E-Commerce's Biggest Obstacle May Be Slow Postal Services (thestreet.com)

Long-time Slashdot reader rudy_wayne writes: J.C. Penney CEO Marvin Ellison recently said that e-commerce companies' biggest challenge is that they are all expanding their businesses and pushing for faster delivery, but UPS, Fedex and especially the United States Postal Service aren't able to keep up, at least not at same cost that exists today, because they're not increasing their delivery capacity at the same rate e-commerce is growing, He said this will cause a supply and demand issue "that's going to be apparent here pretty soon."

Comments

Capacity or Cost?

[Drethon]

For a long time the US postal service has been losing money, they posted a 5.6 billion loss in 2016. I think they would be more than happy to grow their service but can they grow in a way that is profitable for the USPS that doesn't cost more than e-commerce is willing to pay?

Re:Capacity or Cost?

[Nidi62]

For a long time the US postal service has been losing money, they posted a 5.6 billion loss in 2016. I think they would be more than happy to grow their service but can they grow in a way that is profitable for the USPS that doesn't cost more than e-commerce is willing to pay?

Well, once they have their pension fully funded for the next 3 generations as legally mandated by Congress they will probably have enough money to expand capacity. Of course, growth=more workers=more pension, so they would probably have to fund that as well which would slow their growth.

Re:Capacity or Cost?

[MightyYar]

The 3-generation pension thing is a myth. They are simply required to fund the benefits that they promise existing workers given standard actuarial tables which estimate lifetime. I would like this rule extended to the entire government, as we are sitting on a liability time bomb. My beef with the treatment of the USPS is I don't think congress phased in the new rules slowly enough for the business to adjust - but no matter what it was going to be traumatic.

Re:Capacity or Cost?

[zenasprime]

They are incompetent dickbags who do their best to only hire the dumbest people on the planet. Their autorouting system is so pathetic that it creates routing loops that can only be broken by deliberate human intervention. Their hours are garbage that robs the nation of productivity by expecting people to run their errands at the same time that their employer expects them to work. They suffer no penalties for failure, and there is no accountability. Every single package is scanned and the data handed to the government as part of the spying-on-citizens program.

It's like you've never actually had a package delivery attempt by FedEx or UPS. lol

Re:Capacity or Cost?

[Anonymous Coward]

The USPS depends on a certain percentage of spam to exist.

That's the fallacy that is killing the Post Office. Every day they deliver billions of pieces of junk mail at a loss. It's like the old joke, "we lose money on every sale but we make it up with volume". Except the Post Office doesn't get the joke.

A truck full of junk mail, at 13 cents a piece, uses the same amount of fuel, and the driver gets paid the same wages, as a truck full of first class mail at 49 cents a piece. End the subsidy for junk mail. The volume of mail will go way down, the Postal Service would need fewer people, trucks, etc., and there would be an enormous savings of time and money because the Postal Service would be in the business of delivering only the mail that people actually want, rather than truck loads of crap that nobody asked for.

They most likely still wouldn't be profitable, but, they would be much better and more efficient than they are today.

They also wouldn't exist without the deal to take small packages from UPS and FedEx. Without a federally-granted monopoly on delivering to your mailbox, the USPS would have gone away already,

Private companies want nothing to do with mail delivery. Delivering mail to *EVERY* address, from the biggest cities to the most remote rural areas, is very difficult, maybe impossible, to do profitably *AND* at a reasonable cost.

But that's OK. Your local police and fire departments don't generate any profit either and nobody is clamoring to shut them down. They just need to be run reasonably with a minimum of waste and inefficiency.

Re:Capacity or Cost?

[Dorianny]

The economy has benefited hugely from a reliable flat-fee mail delivery system. Like many taken-for-granted benefits we enjoy I didn't realize that until I did some consulting work for a company operating in a part of the world with a unreliable postal system

Re:Capacity or Cost?

