death of the postal system

The second problem, not so obvious, is that for every additional piece of standard mail the USPS has handled, it has actually lost money thanks to the enormous transactional costs it incurs. This is not mainly because its business model has driven away first-class mail customers (though of course it has done that, too); it is because there is a point at which the efficiencies of economies of scale tip over into the inefficiencies of gigantism. The USPS has long since tipped. It has a vast, fixed-cost infrastructure that includes a massive footprint of 38,000 buildings. Its bloated payroll of 800,000 employees—third only to the Department of Defense and Wal-Mart—makes up a whopping 80 percent of its operating expenses (UPS and FedEx spend between 37 and 51 percent)


Now the problem can no longer be ignored. With the economy collapsed, direct-marketing response rates in a nosedive and the entire Ponzi scheme now blown up, the day of reckoning is here. Many experts predict that the USPS will far exceed a $3 billion loss this year and that even with all the cost-cutting measures the USPS has already put in motion, a $6–12 billion loss is more likely. Any loss of over $7.8 billion, which now seems probable, will exceed the $15 billion maximum Federal loan ceiling from the 2006 Act, leaving the USPS unable to meet its financial obligations. The USPS is about to go broke. If it does the phrase “going postal” may acquire a whole new meaning, describing something that literally vanishes.

- Going Postal