2013 November 11 Monday
USPS Sunday Amazon Deliveries
Losing billions of dollars per year with future losses as far as the eye can see. Congress blocking necessary severe restructuring. The United States Postal Service starts to show signs it knows it is in desperate straits.
USPS could try to survive by delivering goods same day from local businesses. Delivering information physically is just so pre-internet. They've got to make bigger strides in physical goods delivery or die. However, being a creature of Congress and with a strong union works against their ability to cut costs.
USPS wants to end Saturday mail delivery. They ought to go even further and end, say, Wednesday deliveries and also concentrate home mail boxes in old neighborhoods into central boxes for each neighborhood. Plus, shift most post offices into the backs of department stores like pharmacies.
The USPS core business is headed the same way as chemical film cameras and fax machines.
But the practice of sending checks in the mail is being abandoned as Americans are becoming increasingly comfortable with paying their bills online. As late as 2002, 75 percent of all bills were paid by mail and only 17 percent were paid electronically. In 2012, by contrast, the Postal Service reports that 56 percent of bills were paid electronically and only 40 percent by mail. (The rest were paid in person).
All those billions per year in losses will eventually come out of the pockets of tax payers.
I do not expect the USPS to turn around and do what it needs to thrive. UPS and Fed Ex will make inroads against the post office and I would not be surprised to see Amazon and Wal-Mart to start running their own local delivery services in some areas as their death match gets more intense.
By Randall Parker at 2013 November 11 09:43 PM
As a man with some interest in Russian women, one thing I do appreciate is that USPS makes it fairly simple and inexpensive to write letters to Russia. I've looked into shipping via FedEx and UPS and was advised by both not to try and ship anything to Russia. The rules were unclear about what kinds of packages would really get through customs, probably due to the overall corruption in Russian customs. Admittedly, this is a corner of a corner case.
"I would not be surprised to see Amazon and Wal-Mart to start running their own local delivery services in some areas as their death match gets more intense."
They'll probably experiment with it, but why would Amazon, etc., assume the enormous fixed costs of their own delivery networks when they have no less than three major corporations vying for their business, and plenty of smaller, local businesses willing to fill the void, as well?
Managing a delivery network is not one of Amazon's core competencies, doesn't leverage their competitive advantages in the most efficient manner, and would be a huge capital expense. It's cost UPS, FedEx, and the USPS tens/hundreds of billions of dollars to build out their delivery networks. If Amazon builds its own network it has to use that network and loses any leverage it has in keeping delivery costs down. Outsourcing has been the mantra for over a decade. There's a reason for that.
This Will. Not. Happen.
*"The rules were unclear about what kinds of packages would really get through customs, probably due to the overall corruption in Russian customs."*
I've sent a few packages to Russia #some in open violation of alleged restrictions# and all got through without incident. Africa is a whole 'nuther story. My first shipment to some do-gooder friends in Africa was also my last. The customs charges exceeded the shipping charges, and greatly exceeded the value of the shipment. I had warned them of this, but they insisted. It was frightening the simple, basic shit in that shipment that they couldn't acquire in Africa. And they had to pay customs for a box of goods whose sole purpose was charitable.
That continent can rot, for all I care.
I don't think Amazon will open a delivery network until drones(land/air) are reliable enough to be used for shipments - they would need the shipping industry to change enough so that they can get a toehold in the next generation of shipping instead of trying to copy their competitors infrastructure. A few years ago people were thinking Amazon would start opening brick and mortar stores which was exactly contrary to where Amazon's skill are. Webvan still uses UPS, AmazonFresh has it's own delivery service but it limited to a select few zipcodes in LA and Seattle.
Another barrier to Amazon delivering their own products: it would make them subject to sales taxes.
Same-day delivery will probably always be a niche market. The vast majority of online purchases aren't time-critical. For the most part, those willing to pay extra for the service are upper middle class or above. The struggling middle class isn't going to pay a premium for such a service.
The money we've wasted in Middle East wars could probably pay for USPS deficits for the next 100 years. At least we get SOMETHING out of the Post Office.
The US Postal Service has a great built-in advantage: a truly national distribution system that reaches every household in the country. This includes business offices and contacts in every town. If the Congress would get out of the way, this thing could be turned around.
If we hadn't wasted all that money on the Middle East wars (among other things) then, yes, we could have it to waste on the Post Office. But why waste money on any of these things?
I remembered this post after reading one of the lead articles on Google News, about how Amazon is testing deliveries via drones. It mentions how Amazon and even Fedex are considering using drones for deliveries. There is even a demonstration video.
There are still problems, seen and unforeseen:
1) The FAA has strict restrictions on commercial use of drones. They are limited to government use and to hobbyists. Changing such laws won't be easy.
2) Relative cost is definitely the big issue. How much does it cost to fund a drone, which will probably be 1-2 deliveries per trip, tops, compared to a mail/Fedex/UPS man? How many parcel deliveries do those guys do in a day? 100-200, most likely.
3) High density urban areas with lots of apartments and condos would present their own special problems. Theft would be a problem. Drones would draw attention that would attract thieves.
4) Will drones require individual pilots, or will they simply follow GPS-defined routes, possibly only relying on human pilots for takeoff and landing?
5) The parcel in the demonstration video is not large. It's shoebox size, and probably a few pounds, tops. How large expensive a drone do you need to carry something with real heft?
My guess is that same-day delivery service will remain a niche market for decades, or even longer, with exceptions for the rich or for people who need to replace something RIGHT NOW - like a broken cell phone or whatever. Most people won't pay extra money to replace their still-operable iPhone 20 with the new-and-oh-so-slightly-improved iPhone 21. The urgency just isn't there. What you'll see more of is boring but effective, scalable, and cost-effective: refined on-the-ground logistics, so that an order placed today can be delivered by tomorrow, perhaps within a given time window when you know where you'll be. Not being home for three days in a row when UPS attempts your must-have-a-signature delivery is a helluva lot more frustrating than the initial two day wait. That's why I have most of my online orders sent to my office.
I suspect the biggest domestic use of drones will be in very remote areas, for deliveries that are way out of the way, and in search-and-rescue operations - dropping emergency supplies or getting dozens of eyes in the air to help stranded or lost hikers.