If you haven’t mailed your Christmas packages yet, better hurry! The United States Postal Service suggests a Mail-By date before the second week of December. Fa-la-la, Fa-la-la, La, La La!
Don't mind me, I'm just trying to sustain my holiday spirit after reading how some post offices are bearing the brunt of our buying binge, delivered courtesy of the Grinch that Stole Christmas, otherwise known as Amazon.
In a story reported by The Washington Post, Bemidji, Minnesota, residents noticed delays in their first class mail deliveries, beginning in November: Checks, credit card, insurance and hospital bills, prescribed medicines, and more.
Without any warning, thousands of Amazon boxes had arrived at the Bemidji post office, along with the ultimatum for delivery by the day's end. Local mail carriers said they were told to prioritize Amazon packages over their patrons' regular mail.
As this continued, they began racking up 10 to 12 hour-days to complete their routes. Yet their pay, based on a defined delivery time set by the USPS, remained the same. Their days off were cancelled, and requests for sick leave were turned down. Some employees quit.
It's not an isolated situation. Other mail carriers and post office workers across the U.S., especially in rural states, are reporting similar Amazon "Special Deliveries".
"It's ridiculous!" one Iowa mail carrier complained to me. "I had 272 parcels the other day. I normally average about 150." He assured me, however, that no priority was given to Amazon parcels.
The view from an Iowa mail carrier’s jeep this week.
Outsourcing Costs
Flash back to 2013, when the USPS signed a contract to deliver Amazon's "last mile" packages. It's unprofitable for Amazon to serve less populated places, so it delivers only about 46% of its packages in these areas. It outsources the rest to the USPS. The USPS lost $6.5 billion in the past fiscal year. It needs the money. Postal delivery workers are caught between a rock and a hard place.
Sen. Tina Smith (D-MN) wrote US Postmaster General Louis DeJoy last week to report complaints from her constituents of mail delays and overworked mail carriers. She suggested DeJoy was pressuring post offices to enter contracts that "your system cannot support".
Post offices in larger cities aren't experiencing this same disruption. Amazon strategically locates its distribution centers and fleet of delivery trucks in dense zip code areas. This reduces its fuel and labor costs; Amazon contracts with as many as 200,000 "delivery service providers" for these shorter, concentrated routes.
Last week Amazon became the largest nongovernmental delivery service, surpassing both United Parcel Service (UPS) and FedEx in parcel volume. Its volume grew 13% from 2022.
The USPS still is the largest domestic parcel service by volume, making deliveries for UPS, FedEx, and Amazon.
So, what is causing the deluge of Amazon parcels at some post offices? Amazon has been shifting its package delivery from UPS to the USPS. It benefits from steep discounts in shipping rates when its trucks deliver directly to post offices in rural areas instead of routing parcels through a sorting and distribution network in a larger, nearby town.
It's not the first time Amazon has disrupted the flow of U.S. mail. Last Christmas, a winter storm paralyzed flights and overland shipping. The Cheyenne, Wyoming, post office closed to the public to handle 13,000 Amazon packages unexpectedly dumped there.
Between a Rock and a Hard Place
The USPS doesn't receive taxpayer funds. It must cover its costs through revenue. It's also been saddled by a 2006 law requiring it to pre-fund more than $120 billion in retiree healthcare and pension liabilities. (No other company or federal entity has this requirement.) The 2022 Postal Service Reform Act cut $90 billion from its projected 10-year-loss of $160 billion. Earlier this year, the price of a first class stamp was raised 3¢ to 66¢.
The USPS also is required to invest retiree assets in low-risk U.S. Treasury securities; a stock-and-bond portfolio would earn higher returns and erase its unfunded liabilities more quickly.
The USPS can't raise its rates on Amazon, its largest package customer, since it offers a bottom-line lifeline for its package delivery.
