Too much USPS focus on cost-cutting, says Ruth Goldway
The Chairman of the US postal regulator said yesterday that the US Postal Service has been “lazy” in the past regarding product innovation, and has recently taken up too much of its attention with cost-cutting efforts. Ruth Goldway, who leads the Postal Regulatory Commission, was speaking at the PostalVision 2020 conference in Washington DC yesterday, saying in her opinion it was “time for change” within the mindset of USPS management.
“The Postal Service got a little lazy at the beginning of the 21st Century. Posts in Europe were thinking about the future, but the Postal Service was resting on its laurels because mail was still growing,” she said.
Commenting on recent years, Goldway said: “They have unfortunately spent almost all their creative energies on cost-cutting over the last four years.”
Some $13bn in debt and projected to lose $14bn this year, the Postal Service is currently working on cutting its annual operating expenses by $22.5bn a year by 2016, although half of the changes would require legislative action from Congress.
The Postal Regulatory Commission is currently reviewing USPS plans to close more than a third of its processing network and significantly reduce operating hours within rural post offices, but the regulator does not have the power to block the cutbacks.
Goldway said yesterday that more action was needed from USPS on finding new ways to generate revenue. She suggested various ideas, from expanding broadband access in rural areas and providing more government services to ID services and secure email. Mining the large existing bank of USPS patents could be one way to create new services, she said.
But, at the heart of her recommendations, Goldway stressed the need for the Postal Service to build on its strengths as a “neutral” network to be used by private companies, perhaps with more “co-opertition” such as USPS currently sees with UPS and FedEx making use of its last mile delivery.
“The digital age is wonderful, but it is fractured,” she said. “It’s based on so many different messages going to so many different people. There’s really only one system now where you can make sure that the same message gets to everyone in a neighborhood or a community or a nation, and that’s the mail.”
Partners
“The Postal Service has been reluctant to share its intellectual knowledge and partner with others”
During the same PostalVision 2020 conference, the president of the National Association of Letter Carriers, Frederic Rolando, said his union had also been “frustrated by the lack of creative vision coming from the leadership over the last few years”.
Rolando said the Postal Service had a “unique opportunity” with its position reaching all 150m addresses in the United States six days a week, but that it was risking opportunities by closing much of its network.
Strong words also came from the mailing industry association PostCom, whose president Gene Del Polito particularly criticised the Postal Service for not working well with the private sector in pursuing growth and not taking risks on new ideas.
“We had had a long, long history in the US where the US Postal Service does not play well with others, it does not know how to play well,” he said.
Del Polito said that when talking to USPS people, it had appeared to him that when novel ideas emerged, the Postal Service was always too concerned about the risk that new products might fail to consider them.
“Fifteen years ago we talked to the Postal Service about a lot of these ideas, and nothing happened because there was no willingness to engage with the private sector to create something of value,” said Del Polito.
“It was also because they could not predict exactly what was going to happen with these ideas. If they had taken the risk then, we would not be talking about (the USPS crisis) now.”
In her comments, the Postal Regulatory Commission chairman also criticised the Postal Service’s “institutional reluctance” to fully open up with partners in seeking revenue opportunities.
“The Postal Service’s problem in this area is that it has been reluctant to share its intellectual knowledge and partner with other organisations. Unless they feel they can take ownership of it in-house, they have been reluctant to move forward,” said Goldway.
USPS
“We have a long history of partnering, and now we see it as an important element of our move into digital”
Speaking to Post&Parcel in response to the comments, the US Postal Service director of strategic planning Emil Dzuray said since Patrick Donahoe had taken over as Postmaster General at the start of 2011, there had been a change in corporate culture with regard to innovation and working with the private sector.
He said top executives had been brought in from outside the postal sphere in recent years, including CFO Joseph Corbett and deputy postmaster general Ron Stroman, as well as the recent appointment of former Coca-Cola Japan vice president Nagisa Manabe as chief marketing officer.
But Dzuray said he did not believe it was fair to say the Postal Service was not working well with the private sector.
“Working with the private sector has explicitly been our strategy history,” he said. “We do more work sharing than any other post, and as it reflects to our core business we have a long history of partnering. And now we see it as an important element of our move into digital.”
Commenting on the future, Dzuray added: “We are going to have to be flexible, innovative and that’s going to require partnerships.”
