- Market Dominant mail — a category consisting primarily of First-Class Mail, Marketing Mail, and Periodicals — accounts for over half of the Postal Service’s revenue, but volume of these mail classes have been falling for nearly two decades.
- Annual Market Dominant mail volume fell by 46 percent between fiscal years (FYs) 2008 and 2023. First-Class Mail volume fell 50 percent over that period, from 92 billion pieces to 46 billion. Marketing Mail volume decreased 40 percent, from 99 billion pieces to 59 billion. Periodicals volume fell 65 percent, from 9 billion pieces to 3 billion.
- Several factors have contributed to declining mail volumes, but the main driver has been “electronic diversion” — the replacement of physical mail with electronic alternatives such as email, texting, social media, and the Internet.
- Declining mail volume reduces mail density, making delivery to each address less profitable, and making it more difficult for the Postal Service to sustain its nationwide delivery network.
Market Dominant mail — a category consisting primarily of First-Class Mail, Marketing Mail, and Periodicals — is the Postal Service’s largest source of funding, contributing 53 percent of the agency’s revenue in fiscal year (FY) 2023. Since 2006, however, mail volume has been in decline. The key factor driving ongoing decline in mail volume is “electronic diversion,” a term referring to the replacement of physical mail with electronic alternatives, such as the Internet, email, texting, and social media. This paper examines Market Dominant mail volume from FYs 2008 through 2023, presenting historical volume trends across classes of mail and describing key factors influencing these trends.
The total volume of Market Dominant mail across all classes fell by 46 percent over the period of our analysis, from 201 billion pieces in FY 2008 to 109 billion in FY 2023. Volume of First-Class Mail, which includes letters, postcards, and large envelopes, fell 50 percent between FYs 2008 and 2023, from 92 billion pieces to 46 billion. Transactional mail (such as bill payments and statements) has experienced a more significant decline than correspondence mail (primarily greeting cards and letters to friends and relatives) as consumers and businesses have increasingly turned to electronic alternatives for billing and payment. For correspondence mail, the primary cause of decline is the decrease in personal correspondence, along with reduced political correspondence and mail from non-profits.
Marketing Mail’s volume decline has been less severe than First-Class Mail but is still significant. Marketing Mail volume decreased 40 percent from 99 billion pieces in FY 2008 to 59 billion pieces in FY 2023. This was driven by customer diversion to lower-cost online alternatives. Along with declining volumes, there has been a drop in mail’s share of total advertising spending.
Periodicals (newspapers, magazines, and other periodical publications) is unique among the major classes of mail in that it is “underwater,” meaning USPS spends more to process and deliver this class than it collects in revenue. Periodicals volume decreased from 8.6 billion pieces in FY 2008 to 3.0 billion pieces in FY 2023, a decline of 65 percent. The decline in Periodicals volume has been driven by electronic diversion away from subscriptions to hard-copy publications.
The decline in Market Dominant mail volume discussed in this paper has fundamental effects on the Postal Service’s financial health. Declining volume reduces mail density and therefore makes mail delivery increasingly less profitable per address served; as each delivery point becomes less profitable, the delivery network becomes more difficult to sustain. Similarly, stagnating revenue from Market Dominant products over much of this paper’s period of analysis has made it more difficult for USPS to fulfill its public service mission while remaining a self-funded entity.
The Postal Service has focused in recent years on the package market to increase revenue. Competitive product revenue — mainly packages — has increased significantly since FY 2008, rising by a greater amount than Market Dominant revenue has declined. Overall, however, the agency’s revenue has not increased enough to keep pace with its increasing expenses. While the Postal Service’s Delivering for America (DFA) 10-year plan, launched in 2021, has had a strong focus on the package market, Market Dominant mail still contributed 53 percent of USPS’s revenue in FY 2023. Future trends in mail volumes will have a critical impact on the agency’s ability to restore its profitability going forward.
