The USPS said on Wednesday that mail volume has declined in the first quarter of fiscal 2008. In their announcement the Postal Service said preliminary financial results indicate mail volume was down 3.0 percent, or 1.7 billion pieces. First-Class Mail volume decreased 3.9 percent and Standard Mail decreased 2.6 percent in the quarter ending Dec. 31, 2007.
Postmaster General John Potter pointed to the downturn in finance and housing, both of which are heavy users of mail for the volume sag. H. Glen Walker, Chief Financial Officer and Executive Vice President also pointed to "disturbing trends" in U.S. economy for the drop in mail volume.
Dr. Joe Webb of the WhatTheyThink.com Economic & Research Center has provided a link to the raw data.
Discussion
By Dr Joe Webb on Feb 01, 2008
I'll get around to commenting on these data in greater detail in an upcoming column. Why people are surprised about this I don't know. These trends have been "baked in" for quite some time. One doesn't have to look at much of the data to see what's going on. Even though the USPS is claimed to be a "business" it is not. Its prices are fixed and can never be adjusted to market conditions. What happens when businesses sense a decline in their volume? They lower prices or have a sale, of course. They may also cut back their operations if they discern that the decline in volume cannot be reversed. The USPS cannot do either of these. Rates are set by law. Any operational changes are met with either political pressure or subject to oversight by Congress. The USPS does a herculean job, but it would do a much better job if it was not insulated from market competition and could charge market prices for its services. Instead, mail volume is a sitting duck for low cost competitors, such as e-marketing, and savvy users who realize that they can mail less and use cross media campaigns that use mail in a different way. When prices can't come down to market levels, volume will decline and only have those uses that can cover those costs. In the past, they could get away with such a structure. Now that information is digital, their inability to compete is more and more obvious. More volume declines are ahead. Get ready for the whining in the 2009 Congress.
By Gary Ampulski on Feb 01, 2008
It would be interesting to see the data for postal revenue (in both real and inflation adjusted terms) to appreciate how the average postal cost per piece has changed over the 2000-2008 periods. Also, would be insightful if someone has any data on how the industry has reduced production costs or value added costs (in light of increased paper costs) to try to offset the increase in postage costs.
By Dr Joe on Feb 01, 2008
Postal fees have basically followed inflation. But if you REALLY want to dig into the details, the USPS data in dollars, pieces, and weight can be downloaded at http://www.usps.com/financials/ Sometime in the future we will make our huge Excel workbook of these data available, but it is not practical at this time.
By Jay Nelson on Feb 01, 2008
OUR postal fees have increased far beyond what could be explained by inflation. The USPS on May 14 increased our per-piece postage from $0.62 to $0.97. That's an increase of 56%.
Needless to say, we have dramatically decreased the number of free sample issues that we mail, instead encouraging potential subscribers to download PDF versions of it.
By Henk Gianotten on Feb 02, 2008
We, in Holland, don't have a government that runs the Post Office. It's all TNT nowadays. Plus a lot of competition from German, Swiss and UK companies. After 5 years there was a price increase of 13% for regular pieces up to 20 gram. For the larger sizes and weights there were lower price increases. Better logistics, more automatic reading, more IT and more competition increased efficiency and was good for the market. But there is still no harmonization due to labor problems in different countries. The German government needs some more time (and guts) to make their postal service more customer friendly. Some German publishers started their own delivery services but are faced with the same German government, so these operations don't make money yet. Anyway, internet (some 80% connected, most high speed) is the cause for lower postage volume here too. That's a fact.