United States Postal Service Postmaster General Patrick Donahoe recently announced a plan to cut Saturday mail delivery as a means to save the financially burdened agency $2 billion a year. For some, the proposed schedule change means little, but for others there could be substantial business ramifications. As expected, the decision met with significant criticism and media attention.
The USPS® announced it lost $16 billion in 2012. It attributes much of its debt to a 2006 federal law that requires the USPS to make payments to future retirees’ retirement funds. The law requires the postal service to pay 75 years of future retirement funds within 10 years, and according to some reports, this stringent timeline is to blame for 85 percent of the USPS’s debt.
Another factor in this financial crisis is the decreasing number of people who use postal services. Text messaging, email and social networking has made a significant dent in the revenue of the USPS; in a Bloomberg Business Week report about the postal service’s financial crisis, the rise of email is cited as a contributing factor to the “staggering rate” at which mail volume is falling. Mashable puts the worldwide tally of emails sent per day at 144.8 billion, and when you add the increased rate at which people use their smartphones and tablets to communicate digitally, people simply don’t use the postal service like they did in years gone by (in an interesting paradox, there have been recent social media attempts to save snail mail).
Some analysts believe the increase in online spending will be the saving grace of the post office. The USPS reported that package deliveies increased by almost 9 percent in 2012, and they expect the trend to continue. As businesses increase their use of external services such as QAS address verification software to validate their delivery addresses against the latest postal service ZIP code + 4 files, perhaps package delivery rates will increase, as well.
The USPS and critics of the new schedule have proposed some other methods to rectify the financial situation. One solution would be to increase stamp prices, with discussion of a possible 72-cent stamp. Almost two-thirds of people surveyed in a recent Gallup poll favor a cut in delivery days compared to increasing stamp prices.
Another solution would be to ask Congress to change the 2006 law that requires the USPS to pay the retirement fund on the current schedule. Advocates of this solution feel the government created the problem and so, the government should fix the problem. Since Congress has the final say, changing the delivery schedule needs Congressional support. Twenty-four senators are rallying against the proposed change. If this is to be a political battle then some feel that the 2006 law should be the battlefield.
The post office is even launching a line of clothing to help shore up the revenue deficit. In 2014, the USPS will roll out a line of clothing and accessories called “Rain Heat & Snow.” The clothing line boasts all-weather, high-tech gear with such things as MP3 syncing capability. These are just a few of the solutions being offered.
What Would Change
If Congress approves the proposed service changes, here’s what will change:
The proposed Saturday changes do not stop all services from the post office. Office hours, under the new provisions, will not change. Likewise, prescription medication that is delivered by post will still arrive on Saturday. Package delivery would still happen on Saturdays, so there would be no change to online purchase deliveries. Though the government is moving most people to electronic deposits, social security and government disability checks would still arrive on Saturdays.
What would not come on Saturday are magazine subscriptions, normal letter mail and DVD rentals. Normal letter mail would include bills. Outside the letter carriers, the organizations that are claiming to be affected by these changes are Netflix, greeting card companies and credit associations. The impact of Netflix is somewhat obvious. Their typical viewership will receive a movie on Saturday, watch it throughout the weekend, and then return it on Monday.
Unlike Netflix, which will see a direct financial impact, greeting card companies and consumer credit advocates are voicing concern. Greeting card companies are worried that removing one day of delivery from the week will further drive customers to use email or social networking to send holiday or celebratory messages. Credit and billing experts worry that the decrease of one day for consumers to pay a bill may lead to increases in late fees as people adjust to the new schedule.
Whatever the outcome, we can be assured a political fight as these ideas go before the Congress for approval.
This will also affect marketers that rely on direct mail campaigns. It will require additional planning to ensure that mail arrives on time if the mailer is time sensitive.