The Postal Service has delivered small packages since the founding of the republic and in 1912 Congress specifically authorized and directed the service to deliver all sorts of packages to our homes and our offices. Unfortunately, thanks to recent proposals in Washington, Americans might find fewer packages coming in the mail and more coming from private companies. More important, if that happens expect shipping prices to jump across the board.
Washington policymakers are pushing the Postal Service to increase dramatically the prices it charges for package deliveries. Notably this business is one of the only “profitable” activities the post office does. Normally increasing its prices might make sense as a means to increase revenue to the Postal Service, but the opposite is likely to happen.
An increase in price alone without any improvement in value or service is unlikely to bring in more revenues to the post office. Instead, a substantially higher price will mean customers — households and companies — will turn to other companies like Federal Express and UPS for parcel delivery. When that happens, the Postal Service’s profits will scatter as well.
Consider, what would you do if you could pay $5.15 to send a present to your graduating nephew by going to the post office vs. $21 to send the same package via UPS. It’s a no-brainer. However, if the post office was forced to raise its fee for that parcel to $19, the choice becomes harder.