The announcement by the US Postal Service that it is starting a new all-weather line of clothing called “Rain Heat & Snow” has raised more than a few eyebrows. After all, the clothing business is extremely competitive, and there’s little evidence that shoppers are clamoring for postal uniforms.
But there is a serious subtext to such developments. The Postal Service is on the ropes. Its signature and most profitable service – the delivery of first-class letter mail – is down by over one-third. It lost $16 billion in 2012, and has maxed out its credit line of $15 billion with the US Treasury. It’s losing over $25 million each day, and has vast overhead in the form of the delivery network required to deliver mail six days a week.
The only alternative to having the Postal Service slowly disappear is to give it the commercial freedom to innovate, to explore new markets, and new product offerings. This is all in the hope of using its existing assets more effectively to raise additional revenue.
After decades as a government-owned firm with two legally enforced monopolies, the USPS will have to climb a steep learning curve to survive in a new, competitive marketplace. Unless taxpayers want to write a check for a major postal bailout, then they should applaud the USPS trying out new business ideas. Let the climb begin.