Many of you have heard by now that the United States Postal Service has announced price increases which will take effect January 22nd, 2012. The price increase, which averages 4.6 percent across all of its services, will see the cost of a stamp rising to $0.45 while the cost of Priority Mail packages will rise 3.1 percent overall. These price increases, however, are just the first of many changes that the Postal Service has proposed to its regulators.
The Postal Service has proposed sweeping changes to their services, their staff and their facilities, all of which will need to be approved by the Postal Regulatory Commission. The first change that they are suggesting is the elimination of next day delivery for First Class Mail packages. Standard delivery times for First Class Mail are currently 1 – 3 days. However, under the new proposal delivery times for First Class Mail would run between 2 – 5 days. This change would facilitate the closure and consolidation of more than half of the mail processing plants nationwide. As a result of the closures upwards of 28,000 postal workers would lose their jobs.
In addition to slowing down the delivery of First Class Mail packages and closing processing facilities, the Postal Service is also proposing to end Saturday delivery services and close upwards of 3,700 post offices. These proposed changes come on the heels of a request made to Congress by the Postal Service earlier in the year calling for the removal of the collective bargaining restrictions in place in order to lay off 120,000 workers. At the same time the Postal Service requested approval to replace existing government health care and retirement plans for postal employees.
All of the proposed changes are in an effort to make the Postal Service profitable again by 2015. At current standards the postal service is projecting a $14 billion shortage in its budget for 2012 alone. If the Postal Service doesn’t find a way to stem the tide of red ink, it could soon face bankruptcy. Most consumers may not even realize the difference the proposed changes will make until they are put into effect. However, when you consider the fact that 42 percent of first class mail is currently delivered the next day, the scale of the changes begin to come a bit clearer.
In my opinion, the changes that the Postal Service has proposed will only hasten their demise. Currently, the only reason for bulk mailers to use the First Class Mail is the increased delivery speed. However, if that incentive is removed or diminished we will likely see more and more mail pieces migrated to services such as UPS Mail Innovations and FedEx Smart Post. I am of the belief that the Postal Service should be improving the level of their services not diminishing them. How else will they compete in an increasingly cost driven marketplace dominated by ecommerce? I firmly believe that if the Postal Service pursues this new course, it will mark the beginning of the end for the USPS. Though, in truth, I suppose the beginning of the end was when they failed to keep up with the demands of a changing market place to begin with and began their decline, while companies like UPS and FedEx began to take more and more of their marketplace share.
So, what does all this mean for you? Well, it is quite simple, really. If the changes go into effect as proposed, the United States Postal Service will begin offering less service for more money. My suggestion would be to explore alternative options such as UPS Mail Innovations or FedEx Smart Post. Where the delivery time difference made these services less desirable before, even if often less expensive, the savings versus delivery time equation will tip more towards the consolidators as the changes roll into effect.