Should the USPS be able to adjust to lower volumes?–March 16, 2016

The debate about whether the rate rollback is a good or bad thing for the future of the USPS is related to the larger debate over whether USPS can adjust to delivering “only” 150 billion pieces of mail in 2016 and beyond without over-charging customers. No one denies that downsizing is very difficult and painful. But it is also true that for most of its 200-plus year history our postal system operated a nationwide network delivering far fewer pieces of mail than in recent years.

An argument can be made that recent peak mail volumes were somewhat of a “bubble” driven by rapid growth in the economy and direct mail. It took about 200 years to reach 100 billion pieces of mail in 1980, around the beginning of the direct mail boom. It took only 19 more years for mail volume to double to 200 billion in 1999. 200 years to reach the first 100 billion; 19 years to reach 200 billion. Then only ten years were sustained at over 200 billion pieces of mail, 1999-2008.

Perhaps the Great Recession burst an unsustainable short-term bubble in U.S. mail volume. A longer view shows 200 years under 100 billion pieces, 19 years between 100 and 200 billion, and ten years above 200 billion. Most recently, USPS has experienced seven years between 176 and 154 billion pieces.