Like many businesses, our often underappreciated U.S. Postal Service (USPS) has been struggling, and it wants to raise its postage rates to compensate. While this is obviously bad news for some companies, there's a definite silver lining for others.
The proposed increases owe partly to a dwindling volume of mail, as companies crunched by the recent recession cut back on mailings. The rate increases proposed affect first-class and advertising mail, periodicals, packages, and more. The first-class rate will likely jump from $0.44 to $0.46. All the increases will average about 5%.
Here's what those higher rates mean for some businesses:
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Netflix's
(Nasdaq: NFLX) bottom line will certainly take a hit, but only in the short term. More of its customers are switching to its streaming video instead of its movies by mail. A Netflix spokesman actually said the company supports the USPS and its increased rates.
- Obviously, companies that issue catalogs and direct mail will be affected. Already, some trade organizations are banding together to protest the hike, explaining that it will make it harder for them to dig out from the recession.
- The postal rate for periodicals may rise by 8%, which will cost companies such as Time Warner
(NYSE: TWX) , whose magazine enterprises include Time, People, Sports Illustrated, and Fortune.
- Likely beneficiaries include UPS
(NYSE: UPS) and FedEx(NYSE: FDX) , since higher package prices (up about 7%) from the USPS will drive more customers to competitors. However, FedEx and UPS have also increased their own rates recently, by around 5%.
- One company emerging unscathed (so far!) is Amazon.com
(Nasdaq: AMZN) , one of the USPS's biggest customers, particularly of its Priority and Express mail services. Notably, the USPS hasn't asked for increases in those services, although it plans to do so in October.
In the wake of postage hikes, many companies are finding newer, more efficient ways to do business. Many customers now pay bills online, taking revenue out of USPS hands, but making automated bill-collecting easier at many companies. New media is also helping transform profitability. Whereas many companies have traditionally relied heavily on mail to communicate with consumers, now they're able to put some of that effort into Facebook pages and Twitter accounts.
The USPS doesn't really have many other options -- though I read an excellent case in The Nation for the postal service as a critical and near-ubiquitous taxpayer-supported institution. With locations near just about every citizen, post offices could serve many civic and social functions beyond passport processing. Revolutionary ideas have transformed many companies and industries. Why not let them transform our trusty USPS, too?
What do you think should be done with the Postal Service? Let us know -- leave a comment below!
