• on Jul 6th, 2009 in Strategy & Public Policy | 27 comments
    In developing countries, postal services are often critical to reaching a vast underprivileged populace. How do posts in these countries cope with the tension between their universal service obligation and financial viability? A look at today’s India Post offers some insights. First founded under British colonial rule 150 years ago, India Post connects India’s people through a network of more than 150,000 post offices. More than 80 percent of these post offices are in rural areas, where residents primarily depend on postal services to communicate with the outside world. In India’s urban areas, however, middle class consumers have options. They also rely on the professional services of private couriers or the Internet. India Post has shown consistent losses. In recent years, private-sector competitors have siphoned off revenue, and costs have risen dramatically. Not surprisingly, given its financial difficulties, India Post’s widespread rural presence has drawn a lot of criticism. The Indian Government subsidizes more than half the cost of rural post offices, but they are still unprofitable. Critics argue that many are unnecessary and should be closed. Another common prescription for India Post’s losses is privatization. Proponents believe that privatization would improve the quality of services. To improve its financial condition, India Post is experimenting with options such as providing investment and emailing services to customers in rural areas. It already runs the largest savings bank, with a customer base of more than 170 million people. Rural and urban post offices also offer a variety of insurance products. Another initiative is micro-finance. In some rural areas, India Post offers loans to small businesses that may be denied credit by mainstream banks. Many of these services have helped offset India Post’s losses while at the same time providing financial services in deprived areas. There is hope for India Post’s future profitability. India has experienced phenomenal economic growth in recent years, and as a result, there is great potential for growth in postal services. To capitalize on the opportunities of India’s economic progress, India Post is trying to cater to the demands of the growing business sector by providing international money transfers and other services. In urban areas, India Post is exploring providing access to ATMs and non-postal retail services like train and bus reservations. India Post could also consider expanding these types of services to rural areas. The rural population would greatly benefit from these and other services such as faxes and electronic money orders. There are many options for India Post to leverage its network. By improving its infrastructure, technology, and customer service, India Post can continue its important role in India’s economy. What kind of a business model should India Post adopt? Do you think India Post’s experience providing universal service has any lessons for the United States Postal Service? This blog is hosted by the OIG's Risk Analysis Research Center (RARC).
  • on Jun 15th, 2009 in Strategy & Public Policy | 30 comments
    The Postal Service has asked suppliers to cooperate in efforts to reduce contract costs in light of the current financial crisis by identifying scope reductions, process improvements, and price reduction opportunities. In his March 25, 2009 Statement before the Congressional Committee on Oversight and Government Reform, Postmaster General John E. Potter stated:

    The Postal Service, with a physical presence in communities from coast to coast, including 37,000 facilities, spends almost $15 billion on supplies and services each year, from air transportation to building rental, from motor vehicles to computer systems, from processing equipment to Priority Mail envelopes in our lobbies. We are working to renegotiate contracts with our suppliers to reflect our reduced needs and to obtain even better value for each dollar we spend. Across the organization we are also constraining spending in every area possible.

    With the economy in a slump, many suppliers may be equally suffering financially. Will this work for or against the Postal Service’s contract renegotiation initiative? Some suppliers may be unwilling to renegotiate contracts because they cannot afford the reductions. Others may be motivated to renegotiate, reasoning that some business is better than no business.

    What do you think?

    This blog topic is hosted by the OIG's Risk Analysis Research Center (RARC).

  • on Apr 20th, 2009 in Strategy & Public Policy | 27 comments
    Earth Day is celebrated on April 22 this year, making now an appropriate time for a blog on the Postal Service’s green initiatives. The Postal Service’s environmental efforts fall into many areas including:
    • Packaging — The Postal Service is the nation’s only shipping company to achieve Cradle to Cradle certification for human and environmental health for its premium products’ packaging. The certification means that more than 15,000 metric tons of carbon equivalent emissions are avoided annually.
    • Fuel use — The Postal Service has increased alternative fuel use by 41 percent since 2006, in part by using hybrid and ethanol vehicles and T-3 Motion electric vehicles. In some places, the Postal Service uses foot and even bicycle routes. The Postal Service plans to continue implementing green strategies to further reduce petroleum use by 20 percent over the next 5 years.
    • Facility energy use — The Postal Service has conducted energy audits and reduced energy use at its facilities. By law, it is required to achieve a 30 percent reduction in facility energy use from 2003 levels by 2015.
    • Recycling — The Postal Service annually recycles more than 1 million tons of paper, plastic, and other materials. It also offers recycling opportunities to customers including recycling bins for P.O. Box customers at post offices and a mail-in recycling program for e-waste (small electronics and printer cartridges).
    • Purchasing — The Postal Service has a Green Purchasing Team to bring environmental practices into its supply purchasing and contracting processes.
    • Building standards — The Postal Service’s new “green” lobby design incorporates low impact environmental materials such as linoleum and bamboo.

    The Postal Service has won numerous awards for their green initiatives. In fact, just this month, the Postal Service accepted the California Climate Action Registry’s (CCAR) Climate Action Champion award in recognition for its leadership role in engaging and shaping public response to climate change and for substantially reducing greenhouse gas emissions.

    Yet there may be opportunities for the Postal Service to promote sustainability beyond these successes. In a commentary in the New York Times, Postal Regulatory Commissioner Ruth Goldway proposed the government provide money to convert the Postal Service’s fleet to electric vehicles. Not only would electric vehicles save gasoline, but they would also be more suited to the start-and-stop driving practiced by the Postal Service. In addition, the Postal Service could help jump start green vehicle technologies. To support this electronic fleet, post offices could be retrofitted with solar panels to generate electric power. Perhaps customers could even recharge their cars when they stopped to buy stamps.

    What do you think of converting the Postal Service’s fleet to electric vehicles? Would it be feasible to implement? Do you have other suggestions for green initiatives the Postal Service could pursue?

    This blog topic is hosted by the OIG's Risk Analysis Research Center (RARC).

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