[Drethon]

Every time UPS gets a new driver, they stop delivering packages to my house. I'm ... lucky, in that I have an even numbered house on the odd side of the street and about an eighth of a mile off relative to the rest of the numbering system. Google maps has the right location and FedEx never has a problem, but each and every time UPS gets a new driver, I have to call them and tell them to have their driver look up my address on Google maps. Then the package arrives the next day.

Re:Capacity or Cost?

[Anonymous Coward]

I would like this rule extended to the entire government, as we are sitting on a liability time bomb

I would like this rule extended to private corporations.

Re:Capacity or Cost?

[Wycliffe]

I would like this rule extended to the entire government, as we are sitting on a liability time bomb

I would like this rule extended to private corporations.

I agree completely. Unfunded pensions are a ponzi scheme that should have never been allowed. Whether it is Social Security, police officers, a car manufacturer, etc... promising to pay retirement out of future revenue is a disaster waiting to happen. Places like Detroit show what happens when your population shrinks and you no longer have the tax base to support your future obligations. Same with private corporations. They can go out of business, downsize, etc... and if their profit or workforce shrinks, there is no way they can fund those future obligations. At the very least, future obligations need to be on the book as debt owed so that if they go bankrupt, the retirees have equal footing to other creditors. I live in Missouri, and our public school teachers have a fully funded pension. My grandma actually gets raises when they have too much money in their pension fund. If school teachers can do it then other government and private businesses should be able to do it too.

Re:Capacity or Cost?

[Geoffrey.landis]

In short, no. The USPS depends on a certain percentage of spam to exist. They also wouldn't exist without the deal to take small packages from UPS and FedEx. Without a federally-granted monopoly on delivering to your mailbox, the USPS would have gone away already, and good riddance.

You just told me that the USPS delivers to people to whom UPS and FedEx don't deliver.

I think that's a valuable service, actually.

Basically, your post says that UPS and FedEx take their profit by delivering to the easy customers, and they use the post office to deliver to the hard ones.

Re:Capacity or Cost?

[tlambert]

For a long time the US postal service has been losing money, they posted a 5.6 billion loss in 2016.

There are three main reasons for them posting a loss:

1. They are the only division of the federal government required to fully fund their pension plan, rather than switching to a "cash balance" plan.

2. They are the only division of the federal government required to fully fund their medical plan, called "Mail Handler's Benefits Program". This is because they have to accept all federal employees who want to enroll in it (rather than private insurance offered in their own division). This is also the medical plan for all members of congress and their dependents.

3. Their bulk mail delivery operates at a negotiated loss. Which wouldn't be a problem, had the Direct Marketing Association not turned around, and turned all the flyers that used to be sent separately into one "coupon brochure" by making an outside "wrapper" page that folds in half, and the other pieces go inside it. Including things like the Trader Joe's Catalog that comes once a month or so.

So yes, they are posting a loss, because the DMA intermediated between them and the flyer senders to take all the profit, while leaving the post office to do the deliver ... on one piece.

The fix is to raise their bulk rates -- which they are prohibited from doing.

Re:Capacity or Cost?

[Hardhead_7]

The main problem with the USPS is that Congress has them operating as a semi-business, semi-public service. That is to say, Congress has told them "act like a business, and turn a profit." But they won't let the Post Office do the most basic of business-like things: set prices.

They can't raise stamp prices, they have draconian rules imposed on them about pension funding, etc. Now, I'm not against Congress artificially keeping stamp prices low - we can view that as a public service similar to roads (we don't expect the Highway Department to turn a profit). But we need to pick one or the other - either is a "government business" and needs to run like one or a public service where we expect a loss for public good. Asking for both gets us dysfunction. It's amazing the USPS is as good as it is, all things considered.

Re:Capacity or Cost?

[Hardhead_7]

> Unfunded pensions are a ponzi scheme that should have never been allowed. I think there's a middle ground between fully funded and unfunded. Or maybe companies should be forced to buy "pension insurance." :) Or maybe it's just something we should have the government do (ie, Social Security).

Re:Capacity or Cost?

[Oswald McWeany]

We live in an average neighbourhood in an average city in the US with an average numbered house.

