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USPS sees huge drop in deliveries due to crisis
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Posted on Nov 12 2008
The United States Postal Service experienced a huge drop in deliveries as a result of the economic slowdown, reporting a drop of about nine billion pieces in the number of mail and packages it has handled so far this year.
Leo Tudela, director for Asia-Pacific Relations, Global Business, USPS based in Honolulu and Washington D.C., said this decline represents a 9-percent drop in deliveries.
Tudela, who is here on Saipan for a two-day meeting of postmasters from countries belonging to the Freely-Associated States, said the USPS usually ships about 40 percent of the 212 billion pieces of mail parcels that go through the worldwide mail system every year.
He said the drop is also due to the increased cost of delivering mail these days. For instance, Tudela said, a rise of just a penny in the price of gasoline translates to a cost of $8 million for USPS. This is because USPS uses about 225,000 vehicles to deliver the mail.
Another big threat to USPS is the Internet phenomenon, especially for first class deliveries, which Tudela said is still the major core of business.
First class deliveries account for about 60 percent of USPS’ income while delivery of catalogs and other advertising materials—also a major revenue source for USPS—has about 30 percent share.
While it is true that the deliveries of packages have been increasing due to the upsurge of people ordering all sorts of products via the World Wide Web, Tudela said the Internet boom has a bigger negative impact because of the big drop in the delivery of first class mails.
“It has really a very heavy toll not only in the U.S. but also in other parts of the world,” Tudela said.
Asked if they have plans to increase rates, Tudela assured that there would be no adjustments—at least for now. This is primarily because of the new mandate of the law, which says that these prices can increase on average no more than the rate of inflation as measured by the Consumer Price Index. The Postal Service plans to provide 90 days’ notice of new prices each year, to help mailers prepare for any change.
