your return address.
The USPS offers several levels of service. You choose the service based on how quickly you want the letter or package delivered and how much you're willing to pay. The terminology is sometimes confusing, so we've broken it down below. (Note that there are many additional options within each of these categories, and business mail has even more choices.)
Priority Mail Express® service offers quick delivery for letters, large or thick envelopes, tubes and packages. It includes insurance up to $100 and guarantees overnight or two-day delivery. You can also purchase additional insurance up to $5,000.
Priority Mail® service offers one- to three-day service to most domestic destinations.
Both Priority Mail Express and Priority Mail have a weight limit of 70 pounds and a maximum length of 108 inches.
First-Class Mail® service doesn't guarantee delivery within a specific time period, although the typical delivery time is one to three days. It is most often used for personal and business correspondence and bills, but you can also send packages weighing up to 13 ounces.
The USPS Retail Ground™ service is listed as a "reliable and economical" option for mailing both large and small packages. Retail Ground rates are based on weight, mailing distance and shape. Packages are typically delivered within two to eight business days — they can weigh up to 70 pounds and measure up to 130 inches in combined length and distance around the thickest part.
Media Mail® can be the least expensive way to mail packages and thick envelopes. According to the USPS website, contents are limited to books, manuscripts, sound recordings, recorded videotapes and computer-readable media (not blank). Packages are usually delivered within two to eight business days. Cost is based only on weight, so packages going great distances that cost more with Parcel Post might be cheaper with Media Mail. Media Mail cannot contain advertising, except for incidental announcements in books.
In 2001, the first phase of a business alliance between the USPS and FedEx Express began with the installment of FedEx drop boxes at post office facilities. With those installments, FedEx agreed to pay the USPS between $126 million and $232 million in fees over the next seven years. In the second part of the agreement, the Postal Service began paying FedEx approximately $6.3 billion over seven years for shared access to the FedEx Express national air transportation network. FedEx transports Priority Mail Express, Priority Mail, First-Class Mail and a portion of some international mail. This enabled the USPS to improve its service without increasing its costs.
The USPS made a similar agreement with UPS in 2003 that was expanded in 2006. UPS began transporting First Class and Priority mail between 98 U.S. cities. UPS often delivers USPS mail to more distant outposts, and the USPS has delivered UPS packages to rural areas.
For $.47 you can send a 1-ounce letter from Florida to Hawaii. That's pretty amazing, considering that the letter is crossing an entire continent and a large section of ocean. Because the USPS is not supported by tax dollars, its revenue must completely cover the cost of operations, and postage prices must be set at a level to cover those costs. Those costs are primarily based on the type of mail (letter, postcard, large envelope, package, etc.) and its weight. Here are some basic postage prices:
- letters up to one ounce — 44 cents, each additional ounce — 21 cents
- postcards — 34 cents
- large envelopes (flats) up to one ounce — 94 cents, each additional ounce — 21 cents
- Priority Mail up to one pound — $6.45 (but distance is also a consideration)
- Priority Mail Express up to 4 pounds — $22.95 (but distance is also a consideration)
Setting postage rates is an often complicated process that involves the USPS Board of Governors (BOG) and an independent Postal Regulatory Commission (PRC). The BOG is responsible for identifying when a rate increase is needed. Once it has determined a need, the BOG files a formal request with the PRC. The PRC studies the request (sometimes for up to 10 months) and gives the BOG a recommendation.
If the BOG (with the exception of the postmaster general and the deputy postmaster general, who don't vote on these recommendations) votes to approve the recommendation, an introductory date for the new rates will be established.
If the BOG doesn't completely agree with the PRC recommendation, it may allow the decision to take place under protest, which means the BOG can go back to the PRC for additional study and reconsideration, or they may request judicial review of the recommendation.
If the BOG receives a revised recommendation from the PRC, it can order the new rates to be placed into effect. If the BOG ultimately determines that revenue generated by the recommended rates will not meet operating costs, the request can be modified and resubmitted to the PRC.
The USPS has specific size and weight requirements for each type of mail, from postcards to large packages.
Postcards (rectangular cardstock not contained in an envelope) have a minimum size requirement of 5.5 inches in length and 3.5 inches in height and a maximum of 6 inches in length and 4.25 in height.
Envelopes (small rectangular mail pieces no thicker than .25 inch) must be between 5 inches and 11.5 inches in length and 3.5 and 6.125 in height to qualify for standard letter rates. There is also a "large envelopes" category with minimum letter sizes of 15 inches in length and 12 inches in height.
Each type of mail must also fall within specific weight limits to be mailed at the standard rates. For example, you can't write a 12-page letter and mail it at the standard letter rate even if it does fit into an envelope that meets the size requirements. It has to weigh 1 ounce or less — the accepted limit for a letter.
You can mail heavier and larger letters or postcards — you'll just have to pay more. For example, the current rate for a standard 1-ounce letter is 47 cents. But if your letter weighs 3 ounces, you'll have to cough up an additional 42 cents.
Ultimately, there are limitations to what you can mail. The largest package you can mail must be less than 130 inches on its longest side for Retail Ground, and it can't weigh more than 70 pounds.