UPS is the only sevice that regulary delivers my packages to the wrong place or tells me that my house doesn't exist.

USPS and FedEx have no problem but UPS seem to be staffed by idiots.

Re:Capacity or Cost?

[Wycliffe]

> Unfunded pensions are a ponzi scheme that should have never been allowed.
I think there's a middle ground between fully funded and unfunded. Or maybe companies should be forced to buy "pension insurance." :)
Or maybe it's just something we should have the government do (ie, Social Security).

Social Security is no better. It's also unfunded. It pays out benefits using current revenue. I see no benefits of an unfunded pension. What are the benefits of an unfunded pensions? It's an unlisted IOU (aka liability) for whoever is promising it. It's a way to promise to pay someone more without actually paying them. A fulled funded pension also has the advantage that a person would have the option of taking the extra cash instead of the pension. The only advantage an unfunded pension has is the hope that future revenue is greater than current revenue. This is a horrible assumption that likely only holds true 50% of the time at best.

Re:Capacity or Cost?

[140Mandak262Jamuna]

Yes, there is a Pension Benefit Guarantee Corporation. Companies must buy the policy for defined benefit plans. It maxes out at some 45K a year. Some airline pilots pensions are in the range of 145K.

The problem is, use the rosy projections on good years to show their pension obligations are "overfunded" and withdraw the cash, distribute it as bonus among the top executives. Then on the next year when the returns are lower, they feign ignorance, "omg, it is underfunded, so you pensioners are dragging the company down. we cant fund it. We will go bankrupt and you lose it all. So accept these lower terms". They have been raiding pension funds, built up over 40 years. From 1950 to 1990. They raided them all through the 90s. And converted all the defined benefit plans to defined contribution plans. Except government, there are very few defined benefit plans exist in usa today.

Re:Capacity or Cost?

[Eyezen]

It's amazing the USPS is as good as it is, all things considered.

Absolutely, everyone like to pick on the USPS but if you were to say to someone who didn't know what the USPS was that one could stick a piece of paper in a envelope and legibly (or not) write an address on it and stick it in a nondescript looking box outside your home with only a little red flag to alert someone of your intentions and have it picked up and delivered anywhere in the U.S. usually within a couple of days and at the most a week to another nondescript box which may (or may not) have said legible address on it for all of $.50 they would call you crazy.

Re:Capacity or Cost?

[Opportunist]

What's your alternative? Savings? Private pension funds? Those depend on the insurance and bank not suddenly going poof and taking all your money with it.

A government backed pension paid by current tax generation has one advantage. It may be much, it may be little, depending on the current economic situation and whether tax revenue can fund it. But it cannot be GONE as long as government exists.

And, well, if you consider government gone poof... ain't that worth losing your pension over?

Re:Capacity or Cost?

[PeeAitchPee]

Every day they deliver billions of pieces of junk mail at a loss.

Citation? I can find no evidence backing this claim. Every article I find about USPS financial losses points back to the Congressional pension funding mandate previously mentioned by others -- nothing that is intrinsically related to junk mail. Seriously, if you have a link, please post it because I'd be interested to see it.

Bear in mind that modern junk mail like Every Door Direct Mail (EDDM) is not individually addressed to the recipients, versus 1st Class Mail which is. There's a huge amount of overhead related to reading those individual addresses, forwarding / routing them, handling exceptions like people that moved / Return To Sender or Wrong Address, etc. None of that overhead is there with EDDM (which literally is bulk mail which gets delivered to every residence on the route -- hence the name), which is a very large percentage of modern junk mail and part of the reason why it's so much cheaper than 1st Class. EDDM junk mail also must be delivered by the sender to the local post offices prior to final delivery on the local routes (though most folks use a 3rd party to do this part for them). But all of these things knock the cost per piece way down versus a 1st Class letter.

Re: Capacity or Cost?

[sexconker]

A ruling several decades ago states that SS is not a contract between you and the government so collecting any is not guaranteed.

