How the Postal Service Plans to Stay Afloat Despite $3.8 Billion Loss

The U.S. Postal Service has big financial problems. Just how big they are came into clearer focus Tuesday morning. Postmaster General John E. Potter said that as people turn to e-mail, letter carriers will carry less and less mail. Last year alone, the Postal Service experienced a 12.7 percent decline in volume. At the same time, it lost $3.8 billion.

Lots of cuts could follow.

The most dramatic change might be the end of Saturday delivery, which would require congressional approval. You might also see higher stamp prices and longer delivery times, all of which could cost the Postal Service even more business.

There are other ideas.

CNN Money pointed out that the Postal Service has more outlets than McDonalds or Wal-mart. Could the post office get into some sort of retail?

CNN Money reported:

"Post offices in some countries, including Italy and Japan, have boosted their sales by offering ancillary services, like banking. But unless Congress steps in, USPS cannot expand beyond the postal-mail realm."

The Postal Service might still shut down some small and/or rural post offices, but that is politically unpopular. There is an idea that the Postal Service could "go private," but given the business model, that is unlikely. Moreover, Congress would have to go along, which is, again, not likely.

The Washington Post explained other options:

"Three studies -- by Accenture, the Boston Consulting Group and McKinsey and Co. -- reviewed the Postal Service's books and presented 50 options for cuts and new services. The agency's business model is so poor, consultants concluded, that privatizing it is untenable.

"As for Postal Service plans to sell banking, insurance and cellphone services through post offices, the consultants point to the agency's lack of start-up funds and inability to afford potential short-term losses.

"But the Postal Service will ask Congress to cut mail delivery to five days per week, a move backed by a June Gallup survey that found 52 percent of Americans support eliminating Saturday deliveries in order to reduce costs.

"Other possible changes carry much greater risk: Officials can seek permission from the Postal Regulatory Commission to increase prices beyond the rate of inflation, but doing so could scare away more customers."

Five Postal "Myths"

Just before he faced Congress, the postmaster general sent a commentary to The Washington Post outlining what he said were five myths about the Postal Service:

1.) "The Postal Service wastes taxpayers dollars."
2.) "The Postal Service is inefficient."
3.) "Mail is not reliable."
4.) "The USPS is not environmentally friendly."
5.) "The UPS can't compete with the private sector."

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    Al Tompkins

    Al Tompkins is The Poynter Institute’s senior faculty for broadcasting and online. He has taught thousands of journalists, journalism students and educators in newsrooms around the world.


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