Snail mail in peril
It comes as no great surprise that, in a world of e-mail, text messaging, Facebook, Skype and other forms of instant communication, the old-fashion snail-mail system is losing ground.
So the news that the U.S. Postal Service lost $1.1 billion in the second quarter of this year, and that the volume of mail it handled during the quarter fell by 17 percent over the same period a year ago is hardly astonishing.
What is perplexing is that the Postal Service still believes it can alleviate its financial problems by raising rates.
Imagine a private business owner who said: “My competition is offering a service that is better than mine in many ways, is certainly faster, and customers seem to prefer it. I’m losing business, so I’ll raise my rates. That should fix everything.”
That business wouldn’t survive long.
The problems of the Postal Service aren’t entirely of its own making. Congress has hamstrung the agency with requirements for prepayments of future retiree health benefits that other federal agencies don’t have. A $5.5 billion payment is due Sept. 30 and Postal Service officials said they don’t have sufficient funds to cover it.
Congress has also made it difficult for the agency to implement cost-saving measures. A Senate committee recently voted to block a Postal Service plan to eliminate Saturday delivery.
But the notion that the agency can continue raising rates and keep customers flies in the face of credible economics. There will continue to be a need for conventional mail delivery for the foreseeable future, but keeping it viable will depend on keeping prices competitive.