Tuesday, November 3, 2009

The Post Office


"Imprivatisable," opined Christian Estrosi, innovating with bravitude where the authors of the Dictionnaire de l'Académie might fear to tread. Already the voters of the Left, impavide, had responded to the clarion call of France's ubiquitous postman-in-chief: No pasaran! But now Henri Guaino, ce fêlé (dixit Sarko), says that, well, maybe nothing is forever, and anyway the EU insists that the postal service be opened up to private competition.

But here's the thing: With all this passion, you'd think that privatizing La Poste was as momentous as, say, nationalizing the banks. Postal workers have every reason to be concerned, but the rest of us? Do we regret undermining the postal service when we send an e-mail, read the news online, buy from Amazon, or FedEx a document to Levallois-Perret?

One doesn't have to be an idolator of the free market to acknowledge that some monopolies, while traditionally sanctioned, may not be socially optimal. I like the story of how UPS, after delivering countless Dell computers, came up with the idea of building assembly stations for the machines attached to its delivery hubs. The carrier became a subcontractor, order-to-delivery time was cut in half, transportation costs and carbon footprint were reduced, and everybody lived happily ever after (until further price competition upset the applecart). Creative destruction, people! Sometimes you've got to live with it.

10 comments:

kirkmc said...

The French post office totally failed to see the future. I don't know if this was because they were staid status-quo loving civil servants, because the unions are so strong, or some combination of the two.

Some time ago, when international packages started increasing drastically, there were a number of options for different post offices to get into the action. The French did nothing. The Germans, however, went big-time into international deliveries, buying out DHL and Airborne Express to become the world's largest delivery company (or, as Wikipedia puts it, "logistics group": http://en.wikipedia.org/wiki/Deutsche_Post).

Not a week passes that I don't get several pieces of mail - magazines or packages - that have gone through Deutshe Post. From New Yorker to any number of packages, DP is everywhere.

The French, meanwhile, are nowhere.

Passerby said...

Do you have a link to that UPS story mentionned in the article?

Unknown said...

Passerby,
The article I read was quite some time ago in the NY Times. I can't find it at the moment, but here's a note on a pilot project involving monitors rather than actual assembly:

This year, Dell stopped accepting deliveries of video displays for its PCs. Instead, when a machine is ready to be shipped from any of its factories, Dell sends an E-mail message to a shipper, such as United Parcel Service. The shipper pulls a computer monitor from supplier stocks and schedules it to arrive with the PC. By no longer shipping monitors first to Dell and then on to buyers, Dell saves some $30 per display in freight costs.
http://www.businessweek.com/1997/14/b3521131.htm

Unknown said...

More here:
http://ops.fhwa.dot.gov/freight/freight_analysis/econ_methods/non_tech_review/non_tech_rev_3.htm

Unknown said...

Hmm, maybe my memory was faulty: this story talks about repair, not manufacturing:

Organizations worldwide are benefiting from the specialized services offered by various companies. In the shipping and transport arena, companies Like UPS (United Parcel Service) and DHL stand out as masters in their industry. UPS and DHL have established offices and transportation vehicles all across the world. They provide business services through in-sourcing which enables them to be part of the internal business process of companies (Marcum 2007)[5]. To a company like Toshiba for example, after-sales support service would require shipping the damaged computer to and from the consumer's side. For that, UPS would say, "Look, instead of us picking up the machine from your customers, bringing it to our hub, then flying it from our hub to your repair facility and then flying it back to our hub and then from our hub to your customer's house, let's cut out all the middle steps. We, UPS, will pick it up, repair it, and send it right to your customer" (Friedman 2006)[6].
http://ezinearticles.com/?id=1371240

Unknown said...

http://books.google.com/books?id=MGwGxmKU7IUC&lpg=PA28&ots=8R4lIDU9z_&dq=dell%20computer%20united%20parcel%20assembly&pg=PA28#v=onepage&q=&f=false

Passerby said...

Interesting. Thanks for the links, Art.

kirkmc said...

FYI, UPS handles repairs for Dell in France too. I have a Dell monitor, which went bad, and they sent a guy on a 2.5 hour drive each way to hand-deliver a replacement and make the exchange. They could have put it on a UPS truck and had it delivered one day later, but, hey, that's their choice.

Unknown said...

About 15 years ago (or maybe 20, I don't remember), I met officials from the Poste that were trying to develop printing in the post-office. Rather than sending invoices, banks, EDF… were to send digital files that would be printed by La Poste in an office next to the recipient. It's not very different from the Dell experiment you're talking about. Nothing happened… from several reasons. One was that they had use Bull's technology when Xerox had a muche better one.

Unknown said...

Yes, I'm all for state intervention when it serves the general interest, but when it promotes particular interests, and the wrong ones at that, trouble ensues. Of course the problem is that it's often easy to persuade oneself that the general interest is served (Bull, national champion, would not only create jobs in France but generate positive externalities, etc. etc.) Often the problem with state action is simply that the state has too many interests that it wants to serve and can't calculate the tradeoffs. The market can be a great simplifier, but also, at times, un terrible simplificateur.