Future Strategy of the USPS

Future Strategy of the USPS

The world is undergoing a technological revolution -- the latest in a long history of revolutions that has transformed the world. For more than two centuries, the United States Postal Service has accommodated changes, creating a major communication infrastructure in this country that made interstate commerce and universal delivery a reality.

Universal postal service is a crucial part of the United States and its economy. However, the future of the United States Postal Service (USPS) is unclear (Pearse and Johnson, 2002). Challenged by the increasing costs of an inefficient delivery network and the popularity of electronic mail (email), the USPS has accumulated over $90 billion in debts and unfunded obligations and an unstable financial outlook. Absent fundamental reforms, the risk of a significant taxpayer bailout, and dramatic postage rate increases are just some of the challenges that the institution faces in the near future.

As the needs of postal customers evolve with the latest technology, the postal service must continue to evolve to meet those needs. Americans demand that the postal service incorporate protection and integrity, quality, convenience and speed.

Direct Marketing Association senior vice president, government affairs Jerry Cerasale commented on the need to increase in private-sector partnerships to maximize the use of the private sector for delivery while using the USPS's core first- and last-mile delivery competency (Miller, 2003). "If you can do it cheaper and more efficiently in the private sector," he said, "contract it out while leveraging that first and last mile of delivery."

The USPS has long relied on First-Class Mail to generate income (Pearse and Johnson, 2002). However, as volumes are experiencing long-term decline, it is clear that more Americans are using cheaper electronic alternatives. The rates of growth for First-Class Mail and Standard Mail, which together generate more than three-fourths of all postal revenues, have been in long-term decline since the 1980s.

The Internet threatens to speed up this trend significantly. Email is a major competitor for regular mail as the medium of choice for savvy consumers, and the migration of routine correspondence from snail-mail to e-mail is expected to eat into the revenue base of the USPS from First Class and Bulk Mail in the upcoming future.

Unless postal expenses can be significantly reduced, it is questionable whether affordable universal mail service via the USPS is sustainable. In this light, the USPS should consider offering all American residents a service that would route their physical mail to an email account.

As a main business strategy, the postal service should concentrate mainly on its core value: universal mail service. According to Pearse and Johnson (2002): "Delivering high-quality service in an era of stagnant mail volumes will require the Postal Service to recognize that as demand for its services contracts, so, too, should the institution. To do so without sacrificing essential services, however, will require the Postal Service to focus on its core value: the reliable, affordable delivery of the mail to every American home and business."

While the Postal Service in recent years has explored numerous new revenue streams far beyond normal postal services, it makes more sense that the USPS focus instead on products and services related to the delivery of letters, newspapers, magazines, advertising mail, and parcels.

According to Pearse and Johnson (2002), the mission of the Postal Service should be "to provide high-quality, essential postal services to all persons and communities by the most cost-effective and efficient means possible at affordable and, where appropriate, uniform rates." This strategy focuses on universal service. It makes cost-effectiveness a key obligation. In addition, it directs that affordable rates do not come at the expense of service, and it opens the door to increased involvement of the private sector in the delivery of U.S. mail.