USPS playing postal politics
How do you reform the U.S. Postal Service to insure it thrives and survives without stepping on too many toes? Congress knows it ain't easy. There are many who support needed changes – for example, the two biggest U.S. express delivery companies support reform – but only as long as it doesn't infringe on their business territories.
Still, you might think reform would have easier passage given its potential impact on so many. The U.S. mailing industry is worth $900 billion and employs nine million people in jobs that include direct mailing, printing, catalogue production and paper manufacturing, according to the Senate Governmental Affairs Committee that just held hearings on postal reform legislation. That industry is thriving and would suffer from a weak Postal Service."Thousands of companies and the millions they employ depend on the health and future viability of the Postal Service," Governmental Affairs Committee Chairwoman Sen. Susan Collins, R-Maine, said. "Without fundamental reform, the future viability of the Postal Service will be jeopardized."In testimony before the committee, FedEx Chairman, President and CEO Frederick W. Smith and UPS Chairman and CEO Michael L. Eskew differed in their opinions of the role the USPS should play in the future, but they agreed that reform is needed."We have a great deal at stake in ensuring a more efficient and viable system," Eskew said in testimony to the Senate Committee on Governmental Affairs. "A challenging aspect of the postal reform debate is to ensure the viability of the Postal Service while also ensuring that where the Postal Service competes with the private sector, it does so appropriately."The contrast in management styles between Atlanta-based UPS and Memphis-based FedEx was clear as the companies' chief executives told the committee members what they suggested for postal reform.Smith lent FedEx's support to postal reform legislation Sen. Thomas Carper, D-Del., introduced in 2003. Eskew said UPS is staying away from endorsing any legislation for now but that the company plans to work with Congress as it develops a reform package.Working with Governmental Affairs Committee Chairwoman Sen. Susan Collins, R-Maine, Carper plans to introduce another postal reform bill in April. The two want to do a comprehensive postal bill this year rather than piecemeal as House postal reform panel chairman Rep. John McHugh, R-N.Y., has suggested might be necessary.The General Accounting Office, which has long studied postal issues, agreed.In a February letter to Collins, GAO Comptroller General David Walker wrote: "Comprehensive postal reform is urgently needed. The ability of the service to remain financially viable is at risk because its current business model, which relies on mail volume growth to cover the costs of its expanding delivery network, is not well aligned with 21st century realities."Smith said the Postal Service's problems stem from the way it is structured by law. He said there are inherent problems built in for a government entity that is supposed to operate like a business while being a regulated monopoly. Despite that contradiction, Smith and Eskew agreed that the USPS should remain under close government oversight even if it moves to a business-oriented operating model with an independent corporate board and more autonomy over operations and salaries.The influence of FedEx and UPS on postal reform is clear in the fact that the appearance before the Senate panel marked the second time in a month that Congress solicited postal reform testimony from the two companies. In February, Smith testified before the House Government Reform Committee's Special Panel on Postal Reform and Oversight. Because of schedule conflicts Eskew and DHL Worldwide Express Chairman and CEO John Fellows submitted only written testimony.The express delivery market has a complex relationship with the Postal Service, to which they are competitors, customers and sometimes suppliers.Smith noted that there are markets the Postal Service serves that FedEx would not want to be in. The Postal Service's forte is letter mail, a role FedEx and UPS would be unlikely to fill due to cost and the sheer volume that the Postal Service handles."If the Postal Service no longer provided universal service at affordable rates, no private company could step in and fill the void," Collins said. "The economics simply would not work."Smith cited FedEx as an example of a company that has recently made some of the transformations he sees as necessary for the Postal Service's future survival."The Postal Service is buffeted by the same tides and bent by the same winds as FedEx," Smith said in his written testimony. He said technological shifts to electronic document transmittal and bill paying have affected all aspects of the mailing industry.But changing the Postal Service, Smith said, is akin to reforming Amtrak, a mission Congress repeatedly attempts.Postal reform prospects this year are bolstered by two factors – a presidential commission that published detailed recommendations for postal reform in mid-2003 and the fact that spurring job growth has become a key political campaign issue in a presidential election year.
Everyone agrees the Postal Service needs fixing but changing it is akin to attempts to reform Amtrak.
