At a recent industry meeting, the U.S. Postal Service indicated that it is assuming it will see rather modest declines in First-Class mail volume. That is, declines around 1 percent. It strikes me that forecasting declines of this little magnitude, though they may turn out to be accurate in the short term, may mask the extent of the problem the postal service faces.
Nearly every large bank, financial institution or mailer of First-Class statements has or is working on a program to leave the mail. Even AOL has announced that it soon will unveil a program, to be called “AOL bill pay,” letting AOL subscribers pay almost all their bills online through AOL. Since many, if not most, AOL subscribers already pay their monthly AOL connect charge via an automatic credit card debit, this feature should prove popular.
First-Class mail declines of a magnitude of just 5 percent could pull nearly $2 billion in revenue out of the postal service, with no meaningful effect on the size and requirements of its delivery network.
The current postal reform proposals, to have any positive impact, must do two things:
· Provide meaningful relief from unfair pension expenses.
· Give the postal service the ability to right-size its infrastructure.
It is unrealistic to think that the USPS can continue to exist in its current form if it remains on the path of delivering less mail to more locations.
Frankly, I’m of the opinion that some industry supporters of postal reform are just hoping to get a few years of rate stability until they can move a significant portion of their customer base to online bill presentment and payment. Similarly, some in the advertising mail community support reform because they think it will shelter them from above-average rate increases. Neither group is likely to get the benefits from the current reform package that they seek. When will this charade end?
However, for better or for worse, recent revelations in Iraq are likely to distract Congress even more from postal reform. Therefore, for the next few years, the key elements for the USPS remain internal changes.
First and foremost remains the focus on costs and the size of the work force. Postmaster general John E. Potter and his staff continue to take big chunks out of the labor complement. And the good news is that delivery service seems unaffected.
Second, postal leadership needs to find and nurture an entrepreneurial spirit first among itself and then to the balance of USPS employees. The good news is that such a spirit seems to be taking hold, at least among letter carriers. Let’s look at a new program to discuss that point.
At the end of April, the USPS expanded its “Carrier Pickup program” to 204,000 city and rural carrier routes. In this program, postal customers can go online to request next-day package pickups. As yet, there is no fee because the packages are picked up as part of the carrier’s standard delivery route. However, it’s required that the package have the proper postage affixed when the carrier arrives for the pickup.
An allied program is “Click-N-Ship,” an online service that calculates postage and lets customers print and pay for labels. Potter said early indications are very positive.
However, increases in parcel volume won’t save the postal service, as this mail accounts for less than 5 percent of its revenue. Yet, increases will be a big morale boost and could lead to other types of cooperation, perhaps even some sales campaigns.
Success in these programs could lead to action on developing a mailing-on-credit program. Or the postal service could start by giving the carrier the ability to do credit card transactions. In any case, it’s a very good sign that both the rural and city letter carrier unions signed on to this program. Clearly, the carriers are the backbone of the USPS. Enhancing their role will bode well for the future. It’s too bad that the other and largest postal union, the American Postal Workers Union, seems to be fighting the postal service and mailing industry at every turn.
It is time APWU leadership realizes that the future requires change at the postal service and that the mailing industry is not the cause of current problems. I trust the union’s leadership will awaken and sign on to the future and not the past.