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Author's profile photo John Peterson

What does the future of the United States Postal Service look like?

I recently attended the National Postal Forum in Nashville TN.  It was my first Postal Forum ever so there was a lot to see and do in 3 short days.  Probably the most impactful session I attended was entitled “Envisioning America’s Future Postal Service.”  Pat Donohue, Deputy Postmaster General, spoke and talked about how the Postal Service has been analyzing the future.  To assist with this analysis, they have enlisted the help from 3 outside consulting firms.   These firms were the Boston Consulting Group, McKinsey & Company, and Accenture.  Each of these firms were asked to take a snapshot of today’s landscape, project out 10 years and describe what the landscape would look like then.  Mel Wolfgang from the Boston Consulting Group said that assuming the Postal Service continues in a business-as-usual mode, the economy returns to historical long-term growth and there aren’t any major economic disruptions we could expect to see the following.  First, mail volume would fall from roughly 177 billion pieces per year to 150 billion.  You could attribute this to a sharp decline in First Class mail.  More specifically, First Class mail would fall from roughly 84 billion pieces to 50 billion primarily due to the increase in online consumer acceptance.  For the same reason, Standard mail would remain relatively flat and we would see a slight increase in packages although far below what it would take to  offset the core business loss.  Next, Thomas Dohrmann from McKinsey & Company spoke and painted a picture of the universal service obligation the USPS faces.  To help put this in perspective, he said that there are 36,500 retail locations in the US as compared to 13,900 McDonalds, 11,100 Starbucks, 7,500 Walgreens, and 3,600 Walmarts.  Keep in mind that the USPS is prohibited from closing a post office solely for economic reasons.  Given that they must delivery to every address in the US, their network is largely fixed.  The problem with this is that the number of addresses continues to increase while the volume of mail continues to decrease.  The other real issue is the workforce.  These costs continue to rise faster than inflation.  So what are the solutions to all these issues?  Well Thomas summed it up in 5 points.  First, the USPS could create new products and services consistent with their mission.  Second, they could modify their price cap to apply across all market rather than by class of mail.  Third, the USPS could adjust their service levels.  Examples of this would include changing from 1 – 3 day to 2 – 5 day delivery for First Class Mail, or reduce the frequency to 5 days or 3 days per week.  Next they could take a hard look at their workforce.  This would include taking advantage of over 300,000 voluntary separations over the next 10 years.  Finally, needs to consider the public policies like restructuring the Retiree Healthcare Benefit pre-funding and the need to look at streamlining the oversight model to improve flexibility and timeliness.  Pat concluded the session with three words.  Speed and Balance.  In order to preserve what we’ve known as the standard operating procedure in the Postal Service, we need to act quickly and take a balanced approach meaning that no one topic mentioned above will solve the problem.  Rather, a blended approach that touches on all 5 of the areas is what is needed.  

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      Author's profile photo Former Member
      Former Member

      as I am heading the business segment Postal at SAP, I can share my thoughts on this.

      USPS is a classic example where tax money is burned when a company is limited too much by the regulator that simply prohibits to innovate and move from areas where money could be made and move away from the old traditional postal services that loose money.

      Hans G. Landgraf

      PS: I only came across this post today, sorry for not answering any earlier