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Squeeze play on mail delivery

Ideas to end Saturday service and close some post offices elicit outcry.

By Laurent Belsie Staff writer of The Christian Science Monitor / April 9, 2001


Morse Mill, Mo., lost its gristmill during the Great Depression and most stores a few decades later. Even the Victorian Morse Motel, where Charles Lindbergh once visited, has turned into a private dilapidated home that rents rooms by the month.

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But the one thing this threadbare town still has, through rain and sleet and penury, is a post office.

Now, however, even mainstays of small-town America like this one may face an uncertain future. Under a cost-cutting move, the US Postal Service is considering closing branches in some rural towns - and even more controversial, ending Saturday delivery nationwide.

The mere thought of letters arriving in people's mailboxes less frequently - even by one day a week - is drawing angry protests from Morse Mill to Capitol Hill. Yet the decision isn't an easy one for the Postal Service, either.

It is caught between two seemingly inexorable forces: mounting debt and its obligation, as a quasi-public service, to provide universal delivery. In fact, it is the one government entity that touches the lives of Americans more often than any other.

Yet the agency's ability to balance these two interests - as it was mandated to do by Congress when it partially privatized the agency 30 years ago - is becoming increasingly untenable in an age of electronic mail and private overnight delivery services.

"There is no way for them to turn without them incurring the fury and the ire of vested interest groups," says Ulric Weil, senior technology strategist at Friedman, Billings, Ramsey Group, a brokerage firm in Arlington, Va. "Old people don't want to lose Saturday delivery. Businesspeople don't want rates to go up. The post office is in a no-win situation."

Four months ago, the Postal Service projected it would notch a $480 million deficit after several years in the black. Now, it expects to lose between $2 billion and $3 billion. Some $800 million of that comes because the Postal Service didn't get as big a postage-rate increase as it expected, according to the General Accounting Office, the investigative arm of Congress. Most of the rest stems from the sudden downturn in the economy, which historically reduces mail volumes.

"If the economy goes south from where it is today ... it could be worse," Postmaster General William Henderson warned Congress in his testimony last week.

Meanwhile, Federal Express and other private delivery services continue to capture increasing volumes of express mail and parcel deliveries. And the Internet threatens to capture $17 billion worth of first-class-mail business over the coming decade as companies look to bill customers electronically.

The warnings could hardly come at a worse time, since the post office boosted first-class rates only three months ago. And such increases, as well as proposals to cut service, don't sit well with postal customers or Congress.

"Any CEO who would go before his board and say that would be out on the street in 10 minutes," says Edward Hudgins, director of regulatory studies with the Cato Institute, a libertarian think tank in Washington, D.C.