Odd, them taking it out of my fucking paycheck is guaranteed.

Re:Capacity or Cost?

[sexconker]

If the volume goes down enough they can do with less trucks and drivers.

Fewer.

You know how many of them can solve that?

[DeplorableCodeMonkey]

Make in-store pickup really, really fast. Many brick and mortar stores make it too slow. So that is one of the main reasons why they are losing out to Amazon. If it takes half a day or more from me hitting "buy" on the site and the local store putting together the order, that's too slow for what it is. Most of the time I go into brick and mortar stores in our area, they don't have that much volume. There's no excuse for them to be slow. As far as I'm concerned, they're slitting their throats while Amazon sits there like \_()_/ while chucking tens of billions in low-hanging fruit into their cart.

Re:You know how many of them can solve that?

[Gilgaron]

We bought something at Sears the other day (shocking, I know) and they had redone their pickup area with a computer to scan the email barcode and a timer would start where the person had 5 minutes to bring the package out (she took 2). I was pretty impressed versus the first (and last) time I tried to do this at Best Buy where the item was not ready for pickup, despite the email stating it was, and they had to run around and ended up finding an open box item of similar type they discounted further in recompense. It would have been faster and as accurate to give my children a sketch of the item in crayon and send them wandering throughout the store. They'll probably go out of business anyway but the way Sears did it was the best I've seen so far.

Re:You know how many of them can solve that?

[hackertourist]

The whole point of e-commerce is to not have to go to the bloody store!

Re: Easy solution.

[Anonymous Coward]

Congratulations on not even reading the summary: "UPS, Fedex and especially the United States Postal Service aren't able to keep up"

Is it really a problem?

[Gussington]

Most ecommerce sites I use have next day delivery, some even do offer same day delivery if you order early in the morning. I can't think of many things I need faster than that. Is this really a problem?

Re: I HATE CENSORS (AKA MODERATORS)

[Anonymous Coward]

If you would comment on the article instead of spewing non-related political flame-bait, perhaps you wouldn't be downmodded. Also, the "moderators" on this site aren't some demi-gods, they are users like you and me. The only difference is that they have a good standing in the community and thus are awarded points to moderate the site.

Posting as an AC and not being on topic will ensure that you never get to moderate.

TL;DR: You are not being censored because of your political views. You are being downmodded because you express them in the wrong forum.

Re:Abolish the USPS

[Anonymous Coward]

Yes, shut down the USPS because you don't like some guy. Sounds legit.

Flawed system. Shippers may not be the biggest is

[jpellino]

As it was explained to me, Arne Nashbar made a great decision by expanding his bicycle mail order warehouse mere feet from a UPS facility. For as long as that was true he revolutionized buying bike parts. As it was explained to me, Amazon now has a live bidding system for shipping as your order is processed. Surepost seems to low bid/ win out a lot. That means UPS gets it as far as your local USPS PO, where it languishes because their schedules don't sync. Amazon waiting until a first-leg truck is full enough to roll doesn't help either.

Heh...

[XSportSeeker]

Think you guys have it bad there in the US? Try postal service in Brazil. It's a state-owned monopoly that exploits people with extremely expensive pricing, and for products that are coming from outside the country (like chinese products bought on eBay and other sites), the review process to charge for importation taxes can take anywhere from a month to half an year - regularly. Yes, I'm not talking about extremes here, this is the average timeframe.
You never know what you are going to get, there is no tracking system for that, there's no online communication system (like really, when there are taxes to be paid you get sent a notice via snail mail, there is no other option), you can end up getting charged over double the cost of the product plus shipping, you have to go get the product yourself from a designated post office that's oftenly not the closest to your home address, and taxes need to be paid in cash - no other forms of payment accepted.

It's pure unbridled exploitation from a monopoly.

Things like same day delivery or guaranteed next day delivery like what Amazon do is pretty much impossible given Brazil's infrastructure. And the taxation structure is probably the reason why Amazon in Brazil never went above selling eBooks, plus bureaucracy and other crap. And services like Blue Apron, Dollar Shave Club, among others are kinda impossible to work well here.

