Poor economy drives down mail volume at Postal Service (U.S)
The ailing economy has dealt the U.S. Postal Service its biggest quarterly drop in mail volume since 2002.
The Postal Service has already lost more than USD 1 billion this year, and officials say there’s no change in sight.
Mail volume has fallen every quarter since the first quarter of 2007, but the third quarter decline was the biggest since early 2002. The economic slowdown has been particularly tough for the Postal Service because the industries hit hardest — finance, energy and housing — are big mailers.
Rising fuel costs have also strained the Postal Service’s finances; expenses were up USD 200 million last quarter, largely due to gas prices.
The Postal Service has trimmed nearly USD 2 billion in costs this year, largely through a combination of new technology that improves efficiency and reductions in labor costs.
But postal officials say more reforms are needed.
The agency’s “network plan,” released this summer, calls for the closure of many large processing facilities that are no longer operating at full capacity. And the Postal Service is finalizing a new five-year plan, which will outline more changes to the postal network.
The five-year plan also calls for a realignment of the Postal Service’s retail facilities. The Postal Service hopes new mail-processing technology, like the Flats Sequencing System, will allow it to close its out-of-the-way retail facilities.
The ailing economy has dealt the U.S. Postal Service its biggest quarterly drop in mail volume since 2002.
Third-quarter volume was down 5.5 percent — nearly 3 billion pieces — from 2007. First-class mail posted the biggest drop in volume, almost 10 percent; Standard Mail — advertising mail — fell by 5.5 percent. The falling volume dragged down revenues, as well, which fell 2.5 percent compared with the same period in 2007.
The Postal Service has already lost more than USD 1 billion this year, and officials say there’s no change in sight.
Mail volume has fallen every quarter since the first quarter of 2007, but the third quarter decline was the biggest since early 2002. The economic slowdown has been particularly tough for the Postal Service because the industries hit hardest — finance, energy and housing — are big mailers.
“We certainly haven’t seen any recovery of the economy,” said Glen Walker, the Postal Service’s chief financial officer. “Volumes will continue to decline at an accelerating rate.”
Rising fuel costs have also strained the Postal Service’s finances; expenses were up $200 million last quarter, largely due to gas prices.
The Postal Service has trimmed nearly USD 2 billion in costs this year, largely through a combination of new technology that improves efficiency and reductions in labor costs.
But postal officials say more reforms are needed.
The agency’s “network plan,” released this summer, calls for the closure of many large processing facilities that are no longer operating at full capacity. And the Postal Service is finalizing a new five-year plan, which will outline more changes to the postal network.
“We’ve seen significant gains in productivity and cost reductions,” said Alan Kessler, chairman of the Board of Governors. “But it’s becoming clear that we must be flexible enough to operate in this environment.”
One strategy to further reduce costs is deploying new coding equipment, which scans addresses from mail and translates them into machine-readable bar codes. The new equipment will have better character-recognition software, reducing the volume of mail that must be hand-coded.
The equipment has already provided one of the Postal Service’s biggest efficiency gains. A decade ago, employees had to manually code more than 22 billion pieces of mail each year. Today that figure is less than 2 billion, and the Postal Service has closed nearly 50 facilities devoted to manual coding.
The five-year plan also calls for a realignment of the Postal Service’s retail facilities. The Postal Service hopes new mail-processing technology, like the Flats Sequencing System, will allow it to close its out-of-the-way retail facilities.
“[FSS] will have implications on retail,” said Linda Kingsley, the Postal Service’s vice president for strategy and transition. “We used to choose retail sites because we needed the space for processing. Now we can put retail where the customer is.”
The plan also advises the Postal Service to use the Internet to drive additional business, although Kingsley offered few specifics.
