The US Postal Service (USPS) is in crisis. Overall mail volume has gone from 213 billion items in 2006 to 177 billion in 2009.

According to its own reports, it is facing a $7 billion shortfall this year, and that is estimated to grow to $238 billion over the next decade. It’s desperately trying to find ways to cut expenses (through such moves as stopping Saturday deliveries and closing underused branch offices — both involve lots of Congressional politics) and enhance revenue (those ever-rising mailing costs).

And a consultant study states that total mail volume will drop by 15% over the decade. And we think that that figure greatly underestimates the problem.

Problem is, almost every step they take speeds up the spiral of decline. Higher costs and worse results for business-class mail means that companies find other ways to sell their product. Magazines and newsletters have to spend more and more to send their product, so they are (especially with advertising down) either shutting their doors or going all-digital.

Rising rates for first class postage mean that people connect more and more online, with friends and with companies. Just as the idea of getting a landline phone is alien to cell phone owners younger than thirty, so too is the idea of receiving or paying bills or reading printed catalogs dropping fast for the same group. Even snail mail volume from Netflix, with its 12 million customers, is under heavy threat from digital downloads.

The USPS has tried to get hip: It has improved its online presence, including a sharp iPhone app for tracking mail and finding zip codes. It’s competed against FedEx and UPS at Christmas with a program for setting shipping costs for parcels at volume rather than weight. And it’s expanded sales out of the town post office to retail locations. But it’s not enough.

There’s no doubt that mail service is going to get far more expensive and probably far less convenient. Its demise is also likely to become a major political football, thus being even less likely to get resolved in a logical way. The sad fact is that your business had better be prepared—most companies are building digital processes where possible, but the prospect is that snail mail, as we know it now, will be radically changed within the decade is strong.

Tags: mail, Post Office