The price to pay for mailing a letter

Even though the cost of stamps is rising to 37 cents, US postal rates remain below those of other countries.

Hate reams of junk mail? Then you might want to move to Cambodia. In the Southeast Asian country of 13 million people, fewer than 40,000 pieces of mail – total – are delivered a year. That's one letter for every 325 people.

Whether it's too much or too little, too slow or too expensive, people around the world love to gripe about the mail. Americans are no exception, and they have plenty of new fodder with the US Postal Service's announcement that it will raise postage rates this summer – with a first-class letter to cost 37 cents, 3 more cents than now.

That has many consumers fuming that Cambodia's letter volume would suit them, and their pocketbooks, just fine.

But before Americans get too upset, they might want to consider just what 37 cents amounts to. It pays for a service that, griping aside, ranks well among other countries in terms of reliability and competence.

And compared with what some foreigners pay for their mail service, 37 cents starts looking pretty cheap. Indeed, at a time when conventional mail faces growing competition from e-mail and ever-cheaper telecommunications, yet when Americans are accustomed to paying $3 for an ice-cream cone, the cost of sending a love letter doesn't seem outrageous.

Take Germany, for example. A first-class letter to anywhere in that country, or to much of Europe, costs about 50 cents – almost as expensive as Switzerland, but still markedly below Japan, where it costs almost 70 cents.

It's a price that seems reasonable enough to Gabi Koch, an English teacher at a business school in the northern city of Hanover. But she is bothered by how much it costs to keep in touch with friends in the US.

"The rates for Germany are OK, but for a letter to the US, it's about $1.50. So I think three or four times before I send a letter there now," says Ms. Koch. "That's where I've really turned to using e-mail."

In fact, among developed countries, the US sits toward the bottom in terms of postal rates. Experts say there are different factors that explain why the US can charge almost half what Germany or Japan does to deliver your mail – but about 50 percent more than it costs in Australia or Kenya.

For one thing, the high per capita mail volume in the US allows for economies of scale. The US delivers almost 200 billion of the 430 billion pieces of mail sent globally every year.

"If your carrier delivers two pieces of mail to your house or five or seven pieces, there's a huge difference in delivery costs based on per capita volumes," says Bob Cohen, director of research and analysis at the Postal Rate Commission in Washington.

In other words, each piece of mail costs more to deliver in, say, Germany, because the average German receives one-third of the mail of the average American.

But on the other hand, the US Postal Service has to pay the cost of delivering mail to both far-flung rural dwellers and the relatively low-density suburbs favored by many Americans.

In France, where it costs more than 40 cents to send a letter within the country or to most of Europe, it's not the price that riles. What really bothers consumers is a sense of the deterioration of "la Poste" – and this in a country where mail service used to be described as impeccable.

"Recently, the mail has turned completely unreliable," says Hélène de Maredsous, a Parisian mother of four. "It's happening more and more that a letter I know was sent to me never arrives or shows up a month or two later," she says. "Then, when you go to the post office, you wait in line for a half hour, only to be treated poorly. Service should be better for the money."

The problem for postal services is that single-piece mail – as opposed to mass-mailing – is the high-margin business they've lived on. Some advertisers have actually helped this bottom line by switching from bulk rates to first class, in an effort to give their mailings a personal touch that they believe gives them a better chance of being opened by the junk-mail weary. But at the same time, some bulk mailers are doing more postal tasks – like presorting – themselves, which reduces costs but also the Postal Service's profits.

"Over the past 20 years, global mail volume has grown about 2 to 2.5 percent a year," says Thomas Leavey, director general of the international bureau of the Universal Postal Union, a United Nations agency in Bern, Switzerland. "But now, in most industrialized countries, there's a flattening, and in some cases a decline."

The US Postal Service, blaming the economic downturn and last year's crisis over anthrax-tainted mail, estimates mail volume has fallen by more than 4 billion pieces since September 2001 – an "unprecedented" drop, according to Postal Rate Commission specialist Spyros Xenakis.

Mr. Leavey, a former US assistant postmaster general, says that one factor contributing to the drop may be mail-less bill-paying. "My wife does it all with a one-stop system using the Internet," he says. In Switzerland, both banks and the post office – which Mrs. Leavey diplomatically uses – offer the electronic bill-paying service. "But that doesn't exist everywhere," Mr. Leavey says, "and it's one place postal services are losing out."

Some postal services seem unlikely to ever win some customers back. In Mexico, Laura Ariza remembers when, as a teenager in the 1980s, she and her friends had fun exchanging gossipy, sticker-laden letters.

"It was fast and no problem," she says. "But now? No, no, no." The expectant mother, who manages some of the correspondence for her husband's pharmaceuticals equipment company in Mexico City, relies on individual couriers, or private delivery companies like DHL and Federal Express – anybody but the post office.

It's a familiar tale to Leavey, part of whose job is to help developing countries establish modern postal services. Pointing to successful postal reforms in Tanzania and Costa Rica, Leavey says, "What we've found is that if you get the post office out of some government ministry and run like a business, it can be profitable."

And to American consumers irate about another postal-rate increase, he offers his not completely unbiased view. "For a service that delivers 40 percent on the world's mail," he says, "the US Postal Service is one of the best."

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