World’s Postal Services Struggle With Lower Demand
Sandra Vidulich is so excited about the leather boots she ordered through Amazon that she rips open the box in front of the postman and tries them on.
"I looove them," she declares, as the driveway at her tree-lined home in rural New Zealand briefly becomes a catwalk. "They’re cool."
For now, a boom in Internet shopping is helping keep alive moribund postal services across the developed world. But the core of their business - letters - is declining precipitously, and data from many countries indicate that parcels alone won’t be enough to save them. The once-proud postal services that helped build modern society are scaling back operations, risking further declines.
The United Kingdom is preparing to wash its hands of mail deliveries entirely by selling the Royal Mail, which traces its roots back nearly 500 years to the reign of King Henry VIII.
The U.S. Postal Service sparked uproar this month when it announced plans to stop delivering letters on Saturdays. New Zealand is considering more drastic cuts: three days of deliveries per week instead of six.
It’s only in the past few years that postal services have truly felt the pinch of the Internet. Revenues at the USPS, which delivers about 40 percent of the world’s mail, peaked in 2007 at $75 billion.
But the decline since then has been rapid. USPS revenue in 2012 fell to $65 billion, and its losses were $15.9 billion. It handled 160 billion pieces of mail that year, down from 212 billion in 2007. And it had slashed its workforce by 156,000, or 23 percent.
Elsewhere, the news is just as grim. La Poste in France estimates that by 2015, it will be delivering 30 percent fewer letters than it did in 2008. Japan last year delivered 13 percent fewer letters than it did four years earlier. In Denmark, the postal service said letter volumes dropped 12 percent in a single year.
The Universal Postal Union, which reports to the United Nations, estimates that letter volumes worldwide dropped by nearly 4 percent in 2011 and at an even faster clip in developed nations. Developed countries closed 5 percent of their post offices in 2011 alone.
And while Internet shopping continues to grow, postal services that once profited from their monopoly on letters find themselves competing for parcels against private companies like FedEx.
U.S. Postmaster General Patrick Donaho said he doesn’t believe the service can ever regain the revenue from packages it has lost from letters. He said axing Saturday mail deliveries, while keeping six-day-a-week package deliveries, will save the service about $2 billion a year.
Donahoe said he thinks ending Saturday letter deliveries will keep the USPS a solid proposition for years to come.
"People still go to their mailbox every day and they wait for their mail to come," he said. "It’s part of American life."
And it has been since the beginning. The postal service’s role was defined in the Constitution, and Benjamin Franklin was the first postmaster general. The short-lived Pony Express achieved an enduring place in American folklore. Even the modern system of highways and airline travel grew from pioneering routes developed by the postal service.
"It’s easy to forget how central this institution was to commerce, public life, social affairs," said Richard John, a Columbia University professor who has written a book on the postal service. "It was once very, very important. Of course, that was then and this is now."
Even now, however, much depends on the post office. According to the Envelope Manufacturers Association, the postal service is at the core of a trillion-dollar mailing industry in the U.S. that employs more than 8 million people.
And for delivering a paper letter cheaply, there is simply no alternative. If rural residents were ever charged the actual cost of mail rather than the subsidized standard rate, John said, the costs would be prohibitive.