When people try to discover whether the Postal Service is operating more efficiently or not, they often talk about TFP. What is TFP? TFP stands for Total Factor Productivity. It measures the ratio of the Postal Service’s outputs to its inputs, in other words, how much output the Postal Service produces with the inputs it uses.
Keep Sunday Operations?
We’ve all heard the bad news. Mail volume in fiscal year (FY) 2008 totaled 202.7 billion pieces, a decline of 9.5 billion pieces or 4.5 percent compared to the previous fiscal year. Mail volume has declined even further this year. At the end of the last quarter, mail volume was down more than 12 percent from the same period last year. Most recently, the Postal Service lost $2.4 billion in the third quarter of FY 2009 and projected a net loss of more than $7 billion for FY 2009.
While the Postal Service leads the world in processing letter mail, private sector competitors have a higher market share for parcels. And while letter volumes are decreasing, parcel volumes are projected to increase. Although parcels represent less than 2 percent of mail volumes, the Postal Service parcel business makes up 13 percent of the market share in the U.S. The chart on the left depicts the market share for parcels. Just how do parcel industry giants keep their costs down and productivity up, even in today’s economic environment?