World's postal services struggle with lower demand
Feb 27, 2013 10:36 AM (ET)
By NICK PERRY
Associated Press
http://apnews.myway.com//article/20130227/DA4N2G681.html
OTAKI, New Zealand (AP) - Sandra Vidulich is so excited about the
leather boots she ordered through Amazon that she rips open the box in
front of the postman and tries them on.
"I looove them," she declares, as the driveway at her tree-lined home in
rural New Zealand briefly becomes a catwalk. "They're cool."
For now, a boom in Internet shopping is helping keep alive moribund
postal services across the developed world. But the core of their
business - letters - is declining precipitously, and data from many
countries indicate that parcels alone won't be enough to save them. The
once-proud postal services that helped build modern society are scaling
back operations, risking further declines.
The United Kingdom is preparing to wash its hands of mail deliveries
entirely by selling the Royal Mail, which traces its roots back nearly
500 years to the reign of King Henry VIII.
The U.S. Postal Service sparked uproar this month when it announced
plans to stop delivering letters on Saturdays. New Zealand is
considering more drastic cuts: three days of deliveries per week instead
of six.
It's only in the past few years that postal services have truly felt the
pinch of the Internet. Revenues at the USPS, which delivers about 40
percent of the world's mail, peaked in 2007 at $75 billion.
But the decline since then has been rapid. USPS revenue in 2012 fell to
$65 billion, and its losses were $15.9 billion. It handled 160 billion
pieces of mail that year, down from 212 billion in 2007. And it had
slashed its workforce by 156,000, or 23 percent.
Elsewhere, the news is just as grim. La Poste in France estimates that
by 2015, it will be delivering 30 percent fewer letters than it did in
2008. Japan last year delivered 13 percent fewer letters than it did
four years earlier. In Denmark, the postal service said letter volumes
dropped 12 percent in a single year.
The Universal Postal Union, which reports to the United Nations,
estimates that letter volumes worldwide dropped by nearly 4 percent in
2011 and at an even faster clip in developed nations. Developed
countries closed 5 percent of their post offices in 2011 alone.
And while Internet shopping continues to grow, postal services that once
profited from their monopoly on letters find themselves competing for
parcels against private companies like FedEx.
U.S. Postmaster General Patrick Donaho said he doesn't believe the
service can ever regain the revenue from packages it has lost from
letters. He said axing Saturday mail deliveries, while keeping
six-day-a-week package deliveries, will save the service about $2
billion a year.
Donahoe said he thinks ending Saturday letter deliveries will keep the
USPS a solid proposition for years to come.
"People still go to their mailbox every day and they wait for their mail
to come," he said. "It's part of American life."
And it has been since the beginning. The postal service's role was
defined in the Constitution, and Benjamin Franklin was the first
postmaster general. The short-lived Pony Express achieved an enduring
place in American folklore. Even the modern system of highways and
airline travel grew from pioneering routes developed by the postal service.
"It's easy to forget how central this institution was to commerce,
public life, social affairs," said Richard John, a Columbia University
professor who has written a book on the postal service. "It was once
very, very important. Of course, that was then and this is now."
Even now, however, much depends on the post office. According to the
Envelope Manufacturers Association, the postal service is at the core of
a trillion-dollar mailing industry in the U.S. that employs more than 8
million people.
And for delivering a paper letter cheaply, there is simply no
alternative. If rural residents were ever charged the actual cost of
mail rather than the subsidized standard rate, John said, the costs
would be prohibitive.
The value of the mail goes beyond money in many places, including rural
New Zealand. The postal carrier serves as a focal point for the community.
John Lahmert, the postman who delivered the boots, has been delivering
mail to farms around the North Island town of Otaki for 18 years. The
72-year-old independent contractor seems to know everybody on his route
and doesn't mind stopping for a chat.
Noeline Saunders greets him at the gate, wondering if her citrus trees
have arrived. Not yet, Lahmert tells her. Barry Georgeson, a
semi-retired farmer, calls out a greeting and wanders down to pick up
his letters.
"We don't like change," Georgeson said when asked about the possibility
of mail coming just three times a week. But he said he could learn to
live with it.
Many seemed resigned to a reduced service.
"I think people can genuinely understand that the world is changing,"
said New Zealand Prime Minister John Key. "And while some people are
still very reliant on the mail, for a lot of people that's a fraction of
the way they receive information."
About 7 in 10 Americans said they'd favor axing Saturday deliveries if
it allowed the post office to deal with billions of dollars in debt,
according to a poll by The New York Times and CBS News.
Some countries, including Australia, Canada and Sweden, have already cut
deliveries to five days a week. Others are tinkering with partial
privatizations.
Exactly what Britons might expect under a privatized service remains
unclear. Some speculate it could mean cutbacks.
Royal Mail's Chief Executive Moya Greene declined to comment for this
story: "We're simply not doing interviews about the planned sale,"
spokesman Mish Tullar wrote in an email.
In policy documents, the UK government said six-day-a-week deliveries
and standardized letter prices remain vital but that private investors
will provide more financial stability than "unpredictable" taxpayer funding.
While letter volumes are falling in developed nations, the reverse is
true in some developing countries. In China, mail deliveries are up 56
percent since 2007, driven by a more than fourfold increase in premium
express mail, according to figures from China Post.
Yet people in China are accustomed to having their mail show up late or
disappear altogether. As Internet use increases in the developing world,
mail may never be as essential as it has been elsewhere.
Not everybody is ready to give up on letters. Reader's Digest sends out
about 500,000 pieces of mail each week to people in Australia, New
Zealand, Singapore and Malaysia as it tries to entice them to buy its
merchandise.
"A lot of players are going for a digital strategy, and fewer are doing
the direct-mail approach," said Walter Beyleveldt, managing director for
the Asia Pacific region. "Because of that, the mailbox will get emptier.
It will potentially become an exciting place to go and look."
New Zealanders, however, may be looking there half as often as early as
next year, if proposed changes to the New Zealand Post's charter are
approved.
The government is accepting public comments until mid-March. A quarter
of those received so far were mailed in, a rate considered unusually high.
The other 75 percent? Email.
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