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Distributor's Link Magazine Winter Issue 2012 / VOL 35 / NO.1


14 THE DISTRIBUTOR’S LINK Jim Truesdell James Truesdell is president of Brauer Supply Company, a distributor of specialty fasteners, insulation, air filtration, and air conditioning with headquarters in St. Louis. Mr. Truesdell is adjunct professor at Saint Louis University and Webster University. An attorney and frequently published writer, he is the author of “Total Quality Management: Reports From the Front Lines”. POSTAL SERVICES CUTS WILL PUSH BUSINESS IN A NEW DIRECTION Inevitably, it seems, our United States Post Offices are moving toward decreased levels of service and higher costs for businesses and consumers. Businesses who have relied on the federal mail service for well over a century are going to find it increasingly attractive to find alternative sources for sending and receiving letters and packages. Mass mail advertising may seek new outlets. The Post Office may well have to narrow and define its mission. Credit managers may become increasingly frustrated as that expected check stays “in the mail” that much longer. Fastener distributors and companies whose products are small in size have traditionally relied on the mails to deliver their goods. Postal rates have been lower than other delivery services and no one can match the network of post offices and deliveries that go almost anywhere— and with a reputation for surmounting delivery obstacles. But the world is changing. Emerging technology and human behavior patterns are resulting in lower rates of first class mail usage. Indeed, annual mail volume has dropped by more than 20 per cent in the past five years. This has coincided with the widespread adoption of e mail contacts and electronic bill-paying. As one segment after another of the population is becoming comfortable with computer communication and seeks the rapid-fire sending and receiving of information that e mail brings, there is less and less of the bread-and-butter first class mail delivery that traditionally has funded the Postal Service. Combine this with regulatory difficulty in raising the postage rates to reflect true cost and you have a situation where the Service has reported a .1 billion dollar loss for the year just ended on September 30, 2011. Postmaster General Patrick Donahoe warned in late November that, unless Congress passes legislation to allow the Postal Service to raise rates, cut back services such as Saturday delivery, and close thousands of lowvolume branches, projected future losses could jeopardize the very existence of the Post Office. In particular he called for the authority immediately to suspend Saturday deliveries when many of the non-retail businesses are closed anyway. He also pointed to the burden of funding retiree pensions as a drain on revenues and to the fact that 25,000 of the nation’s 32,000 post offices operate at a loss. Of course, cutting back on pension costs and closing down small rural post offices (which may double as the last surviving community social link in a declining town) are not easy things politically and touch a nerve of the constituencies affected. Thus it is hard to get the green light from Congress. But it is just as unlikely that Congress is going to come up with substantial funds, in the midst of the budget crisis, to bail out a Postal Service drowning in red ink. please turn to page 128


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