USPS prepares for foreign forays

The U.S. Postal Service’s global business organization is poised to be a major player in the international postal arena.

Paul Vogel, senior vice president and managing director of the newly reorganized unit, emphasized this in a recent interview with DM News.

“We’ve done our market analysis, met with any number of customers and integrators and sister posts around the world to see the type of support or services they need from the U.S. Postal Service,” he said. “So we have a very good feel for the generic products that people would like to see us start getting into.”

Postmaster General John E. Potter announced the new unit last year. It was built on the successes of Jim Wade, the USPS international business vice president who retired in August. Under Mr. Wade’s leadership, international business added $1.8 billion to USPS revenue last year.

Mr. Vogel manages USPS worldwide business with a focus on international business management, international financial and business analysis, global network strategy and technology, international relations and international operations, including the agency’s five International Service Centers.

The generic products Mr. Vogel referred to are the simplified international shipping options the USPS has proposed to make it easier for customers to use the products. The proposal, published Dec. 20 in the Federal Register, would better align USPS international products with the agency’s well-known domestic products: Express Mail, Priority Mail and First Class Mail. The USPS would merge eight current options into four alternatives by combining products with overlapping service standards and prices.

“We just had too many different names, and it was confusing to our customers and to our international processing people as well,” he said.

While these changes affect individual customers, the USPS also plans to reinvigorate its bulk products.

International Surface Air Lift provides delivery of the same types of mail, but with a minimum volume of 50 pounds per mailing. ISAL shipments are flown to foreign destinations and entered into a country’s surface or non-priority mail system for delivery.

International Priority Airmail is a volume service providing worldwide delivery for businesses sending mail weighing up to four pounds. This can include invoices, direct mail, catalogs, small merchandise packages and business correspondence.

But instead of offering these services as a retail option as the USPS now does, “if a commercial customer wants to do more work share out of that, we would want to go into a contractual arrangement with that customer and negotiate a different rate structure with them,” Mr. Vogel said.

All of this activity would be “spinning off our existing products, and this is the type of feedback we are getting from our commercial customers,” he said. “These customers all have their own little uniquenesses, and we have a generic suite of products that don’t necessarily conform to their needs. So we are looking at becoming more accommodating of our customers’ individual needs.”

Mr. Vogel said the USPS considers its commercial customers both traditional mailers as well as large integrators and consolidators.

“We are looking at all of these customers to help us with this effort and make it worthwhile for them,” he said. “The domestic theories of pricing, discounting, outsourcing and work sharing – which have been tremendously successful on the domestic side – will be applied to the international world. I just have to have a different type of organizational structure to support that, and that’s what I’ve been working on over the past couple of months.”

Mr. Vogel said he is hiring people for the unit. Administrative/ executive staff will total 135, and he will have a profit and loss statement for which to judge the unit’s performance. This differs from other groups in the USPS. The 135 employees do not include those in the International Service Centers in New York, Miami, Chicago, Los Angeles and San Francisco. Craft employees there total 4,000 to 5,000.

Mr. Vogel said that the USPS sees growth opportunities in eastern Europe, the Arabic world, South America and Asia. While bigger Asian countries such as China, India, Japan and South Korea offer opportunities, “the baby tigers such as Vietnam, Thailand and the Philippines are also developing infrastructures,” he said.

The USPS advises the posts in these countries, Mr. Vogel said, and they help the USPS with IT technologies.

“We’ve created some very good partnerships with many of the posts in Asia,” he said. “We can help them in creating products that we believe people in the U.S. would need. Priority Mail, for example, is not a product known around the world.”

These partnerships contrast with any effort to buy or control private sector competition, as Mr. Vogel told the International Mailers’ Advisory Group last month that the USPS “was not going to be a Deutsche Post.”

The USPS is considering co-branding of products with these posts, he said, so that first-generation immigrants in the United States who want to send materials and money to their families in their home countries turn to the USPS.

“Their first choice is to go to the posts in their countries because these are very trusted third parties,” he said. “But we believe we are also trusted third parties and that they can come to us first. But we need to earn their respect.”

Despite its large consumer economy, western Europe is a little more challenging thanks to confusion in the postal sector, Mr. Vogel said.

“Part of that is because all of the posts are privatizing and the European Union is liberalizing all the posts, and they are all competing with each other so aggressively that I’d like that to stabilize a little bit,” he said.

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