Section A
Answer this question.
0The United States Postal Service is in trouble
Since 2006, the volume of mail carried by the United States Postal Service (USPS) has fallen considerably and as a result it has reduced the number of its employees.
Table 1: USPS Volume of mail and number of employees in 2006 and 2010
One reason for the problems of the USPS has been the recession. This has prompted businesses and advertisers, which account for most of the USPS’s income, to reduce the number of letters and parcels they send. A long-term problem is that the volume of mail is not likely to go back to pre-2006 figures as the economy improves because of the strong challenge from the internet. Email is fast and cheap, businesses are advertising online more and they are increasingly asking customers to pay their bills online.
All of these issues are making it very difficult for the USPS, which does not receive any government subsidies. It estimated that it would lose US$8 billion in 2010.
The USPS plans to increase revenue by charging more for its services and to cut its costs by stopping Saturday deliveries and collections. Many USPS customers, including firms that use this service, are opposed to the plan. Some firms, however, stand to gain from this plan. One firm, Pitney Bowes, for example, makes products used by the USPS, such as automated sorting machines and automated franking machines. It expects demand for these products to rise if the USPS seeks to replace some of its employees with capital equipment.