I've seen packages of mine getting sent to the other side of the country or even to other countries due to postal service error.
But of course, there's absolutely zero pressure for the service to ever get better since it works that way.

What is the Hurry???

[ve3oat]

I don't know why it is, but many of the companies that I buy stuff from over the Internet assume automatically that I want it delivered "tomorrow" or within 3 days at the most. If I needed stuff that fast, I would go to the store and buy it there, or I would have bought it all a month ago in preparation for what I am doing today.

So when I buy stuff over the Internet, it usually doesn't matter when it comes and I prefer that they ship it by Canada Post, or USPS, or the Royal Mail, whatever. I am not in a hurry and surface mail is just fine. We get very good mail delivery where I live and if a parcel is too big for my box then I go to the Post Office to pick it up, knowing that it is safe and secure.

What really bugs me is having to deal with the so-called courier companies who invariably come while I am not at home and leave stuff on the porch or leave a notice on my doorknob. They say they will "attempt delivery" again tomorrow but, No, no one comes even though I have made a point of staying at home, alert to the driveway and door. Then I end up having to drive all the way into the city to pick up my parcel at the courier's office anyway. Give me the Post Office any day!

Let those who need 72-hour delivery pay extra for it and leave me alone with much cheaper shipping charges and delivery within two or three weeks. I am fine with that.

USPS - both good and bad

[zerofoo]

We have two locations and we receive amazon deliveries many times per week. At one location the USPS driver brings the mail (including packages) up a flight of stairs to our main office - very nice service. I assume free coffee, air conditioning, and an available guest bathroom also help get our packages in the building.

At our other location (also up a flight of stairs) our USPS driver never comes in the building, and if the package is too large to fit in our giant mailbox, it goes back to the post office for pickup - which results in me calling Amazon and telling them that if I wanted to pickup things I ordered, I would simply buy them from a brick and mortar retailer.

USPS does what they do very cheaply - and their delivery volumes are truly staggering, but their last mile performance does seem inconsistent.

Maybe Amazon should just buy the USPS?

China

[DontBeAMoran]

Something I'd like to know is how Chinese sellers on eBay are able to give "free shipping" on sub-$1 items. I've even won a lot of auctions below 25 cents and I've always received the items. Of course it takes weeks and sometimes nearly two months to arrive, but I get the items.

My question is, who's paying USPS, Canada Post, etc? Is China trying to bankrupt our postal services?

Re:Create your own distribution network, then.

[Geoffrey.landis]

Amazon has been using their own contractors to deliver packages in my area for a while now. From a customer's perspective, my packages arrive exactly within the timeframe as specified by Amazon.

Their technique there is to use their own contractors to deliver to places that are easy to get to, and the USPS to deliver to the ones that are hard to get to.

That business "opportunity to improve" relies on the U.S. Post office to work.

reinventing Social Security [Re:Capacity or Cost?]

[Geoffrey.landis]

However, what this says is maybe benefits should not be part of your job at all so that companies don't have to deal with this stuff and we can deal with it at a societal level where that is cheaper and more effective.

Hmm-- interesting idea. We could have a government-mandated plan that provides some sort of minimum benefits, which everybody pays into as part of their job, and that could be like a "safety net" applying to all employees, so they're not destitute even if their savings get drained and their company goes bankrupt. And then, companies could also offer benefits beyond this minimum, a "retirement plan," if you will, so people who worked for that company would have an income that's more than that safety-net minimum when they retire. A two-layer plan. The minimum plan would just be be security, be part of the overall social structure.

Say, we could even call it that: "social security." Good name!

"Esp the USPS"

[whitroth]

Right. Who first was semi-privatized (and Founding Father Ben Franklin, first Postmaster, is spinning in his grave), and then the GOP doesn't want to fund it well enough that they've been cutting back hours and delivery. Same as Amtrak.

The GOP: Government doesn't work... because we make *SURE* it doesn't.

