How the U.S. Postal Service Works

The 21st Century Post Office Landscape

As the numbers show, the Postal Service is facing some serious problems. Offices are closing (more than 1,000 between 2006 and 2015) and employees are being let go. And even though its revenue has been increasing, the Postal Service had a net loss of $5.1 billion in 2015 [source: Minaya].

The biggest problem for the Postal Service is simple: declining mail volume. The number of letters and packages being sent has steadily fallen, since a high of 213.1 billion pieces of mail in 2006 [source: USPS]. (Most of the postal service revenue comes from first-class mail [source: Nixon].) Remember that it's not just the fact you're getting an email from your relatives in Uganda now instead of a letter; it's that you can go online to check out the newest couches at Ikea instead of waiting for a catalog and that a desire to be "green" resulted in a request for all-paperless electronic bill payment.

But it's not as though nobody needs mail or package delivery these days. In fact, UPS and FedEx are both posting profits [source: Sondag and Picker]. Instead, it might be a signal of bigger flaws in the way USPS is run. One is that labor accounted for 80 percent of USPS expenses in 2011, compared to 53 percent for UPS and 32 percent for FedEx (USPS cut its labor costs by $10 billion between 2006 and 2016 [sources: Greenhouse, Katz]. Postal workers have traditionally received more generous health benefits than most government employees as well; thus, the post office is desperate to cut pension and retirement plans, as well as execute layoffs.

The brand of USPS has suffered, as well. No longer is it seen as dominant in customer satisfaction. UPS and FedEx both score higher in the American Consumer Satisfaction Index polls (with scores of 80, 82 and 74, respectively, according to a 2016 ACSI report.

And there might be something to be said about the loss of post offices as town centers. With the declining mail volume, a small town or neighborhood no longer depends on going to the post office for a daily stop to collect mail and gossip. It's hard to quantify how lack of mail has affected the social aspect of post office centers, but we do know that since 2006, post office visits from customers have dropped from 1.24 billion to 919.5 million, while online revenue has increased from $454 million to $1.05 billion [source: USPS].