USPS eyes growth opportunities in its global business

The new head of the USPS Global Business division, Giselle Valera, speaks with James Cartledge about opportunities for growth in the Postal Service’s international business The US Postal Service may handle around 40% of the world’s mail, but international mail volumes represent only a small part of its annual revenues.

Out of last year’s $67bn turnover at the USPS, international mailing services brought in around $900m, while international shipping services brought in around $1.5bn.

Nevertheless, as she took over this month as the new head of the USPS Global Business division, Giselle Valera revealed her confidence that the segment offers plenty of valuable growth opportunities for the struggling Postal Service.

Holding both a bachelor’s and a master’s degree in international affairs, the former from Boston’s Tufts University, the latter from George Washington University’s prestigious Elliot School of International Affairs, Valera certainly has the academic background to help USPS carve out a better market share in the international arena.

“I’ve always had an interest in international business, so I’m particularly delighted they’ve given me this opportunity and this challenge,” she says.

Valera also brings plenty of experience drawn from years in logistics and supply chain consultancy work, including work for European logistics companies and blue chip brands like IBM.

She has been with the USPS for around four-and-a-half-years, most recently as acting associate director of strategic planning, following a role as executive director for Global Finance and Business Analysis.

Her experience at the Postal Service has included involvement in the introduction of new product and service offerings for the international mailing and shipping sector, including the securing of approval for such offerings from the regulators at the Postal Regulatory Commission.

In her new role, Valera reports directly to president and chief marketing/sales officer Paul Vogel, the man who first headed up the unit when it was created in 2006, and who is currently leading a major renaissance in USPS products and services to try to increase shipping and advertising mail volumes and counter some of the financial troubles at the Postal Service.

As with her boss and the rest of the Postal Service, Valera has a significant decline in letter mail volumes to contend with in the market-dominant side of Global Business.

So far this fiscal year (beginning October 2010), an 8.1% decline in outbound First-Class Mail revenues has continued a similar 8.8% year-on-year decline in the outbound revenue seen in the full 2010 fiscal year, up to September 2010.

However, Valera is keen to point to the potential growth that can be achieved in the competitive shipping side of the international business, where there has been a 15.3% year-on-year revenue growth so far in the first two quarters of the 2011 fiscal year.

Thanks to a rebounding global economy and booming e-commerce sector, this growth is even better than the 10.1% year-on-year growth seen in the full 2010 year.

“There’s a lot of opportunity in international shipping in particular, and we’re looking at growing that market for the Postal Service,” Valera says, but she carefully adds: “I don’t want to neglect the mail – it will continue to be a big part of what we support, and we will continue to support the mail products and ensure that our customers are getting their mail in a timely and reliable fashion.”

Building value through relationships

Starting out in her new role, the VP of Global Business says that one of the key issues that her team needs to address is customer awareness of the value already within the Postal Service’s portfolio of international services.

In recent years, USPS advertising campaigns have concentrated on domestic parcels – not least with the catchy “If it fits, it ships” slogan. To some degree, this has left an open goal for a preconception to form in the minds of many Americans that when it comes to shipping items abroad, a private-sector FedEx, UPS or DHL is required.

But Valera is confident in the value and reliability of the USPS line-up, ranging from the premium Global Express Guaranteed (GXG) service run in conjunction with FedEx Express, through to Express Mail International and the economical offerings of Priority Mail International and First-Class Mail International, can win back significant market share.

“I think we have some really valuable products, and falling right behind what Paul and my predecessor, Pranab Shah, were looking to do, we have to continue to focus on those opportunities globally and make sure customers are aware that we provide a good value service,” says Valera. “We’re much more reliable than I think they tend to believe.”

With the emphasis on value within the USPS international service, there is a real need to keep operating costs down. This need for efficiency also reflects the overall priority of the Postal Service this year to be “leaner, smarter, faster” as it stares into the abyss of the worst financial crisis of its history.

Valera says the Global Business unit has already been pursuing a philosophy of cost-cutting – working closely with suppliers to keep down operating costs, as well as with foreign postal operators, since much of the cost in international services is outside US borders.

To a great extent, work to keep down international operating costs means close working with international partners.

The Universal Postal Union provides the USPS with an important link to postal operators outside US borders, and Valera says will continue to be a platform for international relations. But with those countries with which the US exchanges major mail volumes, the USPS also deals on a more direct level.

Valera says bilateral agreements with these key trade partners can be an important way in which costs can be contained, and volumes encouraged, and expresses her hope that agreements with more countries could be hammered out.

“We’ve always had a bilateral agreement with Canada Post, and we’re looking to extend that model to some of our other key trading partners,” she said, although she added that she was unable to reveal any details yet on which countries might be next in line for potential bilateral agreements.

An obvious country close by, which gets a lot of mail flow from and to the United States is Mexico, a growing economy which Valera says is now “definitely in our line of sight” in terms of closer links.

The Global Business team is already starting work on how to take advantage of growth in that particular direction, she says.

“I know Mexico has mainly been a letters and flats market for us,” she says. “We need to identify some new strategies – we’ve been talking about them – to grow the parcel business in Mexico.”

Across the Pacific, the Far East and Asia offers particularly enticing opportunities for closer links with the US Postal Service, with strong growth in China and other tiger economies in the region, particularly in e-commerce.