Doesn't have to be this way

[tgrigsby]

The USPS could build out the necessary infrastructure and at a lower cost than Fedex and UPS, if the GOP would just stop trying to kill them off. And let's be honest, it's Fedex and UPS lobbyists providing the incentive to pass crap legislation like this. Their entire drive is to hamstring the USPS, because they can't compete long term against a non-profit government agency like that unless they can buy legislation forces the USPS prices up and limits the services that can be provided.

Re: Easy solution.

[unrtst]

IMO, GP is on the right track, but simply didn't explain it clearly.

We're mostly talking about deliveries in the USA (based on the summary, USPS, etc).

When you order from Amazon, you get a choice of when to have something delivered, but you do not get to choice the delivery company (USPS, FedEx, UPS, DHL, etc). How the fuck are they supposed to compete and improve if you don't give the consumer the choice to pay more for better service?!?!?!

FWIW, it wasn't always that way. They used to offer a choice. I used to have very good USPS service, and would always choose them. I currently have very shitty USPS service (frequently leave handwritten notes that they missed me while I was home the whole day, and I have a loud dog - they had to sneak that note onto my door!!!), and I would LOVE LOVE LOVE to specify UPS! When I do find a site that lets me pick UPS, they often don't differentiate between what I would consider a typical UPS delivery, and UPS's "Smart Post", which uses USPS for the last leg of the delivery (which goes back to being awful for me).

JUST LET CONSUMERS DECIDE AND CHARGE APPROPRIATELY!

Regarding Amazon Prime - they could still offer that as an option, as they do today, and, on that option alone, they (amazon) could pick the delivery provider, since they're footing the bill (sort of). That said, if they do that, I'll probably drop prime. I'd rather pay for shipping and actually get my product delivered, than have delivery fail faster and have to walk a mile to the post office and stand in line for an hour, only to have them complain and try not to serve me because I don't have the "sorry we missed you" pink note that they never left for me.

Re:USPS? Or UPS?

[sexconker]

A good driver doesn't care. The truck is always full and they always time out on their shift before delivering all their packages. They don't give a fuck if the undelivered package is for your house or not.

A shitty driver "cares" about getting everything "done". What this really means is they take a long lunch, sit in their truck jerking off, or whatever else. Then they scramble to "deliver" stuff. The other AC describes typical behavior. Shitty drivers who are lazy / trying to make up time (that they likely frittered away) will mass-scan shit in the truck to generate door tags, then go around putting door tags instead of delivering the packages. Door tags are light, and you can carry many at once. They assume people won't be home in the middle of the day to accept a delivery, so anything that isn't flagged as "drop and forget" gets the phantom delivery attempt treatment. If it's flagged as "drop and forget", it gets the "chuck it toward the door" treatment. If it hits the door you get bonus points because that counts as the knock!

I've witnessed a FedEx driver literally throw things at my door. I was sick of having food deliveries destroyed so I waited and watched, and I caught the fucker red handed. I walked out to him and his truck and fucking let him have it, out in the middle of the street for all to see. He denied it at first, until I fucking told him I had video. I chased that shit up FedEx's tree pretty far, and the problem stopped. The trick with FedEx is that none of the drivers are direct FedEx employees (I'm not sure if this is area-specific or only true for FedEx Express or FedEx Ground or ...). So you have to bitch and moan and threaten pretty hard for them to give half a shit about contacting the actual guy who manages your area and then get them to contact the contractor that hires the actual drivers, and then get them to actually fucking do something. In my experience, video evidence that includes the FedEx logo helps a lot.

Safety net

[Geoffrey.landis]

Tell you what, you pay my SS taxes and you can collect my SS payments. An offer that has NEVER been taken by ANY liberal. Funny how when it becomes optional, the "best thing in the world" suddenly isn't worth it.

So, I take it you didn't actually read what I wrote, right? It isn't intended to be the "best thing in the world."

Social security is intended to be a safety net. A safety net is most needed for the people who are so stupid that they think they don't need one.