I love my job,shares Postmaster General John E. Potter. And how could he not? Hes at the head of the United States Postal Service during a time of innovative changes, exciting new laws and ground-breaking initiatives. The package aspect of the Postal Service is growing rapidly, successful partnerships with FedEx, UPS and DHL continue to be profitable and the New Law enables the Postal Service to have greater flexibility than ever before. Plus, the USPS is going full steam ahead when it comes to making its products and its organization as environmentally friendly as possible. Yes, its no wonder that PMG Potter is pleased with his job and his organization. And if the feedback hes been getting is any indication, millions of USPS customers and the Board of Governors are pleased as well.
At Last, an
The Postal Accountability and Enhancement Act, the first major legislative change to the Postal Service since 1971, will have a major impact on the parcel sector. In addition to establishing two separate product categories Market-Dominant products (such as First Class Mail) and Competitive products (such as parcel shipments, Priority Mail and Express Mail) it also prescribes a new process for setting prices. Increases for Market-Dominant products will be capped at the Consumer Price Index, by class, while pricing competitive products is more flexible under the New Law.
While the words setting prices often send shippers into a panic, PMG Potter is quick to assure us that those worries are completely unfounded. If anything, its a plus for customers, as the pricing flexibility will allow the USPS to offer people discounts and rebates for using the Postal Service.
The New Law offers other benefits, as well. We can now conduct tests with our pricing on a regional basis or even on a more isolated basis so that we can truly test market conditions, Potter explains. The pricing flexibility will also let us react quickly to changes in the marketplace. We saw an example in March when we introduced a new Priority Mail Flat Rate Box in a size larger than we had. We wouldnt be able to get to market as quickly if we had been living under the old rules. It used to be about an 18-month process to get a price change, so we were unable to react to anything that occurred in the marketplace. Were looking forward to [being able to] quickly respond to meet changing customer needs.
Changing the Status Quo
Of course, with any major change in law comes a change in the organizational structure. The USPS recognizes that there are going to be modifications, both from a personnel view and an operational view. Basically, were going to have multiple offerings, so when it comes to retail products [like parcels], well have a published rate that anyone can take advantage of. And then well have a rate for people who want to use other channels, so if you buy online, you can pay a lower price than you would at a retail counter. Then well be able to offer some volume discounts to folks, and well create some thresholds and publish those rates; beyond a certain level, youll either get a discount or rebate. And in the future, well have contract pricing for larger customers.
For USPS salespeople, that means theyre going to have to be even more knowledgeable and well-informed when it comes to the various service levels. The whole negotiating piece is a skill set were going to have to develop. Up until now, if someone had packages, we could take out a calculator and do some simple math to determine the price. So were going to move into an area from one that was strict computation to one that is more of an art. Our people are excited about it, and I think theyre going to adapt well to this new way of doing business.
From an operational standpoint, the goal is to make the sorting and organization of packages and mail more streamlined. The best way to become efficient is to make sure mail is properly addressed and has good quality barcodes on it, so when it comes into our system, it only has to be handled once through the process, he comments. For example, if we were sending mail from DC to someone in California, but the person had moved to Montana, we would send it to California first, then it would be forwarded to Montana. Today as we read addresses, our systems have the latest information on people moving, so we can actually readdress the piece in DC, putting on the new Montana address. Ideally, wed like all customers to use similar address update information on a more frequent basis so we dont have to forward mail, and we eliminate mis-addressed mail as much as possible.
The Last Mile and Now the First Mile
The changes allowed under the New Law, combined with the increasing popularity of online shopping, underscore the ever-growing importance of packages to the Postal Service. Packages are a good source of revenue, Potter explains. Its an area we think will continue to grow as more and more people shop online and have what they buy delivered. Everyone looks forward to getting their mail, especially packages. Its an important segment for us, and I think were well positioned to provide convenience, choice and make peoples experience with online shopping one thats pleasurable and works for them.
