December 5, 2011

Near-Bankrupt US Postal Service Plans Unprecedented Cuts To First Class Mail

Postmaster General Patrick Donahoe:

“We have a business model that is failing. You can’t continue to run red ink and not make changes,” Donahoe said. “We know our business, and we listen to our customers. Customers are looking for affordable and consistent mail service, and they do not want us to take tax money.”

(Via Silicon Alley Insider.)

The US Postal Service is suffering the same disease as other government-sponsored programs: elevated customer expectations with insufficient funding. They can't afford to continue this way any more than the government can afford expensive social programs without significant adjustments.

The Postal Service's customers must realize "affordable" is, in this case, the same as "bankrupting." The Service wouldn't be running in the red if they charged more than what it cost them to provide service.

UPS charges over $9 for three-day letter service, though their definition of "letter" is somewhat larger and heavier than the Postal Service's. Fedex charges slightly more than that. There's clearly a demand for a lower-priced delivery service in the US, so the Postal Service has wiggle room.

The US Postal Service should raise their postage rate to $1 for one-to-three day delivery of letter-sized packages. They should reduce the discount given bulk mailers, and provide no delivery time guarantees. Their box-sized rates are already competitive with UPS and Fedex.