At the end of March, I penned a posting in somewhat of a rant, regarding the evolving financial crisis within the U.S. Postal Service (USPS). At the time, postmaster general John E. Potter indicated that the agency was facing loses of historic proportions and would run out of money this year unless its gets help. My rant was essentially enough is enough, no more bleeding without a strategic plan..
To add even more creditability to Mr. Potter’s warnings, the agency has just reported a $2.4 billion net loss for its fiscal third quarter, exceeding a $1.6 billion loss in the previous quarter. The agency now predicts that it will lose more than $7 billion by the end of its fiscal year. That is obviously a cause for collective concern.
Similar to what led up to the crisis that occurred within U.S. automotive OEM’s Chrysler and General Motors, the USPS is suffering from failing to grasp dramatic shifts in customer needs, and is likewise burdened by legacy financial costs relative to pension and benefit plans.
The Government Accounting Office (GAO) and post office executive management are implementing various means to consolidate operations, close offices, cut-back in service, and reduce the overall workforce, which should collectively be applauded. New initiatives for automation, web-based customer interaction, and the newly announced priority mail flat rate shipping program, are novel and should also be applauded.
In my view, all of these efforts will not solve the overall structural problems of the USPS for two reasons. First, this is after all a governmental agency that is controlled by the Congress and subject to all forms of political maneuvering to save and protect jobs, or favor local district influence. Second, as with Chrysler and GM, an objective re-thinking and reorganization is the only way to effectively deal with accelerating the inevitable structural changes that need to be addressed within the USPS.
Now before any readers jump to conclusions as to my motivations, let me be very clear. The U.S. needs a vibrant and efficient postal service, and I am not arguing a sole case for privatization. Questions around the cutting back the frequency of mail delivery, consolidating or eliminating post office locations, or whether all of us to have to pick-up our own mail have emotional and far-reaching consequences. Neither am I advocating for placing existing postal workers into the unemployment ranks or another massive financial bailout funded by the U.S. government, but I fear that the current course is leading in that direction.
Second, the USPS does provide a required and beneficial service. There will always be some form of paper mail, albeit smaller volumes. The existing USPS logistics and transportation infrastructure was established to support much higher volumes that exist today, or perhaps into the future. Yet, that same infrastructure has the ability to support, deliver and pickup mail and parcels from every U.S. residential address, urban and rural. The open question is what infrastructure should be maintained vs. what that can placed under a more variable vs. fixed-cost model. The USPS already contracts for certain backbone infrastructure air and surface delivery capacity from private carriers. What about other opportunities? Can a postal facility service both public and private needs?
As I noted in March, the time is long overdue for an independent task force to address the structural problems of the USPS, both financial and operational. It’s time for objective thinking. Congress needs to recognize the reality that the USPS situation can no longer be put-off to another fiscal year. Similar to the urgency and creativity exhibited by the automotive task force, the time is now for independent, objective thinking on how to preserve the mission of the USPS.
Once again, what do you think?
Should an independent task force be immediately put in place to address the USPS mission and goals ?