USPS Transformation Plan Sets the Stage for Reform

Postmaster General Jack Potter’s heavily publicized transformation plan for the U.S. Postal Service has met with mostly positive reviews from postal watchdogs.

Announced in April, the plan calls for the USPS to be privatized, restructured, or transformed into a commercial government enterprise. The USPS recommends the third option, which incorporates features of a commercial enterprise with those of a government agency.

“As a commercialized government enterprise,” Potter said when he unveiled the plan, “we could introduce flexible pricing” that would eliminate the need for year-long postal rate cases and enable the USPS to change prices more quickly to keep up with competitors such as United Parcel Service. Although postal rates would still be subject to regulatory review, he added, the USPS could improve its competitive position by adjusting prices based on market demand.

And as a commercial government enterprise, the USPS would be able to “explore a more progressive way to make collective bargaining work for all parties,” Potter said, referring to the agency’s repeated failures to gain the upper hand in negotiations with its labor unions. The Postal Service would have “the management tools that are available to private corporations to improve service, manage costs more efficiently, and leverage our assets to generate new revenue opportunities.” The 1970 law under which the agency currently operates limits the kinds of new products the USPS can offer and does not allow postal employees to be laid off.

The mailers speak

Gene Del Polito, president of the Association for Postal Commerce, says that he was pleasantly surprised at the extensive details laid out in the plan across the board. Still, he notes, “it’s up to Congress and the Bush administration to determine the destiny of the American postal system,” referring to the past seven years’ worth of failed efforts to pass a postal reform bill in Congress. Furthermore, Del Polito says, for the USPS to be truly re-created, the plan must lead to the formation of a presidential commission.

Neal Denton, executive director of the Alliance of Nonprofit Mailers, notes that Potter’s “description of the ills of the current USPS isn’t too much different from that of former PMG Marvin Runyon or Bill Henderson.” But Denton believes that Potter has taken the advice of officials often ignored by his predecessors — namely Postal Rate Commission (PRC) chairman George Omas, mailers representatives, lawmakers, and Government Accounting Office officials.

As an example, Denton cites the transformation plan’s attention to negotiated service agreements (NSAs) with major mailers. NSAs could lower overall postal costs, increase postal revenue, and keep mailers’ rates in check. “For some time, the PRC has challenged the USPS to bring NSAs before it for quick and fair action,” Denton says. “It now appears as though PMG Potter is answering the challenge.”

Likewise, Chris McCormick, president/CEO of Freeport, ME-based outdoor gear and apparel cataloger L.L. Bean, says he’s “very encouraged by the transformation plan. But reform won’t happen without each of us supporting it. And if reform doesn’t happen, we can’t keep blaming the USPS for future rate hikes.”

Of course, the postal transformation plan, which was ordered by Congress, has its critics as well. In a statement, William Burrus, president of the USPS’s largest labor union, the American Postal Workers Union (APWU), blasted the plan for proposing “billions of dollars in unwarranted discounts to giant presort mailers.” The APWU and other unions, he said, “will vigorously oppose it.”

The USPS must garner support from mailers and the postal unions before it can implement any facets of the plan. Like most anything else in Washington, at this point, it’s unclear how long that could take.

The Plan in Brief

The U.S. Postal Service’s transformation plan, which is designed to set the groundwork for government legislation to remake the USPS into a more viable operation, seeks several key changes. Among them:

  • to introduce, with the Postal Rate Commission, targeted pricing initiatives, such as negotiated service agreements
  • to coordinate postal services, products, databases, retail operations, mail preparation, payment options, and prices to better meet customer needs and capabilities
  • to find ways to create additional products and services at lower costs
  • to use existing assets, infrastructure, vehicles, and facilities more efficiently.

For the most up-to-date postal information, visit Catalog Age online at www.catalogagemag.com

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