Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Five-day delivery no sure cure for postal woes, economist says

25.11.2009
Scaling back mail delivery from six days a week to five may be the best bet to stem mounting U.S. Postal Service losses, but could still be a gamble, says a University of Illinois economist who has studied the agency’s persistent financial decline.

Seung-Hyun Hong says projected savings from weekday-only delivery could wither if the move chases away lucrative business customers who count on the mail to blanket homes with coupons, fliers and other advertisements.

“There needs to be more study to gauge the revenue impact if services become less frequent and less reliable,” he said. “Most residential customers probably won’t care, but some businesses might and could try switching to the Internet.”

The Internet explosion, inexpensive long-distance telephone charges and postal rate increases have already combined to shrink household demand, according to a 2008 study by Hong and Stanford University economist Frank Wolak.

“More people are switching to less-costly electronic alternatives, so the question is whether delivery changes could help accelerate that trend, particularly among business customers,” said Hong, whose study appeared in the Journal of Econometrics.

The postal service last week reported a loss of $3.8 billion in 2008, about $1 billion more than the year before despite a reduction of 40,000 full-time jobs and other cost-cutting moves.

To offset a deepening pool of red ink, Postmaster General John Potter is seeking approval from Congress to trim mail delivery to five days a week, a move that could save the troubled agency an estimated $3.5 million annually.

Scaling back delivery is likely the postal service’s best hope because other alternatives are limited, Hong said. The agency’s targeted mission leaves few options for new, revenue-producing initiatives, and its every-doorstep delivery mandate limits cost-cutting measures.

He says rate increases are also a double-edged sword. His study found that a
5 percent rate increase imposed in 2006 netted a $215 million annual loss in revenue from households, although overall income rose because of business mailings.

“They always have to worry about increasing rates because it can decrease demand. Customers have lots of alternatives now,” Hong said. “Five-day delivery isn’t the only solution, but it’s probably a more reasonable solution than the other alternatives.”

Despite financial problems, high-tech competition and a push for a paperless society, he says the post office will endure.

“People are always going to need to send mail,” Hong said. “It’s not going to disappear.”

Jan Dennis | EurekAlert!
Further information:
http://www.illinois.edu

More articles from Business and Finance:

nachricht How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung

nachricht Demographic change depresses tax revenues
04.11.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Traffic jam in empty space

New success for Konstanz physicists in studying the quantum vacuum

An important step towards a completely new experimental access to quantum physics has been made at University of Konstanz. The team of scientists headed by...

Im Focus: How gut bacteria can make us ill

HZI researchers decipher infection mechanisms of Yersinia and immune responses of the host

Yersiniae cause severe intestinal infections. Studies using Yersinia pseudotuberculosis as a model organism aim to elucidate the infection mechanisms of these...

Im Focus: Interfacial Superconductivity: Magnetic and superconducting order revealed simultaneously

Researchers from the University of Hamburg in Germany, in collaboration with colleagues from the University of Aarhus in Denmark, have synthesized a new superconducting material by growing a few layers of an antiferromagnetic transition-metal chalcogenide on a bismuth-based topological insulator, both being non-superconducting materials.

While superconductivity and magnetism are generally believed to be mutually exclusive, surprisingly, in this new material, superconducting correlations...

Im Focus: Studying fundamental particles in materials

Laser-driving of semimetals allows creating novel quasiparticle states within condensed matter systems and switching between different states on ultrafast time scales

Studying properties of fundamental particles in condensed matter systems is a promising approach to quantum field theory. Quasiparticles offer the opportunity...

Im Focus: Designing Architecture with Solar Building Envelopes

Among the general public, solar thermal energy is currently associated with dark blue, rectangular collectors on building roofs. Technologies are needed for aesthetically high quality architecture which offer the architect more room for manoeuvre when it comes to low- and plus-energy buildings. With the “ArKol” project, researchers at Fraunhofer ISE together with partners are currently developing two façade collectors for solar thermal energy generation, which permit a high degree of design flexibility: a strip collector for opaque façade sections and a solar thermal blind for transparent sections. The current state of the two developments will be presented at the BAU 2017 trade fair.

As part of the “ArKol – development of architecturally highly integrated façade collectors with heat pipes” project, Fraunhofer ISE together with its partners...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Sustainable Water use in Agriculture in Eastern Europe and Central Asia

19.01.2017 | Event News

12V, 48V, high-voltage – trends in E/E automotive architecture

10.01.2017 | Event News

2nd Conference on Non-Textual Information on 10 and 11 May 2017 in Hannover

09.01.2017 | Event News

 
Latest News

Helmholtz International Fellow Award for Sarah Amalia Teichmann

20.01.2017 | Awards Funding

An innovative high-performance material: biofibers made from green lacewing silk

20.01.2017 | Materials Sciences

Ion treatments for cardiac arrhythmia — Non-invasive alternative to catheter-based surgery

20.01.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>