The Contractor's Perspective

The Ghosts of Postal Past, Present, and Future

Posted in Postal Service Contracting

Postal GhostWhile dozing over some catalogs that had arrived in the mail, I was visited by three Postal Service ghosts:  the Ghosts of Postal Past, Postal Present, and Postal Future.

The Ghost of Postal Past

The Ghost of Postal Past was a merry ole soul, though not even that old. He presented himself to me as he was in Fiscal Year 2006 – just six years ago. Back then, he was quite large. He had 673 processing facilities, 36,721 retail and delivery facilities, and a total volume of 213 billion pieces of mail. He had revenues of nearly $73 billion – almost $3 billion more than the year before. This had been his fourth consecutive year of positive net income, and the seventh consecutive year of increasing total factor productivity.

While the diversion of hard copy mail to electronic media was a concern, jolly old 2006 hadn’t put up the white flag. In his FY 2006 annual report, he was committed to “growing the mail … not merely defending our products against diversion.”  Back then, technological and market developments were seen as opening the doors to mail growth, not decline. Twitter still meant the sounds that birds make.

While the Ghost of Postal 2006 was the largest he had ever been in mail volume, he had already slimmed down in career employees. He weighed in at a cheerful 696,138 career employees, about 100,000 fewer employees than he boasted in 1999 – his high water mark in that area.

Postal 2006 knew that First-Class Mail volume had declined somewhat, and had done so for the third time in the last four years. But First-Class Mail revenue had continued to grow.

Warning signs, however, were on the horizon. The Ghost of Postal 2006 had been required to fund a $3 billion escrow account (soon to grow to over $5 billion per year), costs for fuel were on the rise, and inflation-triggered employee benefits increased. The Postal Accountability and Enhancement Act (PAEA) was just enacted and dimly understood. Like global warming, it would soon become undeniable and melt away over $5 billion per year in revenue for pre-funding obligations. PAEA would also limit future rate increases and prevent his future brethren from offering non-postal products and services.

I didn’t mention these concerns to Postal 2006. He was upbeat. He had developed a new product, Priority Mail flat-rate boxes and was on the verge of introducing a new “intelligent” barcode. He believed his Strategic Transformation Plan 2006 – 2010 would create more customer value, improve ease of use, simplify pricing, and satisfy the ever-changing needs of his customers. He was not aware that the country was about to enter into a depression and economic crisis, which would reduce mailing budgets and accelerate the move to electronic alternatives.

The Ghost of Postal Present

I was awakened next by the Ghost of Postal Present. Unlike his brother 2006, he no longer issued glossy, colorful annual reports with upbeat themes. He held instead a black and white “10k report” detailing the myriad threats to his future existence. On doctor’s orders, he had thinned down considerably, now only 528,000 career employees, with plans for even more reductions ahead.

The Ghost of Postal Present had declined to $65 billion in revenue – $8 billion less than he had earned just six years earlier. He was stretched thinner than ever, needing to make six trips per week to 152 million delivery points – 6 million more delivery points than his brother Postal 2006, who had much greater resources available. A glimmer of his jollier brother poked through when I asked him about this burden. “Yes, every year there are more boys and girls on my list that I need to serve, but that’s a good thing. That means I have more customers and potential room for growth, too!”  Ah, such a cheery attitude.

But that would soon pass. The Ghost of Postal Present had processed 160 billion mail pieces – 53 billion fewer pieces than Postal 2006 had delivered just six years ago. The 673 processing facilities he once called home now numbered 417, and he expected to eliminate half of those in the next two years.

One striking difference from Postal Past was Postal Present’s empty pockets. Slipping out of one pocket was a $15 billion IOU to the Federal Financing Bank, and a red notice saying he had used up all of his available credit. In the other pocket was an unpaid bill for $11.1 billion that he owed the U.S. Treasury and another bill for an additional $5.6 billion that is due in 2013. He saw me looking at it and volunteered, “The shame of this one here is even if I could pay it, it wouldn’t do me any good. It goes to prefund retiree health benefits. I can’t use it, and it already has over $42 billion in it.” 

“Well,” I said, “it’s a good thing that your current retirees can draw on this account.”

“Oh no, I can’t use it for that. My current retiree health benefits are paid out of current operations. This account is to pre-fund the health benefits of my future retirees, including the wee little ones who haven’t been born yet. But some day, after they have been born, and after I hire them, and after they grow old, they will retire. And this fund will be used to pay their health care benefits.”

The Ghost of Postal Future

As dawn drew near, I was awakened by the Ghost of Postal Future. This was the ghost I feared most. My visit from the debt-ridden Ghost of Postal Present led me to believe that the Ghost of Postal Future would be in even worse shape. But he wasn’t. Congress had finally enacted legislation that let Postal Future transform himself into a new, sustainable role.

Postal Future had few of his own retail facilities, because he found that the retail function could be performed more economically and more conveniently at kiosks and through other retailers. Communities that truly valued their local post office were able to keep them if they helped pay the cost for them, and these post offices had morphed into providing other products and services as well.

The Ghost of Postal Future was slimmer than ever, but he was spry and surprisingly agile. Mail volume had continued to decline, but that made what was still in the mail even more special. Package volume had continued to increase, and was an important part of the “mail moment” now. Even private delivery companies now used Postal Future to deliver their goods to their customers.

While businesses had more advertising choices than ever before, that didn’t hurt Postal Future. Because advertisers who wanted to get a message directly in front of their customers and prospects still had no better method than Postal Future. The only limit to the effectiveness of these communications was the creativity of the advertiser itself.

Postal Future also found his online and electronic communication role. After a while, it became obvious that Postal Future was the only entity that could be trusted to match a person’s physical address with his or her digital address. And Postal Future was the only entity that could guarantee everyone their own digital mailbox, and guarantee senders that the recipient was indeed the person they intended to reach.

In Postal Future’s world, many people now used online mail services. These services allowed people to receive electronically what used to be sent as hard copy mail. These items were now sent to the customer’s own online mailbox, where they could be searched, archived, and printed at will – and all in one place. The Postal Service’s connection to these services guaranteed the security and privacy of this mail.

As I woke up from my visit from this last ghost, I heard him exclaim ere he departed, “The Future is in the Post!”  

Listen to my interview on Federal News Radio about this article.