The question isn’t whether the U.S. Postal Service is making the right decision in eliminating Saturday delivery of mail, but whether it has any choice. The alternatives are few, indeed, given the gigantic bite that the Internet has taken out of the agency’s business model. And the more far-reaching question is whether even that is enough in light of circumstances that have shifted the ground beneath the post office.
The post office announced Wednesday that it will end Saturday delivery of most mail starting Aug. 1. It will continue to deliver packages on Saturdays. Congress could try to prevent the end of Saturday service, but if it succeeded, it would only delay the inevitable. It’s time to bite the bullet.
That’s what the private sector has been doing for years, now. Big industries, including entertainment and publishing, have seen their revenues undercut by the advent of the Internet, and they have responded in ways that reduce their expenses. As valuable and historic as the Postal Service is, it has no more immunity to the arithmetic of declining income than any other industry. Times have changed. Businesses must adapt or fail.
This trail has already been blazed in North America. Canada, which charges more for first-class mail delivery than the USPS, ended Saturday deliveries in 1969. The country has survived quite nicely.
Ending Saturday deliveries, alone, though, does not account for the losses the Postal Service is enduring. While the change is expected to save $2 billion a year, the post office suffered a net loss of $15.9 billion in fiscal 2012, three times its 2011 loss. It needs to look more closely at what it is doing.
The obvious big question, of course, is whether the Postal Service is even necessary. Could private businesses such as United Parcel Service and Federal Express do the job at an affordable cost? Should those businesses be allowed to compete directly with the post office? Should the post office raise its rates to fully account for the cost of mailing a letter? Should it stop subsidizing marketers by delivering catalogs at a reduced rate? Are there other services the Postal Service could offer to increase revenues?
Each of these actions would have consequences beyond the immediate goal of cutting costs or raising revenues, some of them unintended or undesirable. But the bottom line is that the post office can no longer dodge the fundamental challenges raised by the Internet and exacerbated by a weak economy. It must confront them.
One of the big challenges faced by the USPS has nothing to do with the Internet or the economy, but politics. Congress in the past has blocked efforts of the Postal Service to expand its business, citing complaints from private-sector businesses. It has also required the Postal Service to pre-fund workers’ health benefits for the next 75 years, saddling it with a $5.5 billion annual obligation to pay benefits for employees who are not even born.
That requirement was preposterous when it was imposed seven years ago. In a time of financial crisis, it is intolerable. If the post office must take the unfortunate step of eliminating Saturday deliveries, then Congress must also act to free the service from unnecessary costs and restraints.