White Papers – RARC-WP-15-010 – 04/27/2015
Declining First-Class Mail (FCM) volumes pose a major financial challenge to the U.S. Postal Service because FCM contributes by far the largest proportion of revenue to the Postal Service’s bottom line. Between fiscal years 1995 and 2013, FCM single-piece volume dropped by 61 percent. But a close analysis of the decrease reveals significant variations in this decline by geographic area. In some areas, for instance, the percent of volume lost was even greater than 61 percent, but in other areas, it was almost zero. Additionally, the rate of decline is slowing or has stopped even in many of the areas that have lost the most mail volume, suggesting a new base level of demand for FCM has been reached in those regions.
As the Postal Service plans for its future, it must keep in mind that the needs of its customers vary at least as widely as these differences in mail volumes. Because there is no average mail customer, strategic planning designed around average mail volume data will inevitably result in inefficient solutions. The Postal Service would benefit by examining the widely varying levels of demand for FCM and using that information to develop its operational and customer service plans.
Related: USPS OIG Blog – The Curious Ups and Downs of Mail Volume Declines