Investing

Post Office May Close 700 Locations

Douglas A. McIntyre

uncle samThe writing has been on the wall for years. The Postal Service is slowly going out of business. The fax was the first piece of technology that cut into the need to mail letters and documents. FedEx (FDX) and UPS (UPS) took a lot of the agency’s shipping business away.

The final and most lethal damage was done by the internet. Broadband connections allow people and business to send e-mail, data, and huge documents from point-to-point around the world instantaneouslyfor nearly no cost.

The Postal Regulatory Commission is considering closing or consolidating 700 post office locations. The quasi-government agency will lose about $7 billion this year, and advances in communications technology will only make that worse.

The head of the Postal Service has already suggested to Congress that letter delivery should drop to five days a week from six. That may not be enough.

Most material sent through the postal system, which includes a huge number of pieces of junk mail and catalogues which are not time-sensitive material, could be delivered on a schedule that would cut deliveries to three or four days a week. Rural areas, where the cost of getting mail to homes is particularly high, may end up getting deliveries less often than people in urban areas.

The postal system will have to go through a period of triage. Congress cannot continue to fund large losses for the physical delivery of the mail, particularly with a federal budget that is already creating record federal deficits.

Post offices are becoming anachronisms and the sooner that is taken into account in the process of restructuring the delivery system, the better.

Douglas A. McIntyre