Weekends Off: How Will the Postal Service Decision Change Business?

Posted by on March 10, 2010 in Business News, Financial Services, Uncategorized [ 0 Comments ]

The United States Postal Service announced recently that it was considering ending Saturday delivery services to save funds and counter the loss in revenue over the last few years. The decline is in part due to the internet and the increase in general communication devices such as cell phones, as well as the traditionally low prices that the USPS charges for delivery.

While the benefits of simply limiting their service (albeit on one of the least busy days of the week) can be justified, Postmaster General John Potter has stated that he has more plans for cutbacks. Among his ideas are plans to:

  • Close low-volume post offices
  • Open smaller outlets in busier centers
  • Offer Non-postal services at the post office (such as UPS and FedEx)
  • Sell Postal products in other stores
  • Increase postage prices

Rick Newman, of US News,  proposed to cut the USPS delivery times down to 3-days a week, something that would, “cut costs significantly, while total revenue would remain roughly the same. It would also align the Postal Service with other agencies that will inevitably be forced to slash spending as the government’s debt crisis mounts, and it would force the organization to develop new offerings for smart phones, iPads…”

All of these ideas are meant to generate revenue, since the national business that is estimated to lose $7-billion in 2010 is now sorely in need of a debt management program. The relatively low cost of direct mail and the loss in business from email and other outlets have forced the USPS to cut jobs in many locations already, and the call to rid their workers of Saturday services seems to be a much needed change.

Standing in the way of the independent institution, however, is Congress and the Postal Regulatory Commission (PRC), who are both insisting that any changes – either to the federally mandated 6-day workweek or to prices – would offend customers and ruin the monopoly that the Post Office has on mail delivery.

Mail services are the only independent business required in the United States Constitution, and their dominance in the market has been due to their low prices (as well as Congressional aid), which help to eliminate the competition but also creates a losing market in a recession.

Small and large businesses alike that employ postage meters pay only the direct cost of postage, and rental fees go directly to postal vendors, which has also paid a role in diminishing returns for the government institution.

Plenty of people have offered advice on the current predicament, with suggestions that range from getting rid of management positions to lowering postal wages. While it seems like no drastic changes will be allowed to take place anytime soon, the future of direct mail may have a lot riding on keep their weekends free.

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