Mail Supremacy No More II

The US Postal Service is obviously in deep, deep trouble, even with Congressional subsidies and the even with the seemingly imminent Congressional reprieve eliminating the requirement of the USPS’ advancing $5.5 billion in future retiree health care benefits. Come fall of next year, the pressure to cut the losses may result in a Congressional mandate to turn off the lights and close the entire organization… leaving private delivery services and electronic communications entirely to fill the void. Imagine a letter sent from another country without the Post Office. “In the event of a shutdown, private companies such as FedEx and UPS could handle a small portion of the material the post office moves, but they do not go everywhere. No business has shown interest in delivering letters everywhere in the country for a set rate of 44 cents.” Los Angeles Times, November 16^th. Think of all those legal notice clauses in contracts that could no longer be enforced. Think of the new rates…

In a world of emails and social networking, mail continues to provide 3^rd class “spam” to fill landfills, but also to generate promotions, coupons and awareness to millions of businesses and organizations across the country. This is “spam” you have to touch, if only to carry it to the trash, but at least you cannot filter and delete it from your mailbox. Yet the losses continue to mount as mail volume continues to decline. $5 billion over the last year, even as 130,000 staff cuts were implemented. “The post office had income of $65.7 billion for the year, down $1.4 billion from the previous fiscal year. Expenses totaled $70.6 billion…Mail volume totaled 168 billion pieces, compared with 171 billion in 2010, a decline of 1.7%. At the same time volume was declining, the post office was required to begin service to thousands of new addresses to accommodate population growth and new businesses.” LA Times.

A recent report paints an even bleaker picture... with a tiny, futuristic, ray of hope: “There were 59 million fewer visits to post offices in 2010 than in 2009, and visits are down 21 percent over the last decade, according to a new Government Accountability Office report. (Ironically — despite searching high and low for a number — the report doesn’t actually say how many visits were recorded in 2010.)... ‘Although the public increasingly uses postal retail alternatives, more widespread adoption will be needed if USPS is to close thousands of post offices as planned in the next few years,’ GAO said. ‘USPS has projected that by 2020 alternatives to post offices will account for 60 percent of its retail revenue.’

“And how are those alternative options doing? Take a look:

— According to the Postal Service, visits to USPS.com have jumped to 413 million visits annually in 2010 — up by 100 million since 2006. The site generated $640 million in revenue in 2010.

— There are 2,500 self-service kiosks nationwide that generated $580 million in fiscal 2010.

— There are more than 56,000 sites nationwide selling stamps, but revenue dropped in 2010 to about $1.1 billion annually, down slightly from 2009.” Washington Post, November 18^th.

And what is the GAO’s recommendation for executive action? “To better ensure that USPS's efforts to expand access through retail alternatives support its strategic goals to improve its service and financial performance, the Postmaster General should develop and implement a plan with a timeline to guide efforts to modernize USPS's retail network that addresses both traditional post offices and retail alternatives. This plan should also include: (1) criteria for ensuring the retail network continues to provide adequate access for customers as it is restructured; (2) procedures for obtaining reliable retail revenue and cost data to measure progress and inform future decision making; and (3) a method to assess whether USPS's communications strategy is effectively reaching customers, particularly those customers in areas where post offices may close.”

Congress is slowly working to find a viable path, but is it just too little too late? “Proposals passed by House and Senate committees in recent weeks would permit the Postal Service to end Saturday mail deliveries, close thousands of post offices and processing facilities and potentially lay off hundreds of thousands of workers... But the bills ‘would not provide the Postal Service with the speed and flexibility it needs,’ [Postmaster General] Patrick R. Donahoe said [November 21^st]. ‘Both bills have elements that delay tough decisions and impose greater constraints on our business model. Taken as they are, they do not come close to enabling the cost reductions... Congress needs to step back and look at the Postal Service as a business and give us the business model that allows us to act quickly to lower our costs.” Washington Post, November 21^st.

So how would you be impacted if the U.S. Postal Service were no more? Would you miss it or even notice? Would you turn your mailbox into a planter? Or do you think in this modern era, there is still a place for government mail delivery?

I’m Peter Dekom, and change can seriously accelerate in impaired financial times.