Wednesday, April 10, 2013

The USPS has announced that it will continue its Saturday deliveries of regular mail, counter to its plans earlier this year to discontinue the service. A mandate that the USPS had predicted would be removed has been upheld by Congress, and the GAO has determined that only delivering packages and express mail on Saturdays (as planned) was illegal.


Stopping first-class mail deliveries on Saturdays would have saved the organization an estimated $2B, a savings they desperately need.  Forecasts have the USPS losing between $15B and $30B per year by 2020.

In a society that relies at ever-increasing amounts on electronic communication, as well as competing against private delivery companies UPS and FEDEX, it is no wonder that the USPS is in the red.  If not a government institution, it would assuredly be out of business by now.  They definitely to re-examine their strategy, as Dell is maneuvering itself with HP and other computer manufacturers.

And they are.  According to the USPS website, they have had consultants give their opinions on what are the best measures to focus on.  Reports and other parts of their website speak to their continual efforts to adapt to a technological age.  Comparing itself to other countries' postal services, the USPS is serving more people, while at a lower rate.  While there is a danger of pushing away more customers with a higher first-class stamp, to recoup some of their expenses, it seems a necessary fact.

Examining the cascading risks, supply chain and distribution seem like logical jumping boards.  The USPS should consider which branch offices can be closed, with more centralized distribution services.  Their consultant report alludes to having mail carriers presorting mail by zip code before returning to the post office in an effort to help channeling mail.

I would argue that the USPS's largest costs are the branch offices.  Paying for the land, utilities, and the staff to manage these offices must be large.  Allowing mail services to be purchased online (purchasing stamps and printing them has started, for example) would reduce infrastructure costs and help get them back in the black.

Sources:
http://www.npr.org/blogs/thetwo-way/2013/03/22/175074299/saturday-mail-delivery-safe-for-now
http://www.fiercegovernment.com/story/usps-hasnt-adequately-used-pricing-flexibility-commission-says/2013-04-01
about.usps.com/future-postal-service/ensuring-viable-usps-presentation.pdf
http://money.cnn.com/2013/04/10/news/saturday-mail-delivery/index.html?iid=HP_LN&hpt=hp_t2
http://about.usps.com/transforming-business/future-postal-service.htm

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