I’ve shied away from writing about the United States Postal Service in this column. The reason is simply because the situation is so dynamic that it lends itself more to the immediate feedback from social media rather than the lead time required for print. By the time this does go to print, who knows what new legislation, regulatory commission finding, plant closing(s), or other issues may be in the spotlight? Thus my reluctance to weigh in and run the risk of authoring dated material.

However, as a big supporter of competition in the parcel shipping arena, I think that the United States Postal Service has an important role in maintaining a competitive landscape and wanted to discuss some areas that are major concerns for them.

I attended the National Postal Forum in April of this year. Postmaster General Pat Donahoe gave one of the keynotes, and in it he outlined four basic strategies for the USPS. One of the four, I was pleased to learn, was growing the parcel business (he actually said “growing the package business” but I’m taking a liberty here for the readers of PARCEL). PMG Donahoe mentioned some of the gains they’ve made in growing this business, all of which has centered primarily around the ecommerce market and both outbound and return shipments.

Our 73rd PMG put a lot of emphasis on technology. For example, one of the past criticisms of USPS was the lack of visibility. PMG Donahoe noted that in 2010, the average package was scanned five times. He stated that as of today, the average package is scanned 10 times – and that USPS would continue this trend as scanning is a major growth strategy for it. In fact, it is testing hand-held scanners to provide real time information from the letter carriers. That’s great news and a good strategy; without world-class visibility, the USPS would be at a strong disadvantage to the other carriers.

The other area that has really worked well for USPS is the “if it fits, it ships” campaign. Talk about marketing your sweet spot! They recently added a large ‘C’ box (a little over a cubic foot of space with a maximum weight of 25lbs) bringing a total of five different size boxes into this family of services. The USPS needs to continue with communicating its sweet spots in these very tangible ways and to increase volume with the same type of volume incentives competitors use to increase package circulation in their networks.

The USPS has also taken a critical look at their return services and has three basic options at different weight, size, and time in transit. As part of these improvements the USPS has implemented a “Scan Based Payment.” As the pieces go through the USPS system and are scanned, the data is used to calculate the rates. There is no manifesting.

The US Postal service has its work cut out for them. Right now they are encumbered with a few forms of NIMBYism (Not in my back yard). There’s the classic scenario, playing out where USPS is trying to get its hands around cost by closing postal facilities, with politicians agreeing that USPS needs to get a handle on costs, but not in their state. But there’s also another interesting NIMBY attitude where the backyards are markets rather than physical locations. As USPS tries to improve services they are running into ancillary industries that have business models based on the way the USPS operates. Some of these industries are telling USPS they cannot make improvements as it will undermine the industry that grew around the inefficiencies. Even when improving basic shipping delivery services, USPS has been criticized when it goes after market share with anyone else as they have an ‘unfair advantage as a government entity and/or monopoly. Complaints are filed, and committees appointed and USPS gets caught in a grid lock. Competitors and well-paid analysts suggest selling greeting cards or getting into banking, while existing market leaders shout “foul” when suggestions are made to let USPS use their existing infrastructure to move pharmaceuticals or other regulated goods they cannot process today (because of dated regulations).

While the accountability act of 2006 was put in place to provide flexibility so that USPS could be more cost effective, the act has also provided some heavy baggage. The inability to move funds from a shrinking business, in order to help position itself for the next generation USPS, because the dwindling service is ‘market dominant’ versus a ‘competitive product’ is a handicap no other industry faces. Moreover the pre-funding by 2016 of retiree health care benefits, are just two examples of the 2006 act that should be revisited. 

I don’t have all the answers, but I do believe that USPS needs to be able to adapt quickly. Telling them to stick to what they do best, and cut head count, is basically telling them to go down with the ship.