USPS’s “Plan to Profitability”

Apply the Tourniquet  Now

The U.S. Postal Service is hemorrhaging red ink. The Postal Service recently placed a 911 call to Congress, pleading for permission to address a wound caused by a plummeting first-class mail rate and explosive adoption of electronic communication. The USPS’s proposed five-year business plan, “Plan to Profitability,” must be approved and immediately enacted in order to constrain the bleeding and sustain the USPS until 2016.

It is a critical situation – the USPS is losing money at a lethal rate. By its own projections, the Postal Service could incur annual losses of $21.3 billion and accumulate $92 billion in debt by 2016.  Instead, the USPS rescue plan calls for $22.5 billion in annual cost reductions by 2016, nearly $10 billion of which depends on Congress approving significant legislative reforms: allow the USPS to provide employee health benefits outside federal health programs, increase the First-Class Mail stamp price to $0.50 and authorize a move to a 5-day delivery schedule. When fully applied with the operational and compensation initiatives, this plan is designed to keep the Postal Service alive.

We have long enjoyed the extraordinary benefits of an extremely economical, reliable, trustworthy and universal mail and package delivery service, ranked the “best in the world” by Oxford Consulting. Since 1982, the USPS has been a self-sufficient enterprise, a model funded entirely by its users, but dependent on a steady growth in mail volume. As our communication practices have been steadily migrating to email, e-bills and e-payments, however, the volume in mail has drastically declined. This shift first reached a critical level in 2006, when the scales tipped toward the beginning of the end.

The Plan to Profitability will not fix the Postal Service, but it will keep it alive for now. Under the plan, Post Offices and plants will close, headcount will decline and service reductions will be unavoidable. After all, what do we expect from a self-funding enterprise whose top line is collapsing? Keeping the Postal Service on life support is critical while we determine what happens next.

A Full-Body Scan

Let’s say the plan is passed and the Postal Service does survive through 2016 without a bailout – what then? Do we really expect mail volumes and revenues to level off and digital disruption to subside? The Plan to Profitability will keep the USPS going, but our entire postal ecosystem requires a full-body scan to help the industry’s stakeholders re-examine the USPS’s suitability for meeting the needs of future generations.

Determining the right postal service for our nation in the coming decades raises many questions and few answers. Do we really expect to operate a profitable delivery business in a diminishing market? Is there perhaps more to the Postal Service mission of “binding the nation together” than delivering mail and parcels? How about digital delivery? What infrastructure or platform design will be required to support the fulfillment of society’s postal needs? Must the government provide the solutions or enable the private sector to do so? Who should be responsible for ensuring that the intrinsic societal values of trust, privacy and universal service that we have come to expect from our postal products will continue to be honored and maintained for the common good?

America’s Postal Service must be completely reinvented. It needs to be reimagined and redesigned. This exercise cannot be undertaken by the Postal Service, Congress or any other official body on its own. It is a national responsibility that belongs to all of us and requires bold, courageous and perhaps outrageous thinking and dialogue on all our parts.

Nothing short of a bailout is more likely to save the Postal Service than its Plan to Profitability for the near term. It should be urgently approved. And the open and independent conversation about what comes next should begin now as well.

By John Callan

Note: This POV was also featured in The Hill.

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