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Challenges Faces by the US Postal Service

The United States Postal Service is an independent federal agency that serves as the backbone for the mailing and shipping industry. Ever since it was founded in 1775 with Benjamin Franklin serving as the original postmaster general, the USPS has done a very good job of accomplishing its original mandate: That of delivering mail.

Unfortunately, the advances in technology have changed how Americans communicate. The advent of electronic mail has caused first-class mail volume to decline from 213 billion pieces in 2006 to 168 billion in 2011. Online shopping of books and even music has also contributed to the decline in its revenues. The increasing popularity and convenience of online bill payments is also another reason why the USPS is currently facing financial challenges.

As the USPS defaulted for the second time on a $5.6 billion payment to secure the health benefits of its future retirees, it continues to grapple with its financial losses estimated to amount to $36 million a day. This has led many to conclude that unless something is done, the independent federal agency that uses no tax dollars for its operations is now getting closer to insolvency.

Can’t the US Postal Service cut costs to level with its declining revenue? It has tried to. But its arm is restricted by federal provisions. For instance, its labor contracts have a history of providing postal employees with generous health and pension benefits. It also ensures the job stability of postal workers because there are no layoff provisions in these contracts. These are obviously very welcome for all postal workers but it is a challenge faced by the US Postal Service as an organization.

While waiting for legislation from Congress to overhaul the Postal Service and ensure that it continues to survive well into the future, the USPS assures stakeholders—postal employees and suppliers alike—that operations would continue and that they would receive their payments and salaries on time. As it is, postal customers are assured that they will continue to receive their letters and parcels.

The USPS has proposed various moves to Congress to help them get out of their desperate financial situation. These proposals have included cutting Saturday mail deliveries; allowing them to deliver alcoholic beverages like beer and wine and expand into other lines of business; and reducing the required annual payments to its future retirees health fund. Whether Congress will be favorable to these suggestions still remains to be seen. In the meantime, the USPS and all those who depend on it in one way or another will continue to do with pride what it has originally been mandated to do: Deliver mail.