A view from the US National Postal Forum: Part one

Lawrence Chaido, director of TransGlobal Consultants, gives Post&Parcel a valuable insight into the key messages at the 2010 United States National Postal Forum. The 2010 United States National Postal Forum took place in Nashville from 11 to 14 April.

This was an annual opportunity for over 4,000 delegates including the American Mailing Community, members of the United States Postal Services and vendor exhibitors to network, learn and deliver the most timely and best that the mailing industry has to offer.

The overall theme of this event was “Delivering Success” and the three days of educational sessions, networking and vendor presentations proved to vindicate this statement.  Overall mood was optimistic from the vendors and delegates although the tone was a sombre tone from postmaster general (PMG) John Potter during the opening session.

PMG Potter, presented to the overflow audience, a review of findings from several studies commissioned by the Postal Service and presented to stakeholders on 2 March 2010.  In his presentation PMG Potter, focused upon a 10 year action plan to enable the Postal Service to remain viable in the future. The world’s postal administrations are facing a decline in hard copy mailing both on social and commercial levels.  Key to this decline is the increase in e-commerce as well as use of social media and internet channels of communication.  The volume of mail within the United States from 2009 to 2020 is projected decline from 15 to 35 % after a decline of 17 % during the time from 2006 to 2009 and profitable First Class mail will decline a projected 40 % in the period to 2020. With this factor under consideration, the USPS also faced additional financial obligations to prepay employee’s Retiree Health Benefits.

PMG Potter then began to summarise the important facts that would be key to the reinvention of the Postal Service. He said there are six major issues contained within this 10-year action plan keying on action that will bump up value, through innovation, service, quality and information to new levels. The major theme of our plan will be recognising that our success within the domestic and global marketplace will require our organisation to improve our speed and flexibility to respond to a changing environment. Key to this speed and flexibility will be our ability with the aid of the Congress of the United States and all stakeholders to modify the current legislative environment (laws) that govern the day by day operations of the Postal Service.

The major steps to provide the needed flexibility for the Postal Service to continue to meet the needs of all stakeholders, while maintaining the highest level of a strong and viable business, are as follows:

-A change is needed in current legislation that will enable a restructure retiree health benefits from the current “pre-funded” to a “pay-as-you-go” system.  This “pay-as-you-go” formula is in line with other government intuitions and other private sector companies. (This change is calculated to provide an average of $5.6bn in cash flow per year until 2016)

-A change in the “Universal Service” obligation of the Postal Service. Current legislation mandates a six day delivery of mail regardless of any changes in volume.  If the Postal Service was given the authority to adjust delivery frequency to mach volume and the changing mailing environment, additional savings could be reached by the Postal Service. (A reduction from the current six day delivery to five day delivery is estimated to same an additional $3bn.)

-To meet the changing mailing environment, the Postal Service is seeking to expand access to postal products and services.  This change would move the services currently offered by the Postal Service to give stakeholders retail access in non-postal locations.  This would be a move from brick-and-mortar Post Offices to enhance on line presence, partnerships and kiosks. This action would also enable the Postal Service to reduce costs. If these steps are to be taken and the potential savings realised there is a need have Congress’ approval of the method of closure.  There are several proposals currently under study within the Congress.

-The next area for savings that is required to move the Postal Service forward deals with the Postal Service’s workforce. The Service must become a leaner organisation. This will require a change from the current limited flexibility to adapt to market and technology changes to one of the flexibility to capture natural attrition to match changing demands of the environment. A key need is to establish a reduction in the workforce through the collective bargaining process that is regulated by legislation. This is a possibility; however a request to Congress is needed to require arbitrators to take into account the current financial condition of the Service prior to making any decision. (It is estimated that over 300,000 full time employees will become eligible to retire during the next 10 years.)

-In December of 2009, new Federal Legislation (109-435 PAEA) took effect. One key area that this law touched upon was that of Product Pricing for products and services that fell within the monopoly of the United States Postal Service. This law regulated price increases for these products under a strict inflation-based price cap by product class. The Postal Service is seeking to modify this law to each of the monopoly products and services will be based upon demand for each individual product and the costs that are related to each product. This would mean that each monopoly product would be given the flexibility to be priced and prices increased reflective of market dynamics.

-Another legal obstacle that the Postal Service hopes to change relates to new products and services. There are legal restrictions to the products that the Postal Service may bring to market.  The Service hopes to be permitted the flexibility to introduce new and additional products that will enable it to meet the needs of its stakeholders. Each of these new products would provide a source of additional revenue for the Postal Service. To do this there would be a need to amend the current regulatory framework to broaden the definition of postal products and streamline the timely introduction of new products.

-The last area that is under consideration for change and or modification is that of oversight.  Currently the Postal Service is involved in oversight from multiple bodies with overlapping roles and responsibilities. In addition there are many lengthy processes related to this oversight. A streamlined approach would enable the Postal Service to fulfil its mission plan. Changes to the oversight that primarily involves changes to postal networks, products, costing methods, service, Sarbanes-Oxley Act Compliance and complaints, would ensure a continued protection of the protection afforded to stakeholders, while providing the Postal Service the flexibility to manage in the current and future changing environment.

The above specifics were the subject of the PMG’s opening remarks as well as two additional 2-hour presentations, a one hour question and answer session, as well as two major presentations relating to the Universal Service Obligations. Each of these sessions was chaired by senior Postal Officers.

To read the second part of this article, click here.