Postal Reform – A self-supporting Future?
In its report to Congress – Major Management Challenges and Program Risks – the General Accounting Office (GAO) identified a number of key areas for the Postal Service to address. In a series of articles during the past weeks PostMag has looked at:
– the need for legal and regulatory reform
– the turnover of virtually the complete management team due to retirement
– the need to control costs and improve productivity
We look finally at the issue that the GAO considered paramount – can the USPS remain self-supporting while providing affordable, high-quality universal service?
To respond to this question let us address some of its component parts. Universal service is the obligation that all postal services around the globe share – to provide access for everybody to the postal service, by mailboxes, postal outlets, etc., and to deliver to all addresses. However, when we talk of this obligation we must remember that it is not only an obligation but also a competitive asset that differentiates the posts from most of their competitors.
Affordable? – Affordable to who? A first class stamp is affordable to the US population. Double the price and it will still be affordable. Affordable to the business community? – Perhaps a massive increase might prompt more companies to look at what they spend on postage, but I doubt it. No, affordability has to relate to the industry hidden behind the Postal Service that has enabled it to become the largest postal service in the world with the largest per capita usage of mail.
Self-supporting? – If ever there was a misnomer this is it! The Postal Service is supported by the industry it has spawned. Without the mail and postal industry supporting the USPS is will wither and die. This is the same industry that is today faced with the prospect of another rate case and rate hikes in the 15-30% range to “support” the continuation of the Postal Service.
The US Postal Industry by virtue of its success is most vulnerable to the changes that are taking place in the communications continuum today. Reductions in volumes mean that costs have to be distributed on fewer items increasing prices and making the products that are competing with the new technology less competitive. A recipe for disaster that any other large company could readily deal with by normal pricing strategies, i.e. to support the challenged products with prices that yield less profit but do pay overhead, and increase prices in those areas that can support a greater contribution. Not a strategy that the Postal Service can even entertain – in its current quazi-government structure it must apply costs evenly to all products and defend (against all comers), through the rate case process, its correct application of these costs.
Can the USPS remain self-supporting while providing affordable, high-quality universal service? Only if it privatizes; only if it changes its management style and involves the union in creating the Postal Service of the future; only if it reduces costs and improves productivity; only if it recognizes that the Industry it created yesterday is the Industry it must serve tomorrow.
If you do not think it is possible to make this kind of change look to Germany. Dr. Klaus Zumwinkel was in Washington this week talking to the world’s Internet community (Click here for story) about the transformation in Germany. How does a 333% increase in revenue and a 16% reduction in workforce over a ten year period sound?
