Global Shipping/Logistics Issues

At PostalVision 2020 most recent conference also include a wealth of information and discussions around how posts are dealing with the changing shipping/logistics global landscape.  Brody Buhler (pictured above), Accenture, facilitated a panel including USPS Inspector General David Williams, Postal Regulatory Commission Acting Chair Robert Taub, SwissPost Deputy CEO Ulrich Hurni, and Universal Postal Union (UPU) Deputy Director General Pascal Clivaz, discussing global issues relative to the posts and shipping/logistics arena.


Postal Consulting Services President, Kathy Siviter, reviews PostalVision 2020/5.0 in the final section of a nine part series.


In response to the question of what the calls to action would be from the PostalVision 2020 conference, Hurni said that although there has been a lot of information about industry trends and ecommerce, shifts from sender to receiver, push to pull, and the tremendous opportunities for posts in international business, mail is still declining and that remains the core business for SwissPost and will be so for at least the next five years. He noted that some posts are already thinking about doing only 5 day or less per week delivery, with New Zealand post only delivering 3 days per week.  But if the receiver is the major customer, should they pay for extra days of delivery service? He noted that a previous SwissPost executive had proposed charging households a flat fee to get mail delivery 6 days per week and was subsequently fired because the Swiss did not like the notion of paying a fee to get their mail. The customer is always who pays the bill at the end of the day, he said, and in the case of mail, it is the sender who pays the bills.


Clivaz said that the UPU has been talking about customs and terminal dues issues for 20 years, even before ecommerce, but it is essential to keep working on these issues with the growing ecommerce trends. The UPU wants to be a trade facilitator worldwide, he said, with the role of ensuring growth in the economy. He said it is important that the inter-governmental level organizations like the UPU work with private sector companies to develop solutions and create a worldwide network for ecommerce. It’s not about who will be delivering the goods, at the end of the day, it is up to the UPU member countries to decide that, he said. Clivaz noted that the UPU World Strategy conference is coming up, which will be an important opportunity to integrate ideas and challenges at international and national levels to ensure the business models are sustainable.


USPS Inspector General David Williams told the PV2020 group that things are moving very fast in terms of changes, producing remarkable advancements but also leaving gaps in some services. The USPS could act as an intermediary in helping the public and the progress of the nation by enabling people to use the new offerings and systems that are emerging in this digital era. The Postal Service has been a valuable infrastructure and it can continue to adapt to meet current challenges. Among the ways it could serve emerging needs is to become an identity portal for e-commerce, e-health, and e-government. Williams said there is a huge market for residual infrastructure services. Everyone is fleeing to digital but leaving behind fragments that alone can’t survive but could help each other. Financial services, health services, e-government services all will move to digital but will leave behind many essential services that the USPS could take over, he said. “Our job is to pull friction out of ecommerce and minimize the cost of transactions,” Williams told the PV2020 audience.


Velocity doesn’t matter without focus, however, Williams said, noting that although the USPS has made an outstanding optimization effort in its network changes, it needs to determine who it is now and who it will be in the future. Are we giving citizens and commerce the services they need to thrive in the digital age? Agility matters, and will the USPS have that agility? The universal service obligation is a burden, but could also be an asset, he said. What if it became a platform that connected citizens and commerce?


The USPS Inspector General said we are drowning in torrents of data. The data is unlimited but we are not. So we need to figure out how to map that data in a way that makes sense and makes it usable for us. We need to map the internet to ourselves and then map the Internet of Things and Postal Things to ourselves. The Postal Service needs dashboard and visualization tools to make sense of all this sea of information, he said.


Acting Postal Regulatory Commission (PRC) Chairman Robert Taub told the PV2020 group that looking at the USPS’ role from a government perspective, there are big public policy challenges to be dealt with. He said that conferences like PostalVision 2020 are very valuable in getting those outside the intimate postal world to think about the implications for the future and what is needed in the postal sector. He said the public policy issues around the future of the USPS are complex and absent a crisis, it is difficult to get Congress to focus on the issues and get legislation passed, but forums like the PV2020 conference could produce a white paper or report to be added to the body of work available for Congress when the time comes. He said the USPS’ universal service obligations are one of the drivers of the discussion about what we need from a postal system, what the costs are, and then understanding how we ensure we have a self-sustaining postal service in the future. The PRC chair said that there is a great deal of strength in the U.S. postal system, and that strength will keep the USPS around, but we need to deal with how the institution can thrive going forward.


Taub noted key themes from the PV2020 discussions are money and data, both of which offer opportunities and challenges. It can cost a lot of money to do things such as customs improvements for posts or efficiency improvements for global ecommerce, but there are also opportunities there. Data is needed to operate systems to facilitate the commerce, he said, which has to be in our minds as we look at solutions going forward. He said one of the biggest takeaways is the confirmation that traditional marketplace that posts have operated in are quickly disappearing, with a lot of transformation and immense change coming, which has a lot of unintended consequences that must be dealt with. How do these changes impact the USPS and the role it plays in the U.S. and in the economy, and what are the issues that arise as it transitions from a focus on letters to packages? What implications do those changes have on its infrastructure and funding?


In response to audience question about whether letter mail delivery is somewhat subsidizing package delivery, Taub said that the costing systems in the postal world are about 45 years old and were initially developed under laws in effect in 1970, with attributable and institutional cost components and methodologies. He said the USPS has refined data and systems over the years, and has been able to provide vibrant data to the PRC and in the public domain. He agreed there are ways to improve the systems and methodologies, but said that based on what the law requires and how costs are measured, the USPS today is covering its costs in Competitive Services (package) but also contributing to institutional costs above and beyond what is required. He said that a lot of the USPS’ losses are primarily on the Market Dominant side, and the majority of shipping services products under the current law/structure are covering their costs and contributing to the USPS’ overhead costs.


The panelists and others at the conference agreed that agility will be a key issue in terms of the USPS success in the future. Williams said he is not very worried about the shifting mail mix in terms of letter volumes declining and parcel volumes increasing because when you think about the organization’s duty to U.S. commerce and the American public, the way ahead does not seem troubling, but the greatest challenge will be the USPS’ ability to be agile.


Individual speakers’ presentation slides may be viewed here and Google Hangout full conference video here.


By Kathy Sivitar

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