Post Office Services
The Postal Service offers services and products beyond delivery. You can buy packaging, from bubble-pack envelopes to cardboard boxes. You can also buy postcards and, of course, stamps. At the USPS website you can calculate your postage and print it on your own printer, or call to have a package picked up. Through the USPS affiliate CardStore®, you can create a personalized greeting card online and mail it with a click of a mouse — and a quick dip into your wallet. It even offers a reminder service so you don't have any excuse for forgetting to send cards for special occasions.
Post Office Boxes
P.O. boxes have been around for more than 200 years. These small rectangular boxes are usually located in an area of the post office that is accessible 24 hours a day. You can rent one for a relatively small fee that is based on the size of the box. The boxes themselves are built into an interior wall of the post office so that the locked side is accessible to customers and the other side is open so that employees can insert mail.
There are several benefits to having a P.O. box. It can be more secure, you can often get your mail earlier in the day and it can disguise the fact that your new business is really just you in your spare room at home. Also, if you change addresses within the same city, you don't have to change your mailing address. Some small towns actually require residents to have post office boxes.
Money orders are a safe and inexpensive alternative to sending cash through the mail. You can purchase them from any post office or any mail carrier. You can purchase postal money orders for up to $1,000. They can be cashed at any post office or deposited at banks and other financial institutions. And if they're damaged, lost or stolen, they can be replaced.
The USPS offers domestic and international money orders, international money orders and an international money-wiring service.
The USPS offers several services for additional security, proof of delivery and recovery in the event of a loss. These services include: Certified Mail, Registered Mail, Informed Delivery, Signature Confirmation and the ability to purchase insurance coverage up to $50,000. These services provide many options for delivery confirmation, obtaining copies of signatures of acceptance, confirmation of shipment and tracking of high-value items.
The USPS is in tune with the fact that as broadband internet access increases, its revenue will ultimately decrease. So it is planning strategies for simplifying products and services and tailoring them to better meet customers' needs.
- The Priority Mail Flat Rate boxes take the guesswork out of postage by creating one rate regardless of weight or distance.
- A service called CONFIRM uses bar codes to track mail as it makes its way through the system.
- Information-based markings, which are are imprinted on envelopes and packages during processing, enable the postal service to offer more opportunities for tracking shipments and expediting service.
- The Intelligent Mail device is a handheld scanner that can read current bar codes and electronic signatures.
- The Postal Automated Redirection System reduces costs for mail that must be forwarded or returned to sender.
- Sensors and detectors reduce sorting errors and determine when two pieces of mail have become stuck together.
- Sorters have up to 302 separations — three times more than the machines they replaced.
These are just a few of the enhancements, customer strategies and operations improvements that have been instituted at the USPS. You'll be able to count on the USPS to deliver letters and packages at reasonable cost for years to come. Remember, "neither snow, nor rain" nor high-speed internet …
For more information about the USPS, check out the links on the next page.
More Great Links
- American Consumer Satisfaction Index. "ACSI Utilities, Shipping and Health Care Report 2016." 2016. (June 28, 2016) http://www.theacsi.org/news-and-resources/customer-satisfaction-reports/reports-2016/acsi-utilities-shipping-and-health-care-report-2016/acsi-utilities-shipping-and-health-care-report-2016-download
- Domestic Mail Manual. http://pe.usps.gov/archive/html/dmmarchive1209/D041.htm
- Gibbons, Gail. "The Post Office Book: Mail and How it Moves." Thomas Y. Crowel, 1982.
- "It's Official: Going Postal is Epidemic." http://crime.about.com/od/issues/a/aa040717.htm
- Katz, Eric. "Here's How USPS Cut $10 Billion in Labor Costs Since 2006." Government Executive. April 18, 2016. (June 28, 2016) http://www.govexec.com/pay-benefits/2016/04/heres-how-usps-cut-10-billion-labor-costs-2006/127597/
- Minaya, Ezequiel. "USPS Posts Annual Loss, Though Revenue Rises." The Wall Street Journal. Nov. 13, 2015. (June 28, 2016) http://www.wsj.com/articles/usps-posts-annual-loss-though-revenue-rises-1447433323
- Quote Details: Herodotus. http://www.quotationspage.com/quote/24166.html
- "This Day in History 1991." http://www.history.com/tdih.do?action=tdihArticleCategory&id=1152
- United States Postal Service Strategic Plan 2006-2010. http://www.usps.com/strategicplanning/stp2006_2010
- "UPS, USPS Make a Deal." http://atlanta.bizjournals.com/atlanta/stories/2006/06/26/daily19.html?jst=b_ln_hl
- USPS.com. http://www.usps.com/
- "USPS, UPS Expand Relationship for Domestic Air Transportation." http://www.dmnews.com/cms/dm-news/direct-mail/37326.html
- "USPS-FedEx Agreement Delivers First-Class Service." http://www.postalproject.com/documents.asp?d_ID=2487
- US ZIP Codes: How Postal Codes Work. http://www.squidoo.com/us-zip-codes/
- "Where'd They Get Their Guns?" http://www.vpc.org/studies/wgun911114.htm
- "Woman Kills Self, 5 at Postal Plant." http://www.usatoday.com/news/nation/2006-01-31-postal-shooting_x.htm
- Zip Code FAQ. http://www.carrierroutes.com/ZIPCodes.html