Despite what you may be hearing in the news, all is not doom and gloom with the U.S. Postal Service. While it is true that the need for Congressional support in postal reform is beyond urgent, the agency has a number of initiatives underway to control costs, increase revenues, and make mail more relevant. I wanted to provide an overview of several key movements:
The Postal Service is still in a tight financial situation. Without the passage of a comprehensive postal reform bill in Congress, the agency has missed two pre-payments into its Retiree Health Benefit Fund and reached its borrowing limit with the U.S. Treasury as it borrowed funds to make earlier pre-payments. The focus is now on cash flow and earning sufficient income to meet ongoing expenses. Financial results in the first two months of FY2013 were stronger than expected, and we are hopeful that the trend will continue. The Postal Service releases its full Q1 results later this week.
Congressional Action Needed
We are encouraged that Sen. Tom Carper (D-DE) and Rep. Darrell Issa (R-CA), chairmen of the Senate and House committees charged with postal oversight, seem to be willing to work together to achieve reform legislation this year. Such legislation is long overdue, and we urge them to get the job done this year. Congressional support for postal reform legislation will strengthen a mailing industry that provided 8.4 million jobs and $1.3 trillion in revenue in 2012. (Thanks to our friends at the Envelope Manufacturers Association Institute for Postal Studies for the updated 2012 figures. Their full 2012 Mailing Industry Jobs Study will be published on the EMA website soon. We’ll pass on a link when it’s available.)
Postal Service Initiatives
The Postal Service hasn’t been sitting still waiting for Congress to act. Earlier this year, the Board of Governors (BOG) instructed Postal Service management to accelerate cost cutting and revenue generation activities. And in breaking news, the Postmaster General will hold a press conference at 10 a.m. EST this morning to make a major announcement regarding plans to restructure. Be sure to check back later for a summary of the announcement and any other noteworthy developments.
Management also has a number of initiatives already in the works. Cost cutting activities include another round of facility consolidations in the postal processing network. After consolidating more than 45 facilities last summer, the Postal Service will consolidate another 100 facilities this year. In addition, the Postal Service has offered a number of early retirement incentives to reduce their workforce and align with current volume trends. The most recent offer to the American Postal Workers Union has more than 25,000 employees participating.
The Postal Service is also pursuing revenue generation opportunities including a Web interface to provide advance notice of letters, flats and parcels arriving in a recipient’s mailbox and possibly managing a secure electronic communications system for other federal agencies.
Many of the promotions and incentives that the Postal Service will be offering over the course of this year are designed to highlight the connection between physical correspondence and electronic communications. The first promotion, called Mobile Coupon and Click-to-Call, offers postage discounts to mailers who include a coupon in their mailpieces that can be scanned by a mobile device and redeemed either physically or through that device. This promotion also offers discounts for mailers who include a QR code (or other symbology) that allows the recipient to respond to the offer in the mailpiece by scanning the code to initiate a call.
The Postal Service is Here to Stay
Despite its financial challenges, the Postal Service is too important to American commerce not to survive. Postal management has repeatedly said mail delivery and service are job one, no matter what pressures they are under. However, the Postal Service does need support from Congress to reshape its business model for the 21st Century.
We encourage you to join us in telling our Congressional representatives that we need postal reform legislation now – American commerce and 8.4 million jobs depend on it.
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