In case you haven’t heard, the US Postal Service has announced major cost-cutting measures that will negatively impact the quality (or at least speed) of their service. We’ve talked about this before, but USPS is hurting. Badly. In fact, they’re currently projected to lose over $14B next year, up from $8.5B in 2010. Yikes!
In response, they’ve talked about closing locations, and of course they’ve increased stamp prices. But those changes only get you so far, with the proposed 3600 Post Office closings only saving around $200M.
Well, now they’ve raised the stakes, and have decided to shutter over half of their mail 461 processing centers nationwide. These closures would eliminate 252 such centers and result in roughly 30k layoffs. The savings? Around $3B — which will still leave them with over $10B of red ink on an annual basis.
So what does this mean for you? For starters, you can say goodbye to next-day service on local, first class mailings. Instead, mail will have to travel further (on average) to processing centers that will be significantly busier. Thus, the typical 1-3 day service will become 2-3 days, and periodicals are expected to take 2-9 days.
In other words, your Netflix service will likely slowdown, and you won’t be able to cut things quite as close with respect to bill payments.
Of course, this degradation of service will likely cause a decrease in mail volume, with more people moving their transactions online, streaming movies instead of watching DVDs, etc. And this will do nothing other than further reduce USPS revenue, resulting in a vicious cycle of service cuts spawning more service cuts.
Technically, they have to await an advisory opinion from the Postal Regulatory Commission next March before they can act, but that opinion is non-binding so it seems pretty likely that this will happen.
What do you think? Is the USPS doomed? If so, what will take its place? And how much will it cost? If not, how can they save themselves?