In more than three decades, Richard Watkins hasn't seen anything like it.
"I've never seen the volume drop that we've experienced in the last six months to a year," said Watkins, a U.S. Postal Service spokesman for the Western Region, based in Kansas City, Mo.
As recently as 2006, the postal service was delivering more mail than ever.
But the impact of the Internet on first-class mail and the recession's toll on solicitations from retail, auto, housing and financial industries are taking a toll on the postal service.
The postal service delivered 202 billion items in fiscal year 2008, 9 billion fewer than in 2007. That's the single biggest drop in its history and it contributed to a $2.8 billion budget shortfall.
In the near term, Watkins isn't concerned, even though the overall pressures are undeniable.
With a delivery network growing by two million address points every year, the strain on the service has been severe.
"When your network expands and your mail volume declines, something's got to give," said Watkins,
u.S. Postal Service deliveries |
|---|
| $75 billion, revenue in 2008 202 billion, total mail volume processed in 2008, in pieces 667 million, average amount of mail processed each day 28 million, average amount of mail processed each hour 463 thousand, average amount of mail processed each minute 7,700, average amount of mail processed each second 46 percent, amount of the world's card and letter mail volume handled by the United States Postal Service UPS -- Package Operations deliveries $41.3 billion, 2007 revenue 4 billion, 2007 delivery volume in packages and documents 15.8 million, daily delivery volume 2.3 million, daily U.S. air volume 1.9 million, daily international volume 18.5 million, daily online tracking requests |
"At some point it may become too difficult to provide six-day delivery."
When U.S. Postmaster General John Potter reported the state of the post office to a congressional committee in January, he requested that Congress consider lifting the requirement of six-day per week delivery.
But Watkins said such statements are not meant to alarm customers, especially in rural areas like Iowa.
"Obviously, the dynamics of the communication industry are changing rapidly and the postal service has taken very aggressive steps to address our efficiency, cost effectiveness, and where we spend our work hours," he said.
The postal service froze all major facility projects last year.
Business at competitors like UPS and Fed Ex is up, but the U.S. Postal Service is helping provide the depth of its reach, according to Watkins. He stressed that the postal service sets up shop in towns of all sizes -- places where the larger delivery services often don't go.
For several years the government service has contracted with its competitors in some instances to get packages the last few miles to smaller communities.
"Our focus, which is not just in the wake of the current economic crisis, is how to make the postal service more user-friendly," said Watkins, pointing to efforts to cater to small businesses with services like a free carrier pickup that can be used through an online home form or an office computer.
"A good number of companies are taking advantage of that," Watkins said.
And last year, there were online discounts instituted for printing postage and labels online.
But even with the ongoing popularity of Internet shopping, shipping companies like UPS did see a sign of slower times during the recent holidays.
Clare Richard, store manager for UPS in Dubuque and Galena, Ill., said there were not as many large box shipments, but there remained a high volume of smaller shipments.
"We were down some, but not dramatically. People still wanted to give something," Richard said, noting that many customers watching their budgets commented their savings were on the purchases, since the shipping rates remained the same.
While many online shippers are taking advantage of priority mail flat rates that don't include rate or zone restrictions, Watkins noted that anecdotal evidence is pointing to major decreases in some online shipping sites, like eBay.
The economic slump has had varying impact on Overstock.com, a site known for offering clothing and other items at discounted rates.
"Most of our competition, the brick and motor stores, are running a national 'Going Out of Business' sale. When Macy's is at 75 percent off, it's hard to be discounting," said Patrick Byrne, chairman and CEO of the Utah-based Internet retailer. "On the other hand, that's not a sustainable business model for them."
While chain retailers have been driving at Overstock's business with their big-ticket sales, Byrne said there have been some advantages in sagging consumer confidence.
"The middle class is downshifting, which is why Wal-Mart is doing well and McDonald's sales are up 7 1/2 percent," Byrne said.
"People who normally buy $1,000 tennis bracelets are buying $300 gold chains."
Overstock grew at 27 percent in the first half of last year before hitting the economic downturn.
Byrne said the company fell by 13 percent in the fourth quarter.
"But that's turned around and coming back nicely," he said.
Byrne said Overstock is being inundated with excess inventory as traditional retailers watch sales plummet.
"There's far more excess inventory than demand so we think we're really just at the third or fourth inning of what's to come," he said.
That's thanks, he said, to newly conservative consumer spending habits.
"When they start pinching pennies, that's good for us," Byrne said.
