Struggling to manage with fewer mail volumes yet increasing address counts: Can the Postal Service sustain this pace?
The United States Postal Service (USPS) is bracing for significant operational and financial challenges over the next decade, primarily due to a decline in mail volume and an increasing number of delivery addresses, particularly in rural areas.
According to a report from the USPS Office of Inspector General, the decline in mail volume—nearly halved over the past two decades—is expected to continue, with projections suggesting a decline of up to 41% by 2035. This trend, combined with the growing number of delivery addresses, stretches the delivery network thin and poses operational challenges for the Postal Service, as it strives to maintain affordability.
The decline in mail revenue may also begin to decline as volume declines, potentially posing a future challenge for the Postal Service. Operationally, maintaining or improving service standards amid reduced mail volume yet expanded delivery networks stresses resources and increases per-unit delivery costs.
Financially, the USPS, as a government agency, is constrained and cannot operate at a loss sustainably. Reducing service or workforce presents politically sensitive options, while privatization faces union and public opposition due to potential service cuts. The USPS must balance cost-cutting with maintaining universal service.
To address these challenges, the Postal Service is currently adapting its delivery network using new technologies to better meet the needs of consumers, particularly in the shift towards package delivery. Innovations that could help mitigate these issues include greater use of technology for route optimization, automation in sorting and delivery operations, and expanding digital services that leverage USPS’s broad network to generate new revenue streams.
Potential specific innovations could include automating last-mile delivery with drones or autonomous vehicles to reduce labor costs and improve efficiency in low-density rural areas. The Postal Service could also expand package and parcel services amid growing e-commerce, possibly through enhanced partnerships or service diversification, to compensate for declining traditional mail.
In addition, increasing digital transaction services to leverage USPS’s presence in underserved communities and implementing environmentally sustainable practices to reduce costs and align with emerging regulatory and consumer demands could also help stabilize the Postal Service's future.
David Neu, a research analyst with the USPS Office of Inspector General, has discussed potential AI technologies and marketing communications as a major trend that could affect mail volume. The report from the USPS Office of Inspector General also discusses the impact of electronic diversion on the Postal Service, attributing the decline in mail volume to electronic diversion, or the replacement of traditional mail with digital communication.
Despite these challenges, the Postal Service remains crucial for millions of Americans for services like paying bills, receiving government forms, and delivering medicine to rural areas. The model does not predict which scenario is most likely, but it does predict a wide range of potential volume declines, ranging from 14% to 41%.
The Postal Service executives have a good handle on the general mail market and the trends there. They are actively seeking legislative and administrative actions, such as increasing the debt limit, corrections to pass civil service retirement system over payments, changes to administrative or workers' comp programs, and allowing the Postal Service to invest its retirement funds, to help address the financial challenges.
In conclusion, facing declining mail volume and increasing delivery points, the USPS's challenges are both operational (delivery complexity, workforce) and financial (sustaining revenue amid losses). However, innovations in logistics technology, service diversification, and sustainable finance may help stabilize its future.
- In the face of challenges in the federal workforce, with the civil service organization having to adapt to a declining mail volume and increasing delivery points, there is potential for reimagining the workforce to incorporate technology such as automation in sorting and delivery operations, drones for last-mile delivery, and AI technologies for marketing communications.
- Amidst the ongoing decline in mail volume, the Postal Service has been actively engaging in sports, such as exploring potential partnerships or service diversification in the growing e-commerce sector, and implementing environmentally sustainable practices that could help stabilize its future revenue streams.