With the package market growing rapidly, it makes sense that the USPS will continue to strengthen and maintain its partnerships with UPS, FedEx and DHL. For big shippers, the USPS offers a Parcel Select rate for consolidators, who drop packages into the USPS stream for the last mile of delivery. It also offers shippers the chance to drop mail further upstream from a delivery unit and avail themselves of reasonable rates. Our partners are probably considered unusual in the sense that they are our biggest competitors when it comes to ground package delivery, Potter says with a laugh. Theyre the ones who use the Postal Service, largely in rural and suburban areas, to deliver their packages the last mile, and it makes a lot of sense. Our folks are there every day, and were driving our vehicles out to that home already. Its a competitive advantage in the marketplace to use the Postal Service for the last mile, and I think its something that will continue to grow. Not only is it an advantage for the Postal Service and its partners, but customers benefit as well. When the USPS partners with a traditional competitor, the consumer receives faster, lower-cost service for the packages that are shipped to their households.
The last mile is not the only place that the Postal Service is leveraging its strengths, however. The first mile is an increasingly important component of the service provided by the USPS. Potter shares that Click-N-Ship is one of the most popular USPS services because it offers customers the ability to pay for their packages on their home computers and have the shipments picked up at their doors. Thats a huge advantage and convenience for American consumers and for businesses, particularly small businesses, Potter explains. And the increase in online shopping means that there is, necessarily, an increase in returns as well. We are enhancing our return product, so just like Click-N-Ship you can go online, print a return label and schedule a free package pickup. Were looking to expand our returns business, and we intend to price it so it becomes attractive in the marketplace. We want everyone whos using us for the last mile to use us for the first mile of the returns leg. So youll see us putting more emphasis on that.
More and Better Service to Really Compete
Right now, service levels for package shippers are at the highest theyve ever been. However, this benchmark isnt cause for complacency for Potter or his team. Anyone can improve, he shares, and our goal is to continue to build upon service and our record. We have to work on becoming even more transparent than today when it comes to tracking and tracing capabilities. We need to go the next step. Today, for example, a piece of Express Mail gets scanned an average of six times from the time its accepted until the time its delivered. We think theres an opportunity to do even more scans, making the mail even more transparent. We know that doing this will provide better information to customers and improve end-to-end delivery time.
By making packages more transparent in transit, it gives shippers more insight, which allows them to lower costs and improve relationships with their customers. Honestly, I think all this information will go a long way to getting people to understand just how good the Postal Service is, because I think there are some incorrect perceptions out there. The whole notion of being more transparent is going to be helpful to us and our customers.
Green: The New Color Trend
Obviously providing reliable, efficient service to all of our countrys residents is of the utmost importance to the USPS, but Potter recognizes that there are other issues that demand attention, as well. For some, going green seems to be merely a buzzword, but at the USPS, that concept is a reality. Potter says that he was shocked when he found out the USPSs old box had 1000 components that went into its manufacture. The USPS then converted to a much more environmentally friendly package and is the first and only carrier to receive cradle-to-cradle certification. You can recycle this packaging, you can put it in a landfill and itll decompose, he says. Plus, most of the harmful chemicals used in manufacturing and in the inks were eliminated.
But more environmentally friendly packaging isnt the only initiative the Postal Service has adopted with respect to going green. More and more people are purchasing goods online and having these packages delivered by the Postal Service, which means fewer trips to the mall by consumers. Additionally, by providing the last mile of delivery, there is only one vehicle on the streets that makes stops and delivers packages, as opposed to two or three delivery trucks.
Potter notes that this concept is becoming more and more accepted worldwide. When I was in Europe recently, I heard there were a couple of towns there that are thinking about licensing a single company to deliver within the confines of the incorporated towns, he shares. Basically, youre better having one truck make four stops rather than have four trucks making one stop. If you think about our Parcel Select product, thats the advantage we offer. Were providing a much more environmentally friendly delivery on that last mile because were already there anyway, eliminating the need for multiple trucks to go down the street. Add in the fact that many of the Postal Service buildings are green (and no, were not talking about the color), and its obvious that the Postal Service is doing its part for the environment.
Yes, its no wonder that PMG Potter loves his job. Its an exciting time to be the head of an organization that has 37,000 retail outlets, over 253,000 collection points and, most importantly, is at every single address all 148 million of them six days a week, while still managing to have a positive environmental impact and assist its customers in lowering their costs. The future of the Postal Service is bright, thanks in large part to John E. Potter. And hes adamant about sharing credit with USPS employees from coast to coast.