So How Are We Really Doing?

The Postal Service is a very large organization with a lot of moving parts, all subject to error. It is easy for critics to point to mistakes, and it is tempting to build policy recommendations based on anecdotes, personal opinion and even mistaken assumptions.  That may be where we have been for a while. We need to move on.

Profit is not the Goal

The Postal Service is not a private sector corporation.So how It is not designed to maximize profit. It has no “owners” or shareholders who demand return on their investment. Until the Postal Accountability and Enhancement Act was enacted in 2007, the Postal Service was organized around “break-even” financial requirements, and has a number of explicit constraints on its ability to operate.

The Postal Service is required by law to provide public services and government functions without consideration of cost or compensation. It must also be much more transparent than most private sector firms, and is expected to treat employees, customers, suppliers and others in a fair and equitable manner (non-discrimination). It cannot be “unfair” to competitors. The annual independently audited financial statements and the 10Q’s do not provide a complete picture of the Postal Service’s finances.

Action Items for the Mailing Industry and Public Policy Makers

The financial position of the Postal Service is determined by many things other than competition, market demand and operational efficiency. This includes, but is not limited to:

  1. So How 2The need for a more precise definition of public service, the relevant costs, and must be shown how to pay for those services without unduly burdening business mailers;
  2. A break out of the costs of providing specific governmental functions such as the Postal Regulatory Commission, Inspection Service, and Inspector General. These are “taxes” on postal services and are independent of postal operations and management control;
  3. More analysis of which private or public sector “best practices” are most relevant for the Postal Service. Government agencies are run differently from most corporations. While there are essential similarities, Congress requires federal agencies to observe procedural steps that are not generally required of corporations. The Postal Service appears to be exempt from some of these requirements, but some processes (human resource, procurement, etc.) are more aligned with government than the private sector;
  4. Exploring structural and financial flexibility adopted by other posts. Some of the growth of corporate organizations comes from mergers, acquisitions, and other financial operations, including the investment of pension funds or other reserves. This can be a source of innovation for corporations. Some foreign posts have this capability and have demonstrated success in using it. The USPS does not have this flexibility, but should. At the very least, it should have much more flexibility to develop public/private ventures that benefit customers and the mailing public; and,
  5. Industry and postal collaboration on improving the design, production and acceptance of mail. The value chain must become quicker, more responsive, and easier to use while protecting revenue generation.

Policy Makers Should Evaluate Results, Not Micromanage Operations

The goal is to provide universal delivery to a growing networks efficiently as possible.So how 3 Independent studies suggest that the USPS does this better than any postal system in the world, especially given the relative delivery densities of different nations.

Every household and business in the country has access to a well-regulated and trusted delivery system. All it takes is a stamp (or permit) and a mail box. Both are relatively inexpensive (compare phone or Internet access fees and the cost of devices) and easy to use. Every user of a specific mail category pays the same price (among the lowest in the developed world) and gets the same service (reliable, consistent and accurate delivery, with high levels of consumer satisfaction, as documented by the Postal Regulatory Commission’s Annual Compliance Determination Report).  The current policy attention on facility and post office closings, and days of delivery are distractions unlikely to solve any real problems – and are the exact opposite of how the world of modern logistics and distribution works.

The Industry Must Invest in New Capacity and Capabilities

Instead, policy makers should be facilitating strategic discussions on how to improve the core operations, including but not limited to:So how 4

  1. Investing in modern robotics and other materials handling technology for mail and package processing;
  1. Applying artificial intelligence and data analysis to postal operations;
  1. Using distributed networks to capture and scan mail (such as checks) at origin and use electronic transactions instead of physical handling, and converting electronic messaging to printed documents for physical delivery close to the destination (hybrid mail);
  1. Developing partnerships to develop and manage documents (document management and the digital front end of mail and);
  1. Upgrading the postal vehicle fleet to provide new capacities (to handle more packages) and new capabilities (connected, smart vehicles and carriers with wearable technology); and,
  1. The application of “the Internet of Things” or the physical Internet to postal mail and package operations.

The industry stands on the edge of an exciting new wave of potential opportunities. Will it take the plunge, or continue to play in the same old wading pool, with the same equipment, systems, and processes?

By Kent Smith

Kent Smith is Research Director, Ursa Major Associates / Postal Vision 2020. His 38 year career in the Postal Service included Rate Classification Research, Market Research, and Strategic Planning. Ursa Major Associates / Postal Vision 2020 is dedicated to taking a broader, longer-term perspective on the future of the mailing industry ecosystem. The thoughts expressed in this “Point of View” are his own.

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