But it's a slippery slope, considering Amazon's track record for using its market dominance to stifle competition. UPS shared proprietary routing data with Amazon when it was vying for its parcel business. During the Pandemic, Amazon began converting passenger jets for its own air cargo network, adding air hubs at airports, and acquiring trailer trucks to deliver parcels to its distribution centers. As Amazon's ambitions to build a competitive third-party logistics system became apparent, UPS stopped oversharing. In 2019, Fed Ex didn't renew its express U.S. shipping contract with Amazon (air service). Now Amazon has surpassed both in parcel volume. Amazon already is competing with FedEx in the U.K.
As I wrote in an earlier column, Boo-Hoo, Amazon, September 30, 2023, the Federal Trade Commission has filed an antitrust suit against Amazon for using its monopoly power to harm consumers by keeping prices artificially high. An earlier suit by its Consumer Division resulted in Amazon paying over $30 million in customer refunds and fines for signing up Amazon Prime customers without their consent, and making it hard for them to cancel.
Social and Environmental Costs
In The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market, co-authors Naomi Oleskey and Erik M. Conway write: "Self interest can drive business in good ways, but it also can create huge social costs. A framework focused on individual self-interest is not rational because we don't live as individuals; we live as part of a world, and that world is being massively damaged by inadequately regulated capitalism."
There are social, quality of life, and environmental costs, such as:
What about all the Amazon boxes piling up in landfills, including holiday returns? A total of 25% of all Amazon products sold are returned, compared to 7.5% of products purchased at a store. Free returns? Somebody is paying for this. Many, if not most, of the returned items also end up as waste, contributing 24 million metric tons of CO2 in 2022. TheConversation.com, June 14, 2023
Four years ago, FedEx added weekend deliveries to compete for Amazon's business with USPS. Earlier this year, the Supreme Court ruled in favor of a postal carrier who sued the USPS for requiring him to work on Sundays, primarily to deliver Amazon packages. The Court ruled that the USPS should accommodate the carrier's religious beliefs, but sent the case back to a lower court to review the "clarified" standard.
Here's what passes for good news to the USPS employee I quoted earlier in this column: If he and other carriers are willing to work their days off, a carrier substitute can be paid to help deliver some of their parcels! Bah Humbug!
Please forgive me for putting a damper on your holiday gift-giving spirit – maybe I'm the Grinch that Stole Christmas? But how did we arrive at this crossroads in the history of American commerce? (1) The Internet undermined revenues from the more profitable USPS first class mail: i.e., electronic paycheck deposits and bill-paying, plus sending texts and emails to loved ones instead of greeting cards.
(2) Evolving consumer expectations and behaviors are demanding faster deliveries. We lust for stuff delivered to our doors even if we only would pay a couple of bucks more for it at the local store.
Speaking of local stores, here's a novel solution: Buy Local. Easier said than done, especially in rural areas where there's a dearth of stores. We've lost two Younkers stores in Ames and Ft. Dodge, and Penney's hanging on by the skin of its teeth at the Ames mall.
The USPS is an essential public service, and has a mandate to serve Americans no matter where they live – that's 161 million addresses six days a week. Considering its diminishing first-class mail volume, and Amazon's dubious track record as a team player -- we could be left with only for-profit companies with no incentive to serve all Americans. Amazon laid off 18,000 workers earlier this year. But what if Amazon can mold a huge segment of the U.S. economy into its own mode of doing business: on-the-cheap, fast-as-can-be, and subcontracted wherever possible?
After all, if drone delivery becomes more feasible soon, Amazon could be delivering our Christmas packages down the chimneys of our homes, replacing Santa Claus. Now that would be a Special Delivery!
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Thanks, Josiah! I don't know how I missed that! I appreciate your correction.
Correct me if I am wrong, but did not the USPS consensually sign a contract with Amazon committing their postal workers to perform just this priority service? And isn't the seasonal holiday crush at the USPS greatly compensated by being done mid-day the other 10 months?
Sorry, but imitation is the sincerest form of flattery and every sizable retail outlet is rapidly emulating Amazon with online order (five minutes on the computer compared with an hour in the car and store only to find items not available) and delivery (by someone--UPS?). If "shopping" is your recreation, great, but for many of us it is a painful necessity and Amazon and its ilk are our heroes. Creative disruption in action. Nothing hidden about it. Happy Holidays.