Posted 8/12/09 (Wed)
By Neal A. Shipman
By now most Americans are getting used to hearing about another business going belly up. Some businesses are going broke as a result of tough recent economic times. Some are going broke because of their inability to adapt to the changing market they are working in. Some businesses are going broke as a result of both.
Such is the case of the United States Postal Service which is on its way to losing a staggering $7 billion in 2009, on around $68 billion in revenue.
What is the problem with our postal system? The answer is obvious. Technology has virtually made mailing a letter at the post office a thing of the past. Think only of how computers, the internet, e-mail and cell phones have changed the way we all stay connected with one another. Most individuals today send e-mails, text messages or just chat on cell phones instead of sitting down and writing a letter and then mailing it to a friend or family member. We live in an “instant world” of communication and the thought of writing a letter, mailing it through the postal system and then waiting for a mailed response just doesn’t fly today.
And businesses have adapted to today’s technology as well. Most business communication is done electronically instead of through the mail. Major businesses have their entire catalogs online where shoppers can browse on their computers instead of through the gigantic catalogs that once came in the mail. And when they are done shopping, they pay for their purchases electronically and then wait for their merchandise to be delivered to them through a carrier, most likely not the postal system.
The Postal Service’s demand for mail service peaked in 2006, with 210 billion pieces delivered. Since then, the amount of mail being sent is dropping like a stone — it will be down to 175 billion pieces in 2009.
The inability of the Postal Service to react quickly and effectively to the change in technology has severely hurt it.
But so has the way that the Postal Service, a government agency, been run.
It is virtually impossible to reduce the number of postal system employees because union contracts forbid layoffs. And again because of union contracts, no one can touch their benefits package, which incidentally is better than those offered to any other federal employee.
So if you can’t cut employees or reduce employee benefit costs, what options are there for getting the Postal Service back into the black.
Obviously, the Postal Service can continue to raise the cost of the stamp and the cost of using the mail system. Or it can close post offices, which is being discussed. Or it can cut the number of days that mail service is provided to say, five days a week, which is also being discussed.
But will a combination of income enhancements and cost savings measures stem the flow of losses for the Postal Service or will the changes only push more and more Postal Service customers to private carriers or to the internet?
The United States Postal Service has played a key role in keeping Americans in contact with one another in the past. If it is going to continue to provide that link it is going to have to adapt, and it is going to have to adapt quickly.
Most Americans probably can’t imagine a world that doesn’t include going to the post office to pick up their mail or to drop off a package. Or in those towns with delivery service, having a mailman stopping by their homes.
But unless the Postal Service can bring about fundamental changes and manage itself like a regular business, it could be riding into the sunset just as did its predecessor - the Pony Express.