Article published in The Norfolk (VA) Virginian-Pilot
IF YOUR wallet is feeling lighter these days, don’t look to the Postal Service for sympathy.
Despite the economic meltdown, stamp prices are rising to 44 cents on May 11. The Postal Service is also seeking permission from Congress to eliminate a day of mail delivery. Meanwhile, the service is offering new discounts and services to companies to try to break into the business-consulting arena.
With actions like these, it’s becoming apparent that the Postal Service cares little about ordinary stamp-buying customers.
Individual consumers can’t take their business elsewhere, of course. The Postal Service has a monopoly on letter mail. As the service rolls out a bevy of new services aimed at expanding its share of the business market, it must not give short shrift to consumers.
In the past two years, the Postal Service has lost nearly $8 billion. The volume of firstclass mail — letters, greeting cards, financial statements, and the like — has been declining for much of the past decade. Thanks to the growing popularity of online banking and e-mail, it’s unlikely volume will ever come back.
The Postal Service has tried to make up for the decline in first-class mail by ramping up standard mail — the ads, solicitations and junk mail that now make up more than half of the mail stream. To drive up volume, the service has also pursued work-sharing agreements, whereby big mailers receive discounts in exchange for presorting their mail.
Also, postal execs have tried to trim costs by reducing the number of pickup options. Over the past decade, it’s estimated that more than 60,000 of the iconic blue mailboxes have been taken off the streets. For those that remain, pickup times are dwindling.
These efforts to balance the budget aren’t working. On several recent work-sharing agreements, the Postal Service actually lost money. And the economic crisis has hamstrung efforts to make money through increased volume.
Simply put, cajoling businesses to send more mail won’t rescue the Postal Service’s finances.
So postal executives have launched new services for businesses, including supplychain management, in hopes of slowing the agency’s fiscal slide. In recent months, they’ve also hired several new high-level staffers to head up divisions that focus on package-tracking and information technology. USPS is attempting to exploit DHL’s exit from America’s domestic express delivery market to increase its own market share.
Some observers have applauded this effort. But the Postal Service’s entry into these competitive markets deserves close scrutiny.
Early indications suggest the Postal Service may abuse the pricing freedom it acquired thanks to postal reforms enacted in 2006. According to parcel delivery consultancy ParcelPool, the service provides discounts to customers who negotiate on an individual basis but doesn’t make pricing decisions available to the public.
Such confidentiality may be acceptable for a private company. But the Postal Service is no ordinary business. It’s a government agency, with numerous statutory protections.
The Postal Service also has the exclusive right to consumers’ mailboxes. It doesn’t pay tolls, parking tickets or customs duties. It calculates the amount of corporate income tax it would owe if it were a private company — and then pays that amount to itself.
As long as the Postal Service enjoys these perks, the agency’s primary obligation should be to the ordinary consumers who are captive to its monopoly. By pressing for five-day delivery and stamp price increases even as they extend discounts to big mailers and businesses, postal executives are signaling that stamp-buying customers’ needs are not a priority.
Robert R. Schrum is a research fellow at the Lexington Institute, based in Arlington. It believes in limiting the role of the federal government to functions explicitly stated or implicitly defined by the Constitution.
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