Why the Postal Service Exists

The Postal Service faces significant problems that threaten its survival. The financial problems are well known but solvable. However, solving the financial problems in a way that ensures a vibrant postal market as long as the prevailing story line is that “we have a delivery service whose raison d’être is rapidly vanishing before our eyes.” as illustrated by a recent New York Times article. Until that view is reversed, neither Congress nor any President will look at any proposal ensuring the survival of the Postal Service beyond the impact on the budget or local jobs and services.

The Postal Service is a Business Service

For at least the past two decades mail has been a service for commercial and government entities. While expansion of Internet and broadband access to household is often thought as the driver as the decline in consumer use of mail, business/government/non-profit share of mail volume has remained close to 90% of mail volume.

• 1987 – 88.8%
• 2006 -90.6%
• 2007 – 90.6%
• 2008 – 90.2%
• 2009 – 89.8%

If one adds mail sent by individuals to business, government, or non-profit, the share of mail that involves a business, government, or non-profit is

• 1987 – 95.2%
• 2006 – 97.0%
• 2007 – 97.3%
• 2008 – 97.1%
• 2009 – 96.9%

The slight decline in the commercial share of mail reflects the impact of the recession on economically sensitive commercial mailers.

To the extent that consumers have abandoned mail because they don’t sent personal cards and letters that abandonment happened well over 20 years ago. One might argue that the decline in consumer use of mail had more to do with the universal access to land-line local and long-distance telephone service and the deregulation of long-distance telephone rates as the abandonment happened well before e-mail or other web-based services were accessible to every office worker and most homes.

What “Binding the Nation” Now Means

To the extent that the Postal Service binds the nation together, it binds businesses, governments, and non-profits to households and other businesses, governments, and non-profits. Businesses, governments, and non-profits send at least 46% of all single piece mail, but mostly they send their mail in quantities sufficient to get presort and other discounts. The following chart illustrates that the share of the Postal Service’s First Class, Standard, and Periodical mail volume that is tendered in bulk.

The chart illustrates that mail tendered in bulk now represents 83% of all mail volumes. The chart also illustrates that bulk mail’s share of letter and flat mail has followed a linear trend for more than a decade. At the current rate, bulk mail could represent over 90% of all mail volume by 2020.

Mail as a Business Service And Public Policy

With most citizens having a minimal personal connection to the Postal Service and the postal market as a consumer, easy analogies for the Postal Service are the pony express and the telegraph.  These technologies served their time but were replaced with newer, cheaper and better alternatives and the Postal Service faces the same fate.

These analogies focus policymakers on policy options that wind down the Postal Service and force it to pay any retiree obligations sooner rather than later.

These analogies are not accurate. While mail faces competition from other communications and parcel delivery modes, it remains viable today.  The postal market generates over $1.1 trillion in sales and employed 8.4 million people.  Nearly all of the economic activity and jobs exist because mail provides a critial business service to the nation’s economic infrastructure.

Recent studies by Robert Cohen and Charles Mc Bride have shown that the primary driver of declining bulk mail has been the economic downturn and the slow recovery and not development of web and mobile-based alternatives.  Reports and forecasts on advertising spending has shown that mail advertising has held up better than many other non-web based advertising modes.  Looking forward, advertising forecasters project a better growth for mail advertising than any other mode other than web and mobile-based advertising.

The postal market will be viable tomorrow if postal policy can develop that allows the Postal Service to serve its primary mission, “to servebusinesses, governments, and non-profits that mail in bulk to households and other businesses, governments, and non-profits,” as it has had for at least the last two decades even though the Postal Service has never publicly admitted that that was its primary mission.

The Postal Service has other missions serving important average citizens and non-housholds that mail one piece at a time or in small quantities and ensuring access to mail and parcel delivery services to rural and economically  and the communications and parcel delivery needs of Americans, however, those missions can only be served if public policy allows it to meet its primary mission and satisfy the needs of the customers that generate 90% of all mail.

Given that most members of Congress, bloggers, broadcasters and writers for larger media outlets focus on the other 10%, it is time for postal stakeholders  to join together to develop the research and communications tools that focuses on educating policymaking what the Postal Service really means to the U.