USPS lags behind other posts dealing with mail decline, says study
A right-wing think tank in the United States has issued a white paper criticising the “disturbing” lack of speed at the US Postal Service in responding to declining mail volumes. The Congressional advisory note from the Washington DC-based Institute for Research on the Economics of Taxation (IRET) assessed USPS in comparison to nearly 60 of the world’s major postal services during the recession and its aftermath.
It said “most” foreign postal services had managed to restore profitability and remain financially viable despite electronic diversion of mail and the impact of the global downturn.
The paper from senior economist Michael Schuyler said the USPS, which posted a $5.1bn loss last year and could be heading towards a $14bn loss this year, has been “badly underperforming financially” in comparison.
Studying Universal Postal Union data from 59 posts that reported their figures openly, the research stated that the number of loss-making postal services in the world has increased from one in 10 during 2007 to one in three in 2010 owing to the difficult economy and the decline of physical mail volumes.
But Schuyler argued that: “The good news is that posts can adjust to change and remain financially viable.”
Pressures
The IRET paper said USPS had been badly hit by the shift from 75% of households paying their bills through the mail in 2002 to 47% by 2010, helping a 25% decline in First Class Mail between 2006 and 2011.
The paper does point to the overly-aggressive payment schedule set by Congress in 2006 for USPS to prefund future retiree healthcare liabilities.
However, it said many of the pressures faced by USPS were also being faced by other national postal operators.
Postal operators in Australia, France, Germany, Italy, New Zealand and Switzerland were highlighted as successfully facing “harsh” economic conditions with positive financial results. Looking at other posts, Schuyler said many had made “quick and vigorous operational adjustments” when facing negative income, “and soon returned to the black”.
“In comparison, the US Postal Service appears to be an outlier in not more effectively countering losses through operational adjustments,” said the economist.
Although the IRET concedes that different posts have different levels of government subsidy, face different taxation and have different rules for reporting their results, it said the general patterns of profits and losses among the world’s major postal services were “sufficiently pronounced” to support its findings.
A future paper is set to detail why USPS has been less successful than other postal services in the world, and potential remedies.
