• on Aug 8th, 2011 in Post Offices & Retail Network | 26 comments
    The U.S. Postal Service recently announced that it would study approximately 3,700 postal retail facilities which are candidates for consolidation. Many policymakers and Postal Service customers have expressed concern over the effect these potential consolidations will have on access to postal services and as well as the social life of rural communities where the local post office acted as a gathering point for the community. In an attempt to address some of these concerns, the Postal Service revealed plans to offer its services through authorized third party vendors, including drug stores, grocery stores, and office supply stores. These Village Post Offices (VPO) would be operated by the vendor and sell popular products and services such as stamps and flat-rate packaging. The Postal Service’s primary benefit would be lower labor and facilities maintenance costs from replacing traditional, free-standing post offices with Village Post Offices. There are also potential benefits to consumers. First, postal services could be more conveniently accessed by customers who already patronize the third party vendors. Second, the co-location may actually help to strengthen community ties. Third, the VPOs may be open longer hours. However, there may also be drawbacks to switching from traditional post offices to VPOs. First, the quality and level of service may vary between communities as VPOs would be managed by many different private vendors. In addition, as with any effort involving public-private partnerships, oversight issues may arise. Finally, because VPOs will be operated by private vendors, the role of the post office as a public space may be lost. Are Village Post Offices a viable substitute for tradition postal retail facilities? Can service standards be maintained? Which type of vendors do you believe would be most suitable as a host for a VPO?
  • on Aug 1st, 2011 in Ideas Worth Exploring | 7 comments
    In December 2009, the Universal Postal Union (UPU) obtained exclusive rights to the “.post” top-level domain for the postal community from the Internet Corporation for Assigned Names and Numbers. The .post domain joins existing prominent top level domains (such as .com, .edu, and .org), along with recent additions (such as .museum, .biz, and .aero.) The .post domain is intended to provide a secure space for members of the postal community to develop and deploy digital products and services. The .post domain is expected to be available for use by private postal operators, regulators, suppliers, vendors, trade unions, and trade associations. By linking well-established national networks, the UPU hopes .post will allow postal operators and customers to reap the benefits of a global physical/digital network that permits postal service providers and end users to connect quickly and securely to other end users around the world. The .post domain could be an appropriate platform for a variety of services. Common suggestions include: a global track and trace system linking the existing systems of the posts; the creation of an accessible database holding a universal and global addressing system; and a feature allowing consumers to decide whether to have an item delivered to a physical address or an electronic address. One approach, at the core of the OIG Risk Analysis Research Center's (RARC) digital strategy paper, Expanding the Postal Platform, would be to give every postal customer an e-mail address and digital ID. The .post top level domain could be a platform to support implementation of this strategy. The development of the .post top level domain raises a number of interesting questions: •Should the U.S. Postal Service use .post as a platform for offering digital services? •What are the advantages and disadvantages of using the .post domain, rather than .com or .gov? •Are there potential applications for .post that the postal media has not addressed? •Would .post improve the Postal Service brand by helping differentiate the Postal Service from other services in the digital space? •Does the choice of domain name affect the quality of service provided or the effectiveness of marketing such services? Let us know what you think! This blog is hosted by the OIG’s Risk Analysis Research Center.
  • on Jul 25th, 2011 in Finances: Cost & Revenue | 43 comments
    The past few years have been tumultuous for the U.S. Postal Service. Mail volume has dropped 20 percent to 171 billion pieces from its peak in 2006, and over the last four years experienced unprecedented financial losses totaling $20 billion. In 2010 alone, the Postal Service experienced its largest 1-year net loss of $8.5 billion. Our Risk Analysis Research Center has published The Cost Structure of the Postal Service: Facts, Trends, and Policy Implications, which reviews the major components of the Postal Service’s 2010 cost structure and presents insights to the ongoing policy debate about the future of the Postal Service. Below are some of the paper’s key findings: 1.The mail business is labor intensive, and labor makes up 80 percent of Postal Service expenses. This means that in order to achieve real cost savings, the Postal Service has to cut labor costs. While ideally labor costs could be cut to match declines in volume, this is challenging because the Postal Service’s delivery network has significant fixed costs. 2.Since 1972, the total cost of benefits to the Postal Service has risen an astounding 448 percent above inflation, while the real amount spent on wages has declined by nearly 3 percent. This extraordinary increase in benefit costs is due to three factors: a general trend of higher benefit costs that has affected most U.S. companies, the gradual transfer of postal retiree benefit costs from the federal government to the Postal Service, and repeated overcharges for these retiree benefit costs. 3.Since 2000, cumulative unit costs for three of the four market dominant mail classes (Periodicals, Standard Mail, and Package Services) have far outpaced increases in the Consumer Price Index (CPI-U). 4.A continuing freeze in capital investment, while saving the Postal Service in the short term, may paradoxically lead to higher costs in the future. In particular, investing in rightsizing the physical network to meet decreasing demand is vital to the future viability of the Postal Service. We invite you to review the white paper and share your thoughts on reducing costs and the impact those cost reductions might have on the Postal Service here on our blog. This blog is hosted by the OIG’s Risk Analysis Research Center.

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