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Is the postal service going the way of the pony express?

December 29, 2013 at 12:00 AM EST
The U.S. Post Office announced that the price of a first class stamp will rise from 46 to 49 cents in late January. Rising costs and diminishing usage may endanger future of mail delivery. Canada is phasing out urban delivery service in the next few years.
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HARI SREENIVASAN: Another story that came and went without much notice this week was the announcement by the u-s post office that the price of a first class stamp will rise from 46 to 49 cents in late January. This got us wondering about the future of mail delivery in this country. For more,, we are joined from Washington by Bradley Klapper. He covered the story for the Associated Press.

So tell us, just how important was this price hike for maintaining the viability of the U.S. Postal system today?

BRADLEY KLAPPER: Certainly the postal service hopes that this will help it generate more revenue. They were hard hit by the recession and they were also hard hit by increased competition from private postal carriers as well as the Internet which makes a lot of things we used to do by post not necessary any longer. 

But for consumers I don’t think there will be immediate, drastic effects. Yes it will cost three cents more for a stamp and considering how much less consumers are mailing today it shouldn’t be a dramatic pinch in the pocketbook.

HARI SREENIVASAN: And what about the companies that use bulk mail often. Like the magazines, it used to be the Publisher’s Clearinghouse, but are they going to feel the pinch much worse? 

BRADLEY KLAPPER: Well this is where the louder protests are coming from — whether its greeting cards, magazines, charities — they’re really upset with this. They say this could affect the bottom line, mean lost jobs. This could really impact the way they do business.  

HARI SREENIVASAN: Over the holidays we’ve seen how people are depending more and more on companies like UPS and FedEx to get their packages done. Over time does this mean that the viability of a state-run postal service is in jeopardy? How do other countries deal with it? 

BRADLEY KLAPPER:  It is really a time of change clearly for postal services worldwide. Fewer and fewer are now state owned. A lot of them had to go through difficult restructuring in the last couple of decades. In Canada right now there’s a move to significantly curtail home delivery and other services. 

In the United States, despite high levels of losses in recent years, the services are still there. But changes may be around the corner. 

HARI SREENIVASAN: So this raise from the increased price of stamps is that going to be enough to put the post office on a financially solvent track?

BRADLEY KLAPPER: Well that alone is not going to do it and I think that’s something that even the postal service recognizes. The regulators decided that they could raise the price of the bulk mail and the price of a stamp and other services for about two years. The idea was that they would be able to recoup about 2.8 billion dollars, money that they lost through the recession. But last year losses for the postal service were about six billion. The year before they were about 16 billion — so that alone is not going to make it suddenly a financially-solvent enterprise. 

HARI SREENIVASAN:  Bradley Kapper from the Associated Press, thanks so much.

BRADLEY KLAPPER: Thank you.