The U.S. Postal Service, or USPS for short, provides a vital service to Americans at a relatively low cost. Despite the fact that stamp prices generally increase every few years, the cost of mailing a letter is still small when you consider the costs of delivering it. The USPS was previously able to remain profitable because of the sheer volume of mail that it delivered. However, nowadays mail volume is down significantly and the Postal Service is strapped for cash.
Other mailing options, such as Parcel Post for packages, have rates that vary depending on how far the package is delivered from its origin. In contrast, a first-class letter can be mailed for the same price regardless of where in the United States it is going. For example, letters can be mailed to the far reaches of Alaska or to rural homes at the end of dirt roads, all for 44 cents. And mailing a postcard is even cheaper. Think how much it would cost you if you had to deliver such mail yourself. Perhaps this is the reason that commercial mailing services such as FedEx and UPS tend to have competitive rates for packages and large envelopes but not for letters or postcards.
So, if the USPS has no real competitors for delivering letters and postcards, why is the Postal Service suffering so much? The main answer is that the volume of mail has decreased drastically. The primary reason for this is the rise of e-mail and online accounts such as online banking. When a customer signs up for paperless bank statements, the bank no longer has to spend postage mailing that person monthly statements. When you want to write a note to your friend, you most likely use e-mail much more often than physical mail.
A secondary but significant reason for the decline in mail volume is the recession. Before the credit crunch, many people were being bombarded with credit card offers and the like. That is no longer as prevalent. In addition, as businesses cut their workforces, they now have fewer employees to whom they have to mail items such as W-2s. Declining business operations also mean less mail. For example, if a vendor gets hired by 100 buyers instead of 150 buyers, that vendor will mail 100 contracts instead of 150 contracts. When the work has been completed, the vendor will mail 100 bills rather than 150 bills. Multiply this by the number of companies that are not doing as much business as they usually do and it is easy to see how the USPS is being hit harder than many private businesses are.