The United States Postal Service recently delivered its transformation plan to Congress. The plan offers solutions to the current financial situation the service faces and, in the long-term, calls for a new business model to replace our 30 year-old operating structure.
Switching to a new business model will require legislative changes, essentially rewriting the 1970 Postal Reorganization Act that formed the current agency.
The U.S. Postal Service gets most of its revenue from first class mail – the kind used to pay bills and write letters.
Any decline in first class mail has huge consequences, since two-thirds of our costs are covered by the revenue it brings in. Add to that equation the 1.7 million new addresses created every year, nearly 18,000 in Utah, and you can see the crisis the service faces.
But we have solutions. In the long-term, the postal service will ask the U.S. Congress to adopt a new business model, called a commercial government enterprise.
Changing to a CGE would be a large step toward placing the U.S. Postal Service on more businesslike footing.
Postal employees would be expected to provide traditional and non-traditional products and services and implement market-based pricing. Universal mail delivery would be maintained by giving the agency the flexibility to survive in a new economy.
We will also cut costs.
The U.S. Postal Service cut $2.5 billion dollars in operating expenses since 1999. The postmaster general has asked us to cut $5 billion more nationally on an annualized basis during the next five years.
The old legislation served the country well.
In Utah alone, we deliver more than 27 million pieces of mail every week. The figure represents in excess of 1.4 billion pieces every year to more than 930,000 businesses and homes.
No system does what the U.S. Postal Service does. But what organization can keep the same business model for 30 years and hope to survive? Organizations must be able to change in order to survive.
Thirty years ago, no one could have predicted the rise of the Internet, electronic bill payment and competition from global mail providers.
Mail volume nationally and in Utah has always had steady increases and our old business model counted on volume always climbing. But that has changed.
Nationwide, the U.S. Postal Service lost $1.68 billion in 2001 and could lose close to $2 billion in the present fiscal year.
The transformation plan also allows the U.S. Postal Service to better meet changing customer needs, such as increasing access for consumers.
The Salt Lake district has 300 post offices and other retail outlets. But there are quicker, more cost-effective ways to get basic services like stamps.
People already purchase stamps by phone and over the Internet, but we will also explore other non-traditional outlets.
The U.S. Postal Service plans to offer simplified, pre-paid package shipping so customers can pay by the size of the box, not the weight.
And the organization recently introduced a product called Confirm, part of the new generation of “intelligent” services that allows large businesses to track mail in near real-time throughout the postal system.
As the district manager for Utah, I am excited to be a part of the transformation plan. Delivering the mail is a public trust. And the U.S. Postal Service is committed to guaranteeing mail delivery well into the future.
The transformation plan submitted to Congress by the postal service is the first step in the process of guaranteeing mail delivery well into the future and sparks the public policy dialogue with the American people.
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