• on Jun 17th, 2013 in Strategy & Public Policy | 12 comments

    A recent study from a Washington think tank argues the U.S. Postal Service should provide only last-mile delivery of mail and open all other aspects of the mail system to competition. The report from the non-partisan Information Technology and Innovation Foundation came to a similar conclusion as an earlier proposal from a group of four mailing industry leaders who released a concept paper that also proposed a public-private partnership with the Postal Service focusing on final delivery. Those authors envisioned that this so-called hybrid model would encourage innovation and efficiency.

    A panel of fellows from the National Academy of Public Administrators (NAPA), a nonprofit and non-partisan organization providing expert advice to government leaders, reviewed the earlier paper and concluded that many of the ideas represent expansions of current public-private partnerships already employed by the Postal Service, i.e., worksharing. The panel recommended further study around a host of related areas, including financial, labor-related, operational integration and regulatory issues – all of which could pose a range of new challenges.

    Critics note a number of shortcomings with these hybrid model proposals. First, the papers don’t provide a full cost-benefit analysis of privatizing parts of the system. Revenue could be lost if service were reduced, which could occur with numerous service providers involved in mail transportation and processing. Further, the papers don’t indicate what would become of the Postal Service’s infrastructure of buildings and equipment.

    Papers and studies proposing new business models for the Postal Service are nothing new. Think tanks and academic conferences regularly churned out suggestions for rethinking the Postal Service model, ranging from a return to an appropriated government agency to privatization. Last year, the Postal Service put forward its own business plan for returning to solvency, which it called its Plan to Profitability. Recently, the Board of Governors asked the Postal Service to accelerate many of the action items in that plan.

    The Postal Service’s 5-year plan requires a number of legislative actions from Congress and does not effectively change the current governance model. That is, the Postal Service would remain a self-supporting government entity funded through its own revenues. The plan calls for some greater freedoms around offering new products, greater control of its healthcare costs, and closing facilities but it does not abandon its public service or universal service roles.

    We would like to hear your thoughts. Do you think a hybrid model, like the one considered in the recent papers, has merit? Would such a model add efficiencies or would it merely shift work away from postal workers, as some have claimed? In an era of shrinking mail volume and changing communications, what business model would work best for the Postal Service? How does the Postal Service continue to support its universal service obligation under a new model?

  • on Jun 10th, 2013 in Labor | 11 comments

    The national agreements between the U.S. Postal Service and two of its unions give the Postal Service greater flexibility to use non-career employees for clerk and mail handler duties. The Postal Service pressed for the new employee categories in its separate labor negotiations with the American Postal Workers Union (APWU) and the National Mail Handlers Union, because it wanted greater workforce flexibility in scheduling and aligning employees with the work available. The Postal Service expects this will allow it to reduce labor costs, which currently make up about 80 percent of total costs.

    With the APWU, the Postal Service has already begun to utilize the two new employee categories created under their National Agreement, which include postal support employees and non-traditional full-time employees. The provision on new employee categories in the National Mail Handlers Union’s agreement does not take effect until August, but it will allow for similar type of workers to be used. These workers will start at a lower hourly wage and will have limited benefits.

    The number of Postal Service career employees has declined steadily over the past decade. As of early 2013 the Postal Service had just over 500,000 career employees, down from 729,000 in Fiscal Year 2003. Recent buyout offers have spurred a wave of retirements and moved the Postal Service closer to its goal of further reducing its workforce by 150,000 employees by 2015. Unlike previous reduction-in-workforce efforts, the Postal Service now has the flexibility to hire part-time employees. By shifting more work to lower-paid employees with less expensive benefits, the Postal Service is hoping to move the needle on its labor costs.

    A recent OIG audit report on the use of part-time employees in processing operations found that the Postal Service is increasing its use of these part-time positions, but it has not hired them to the fullest extent allowed by the contract. It could have saved more than $30 million in labor costs last year if it had hired postal support employees up to contract limits.

    Time will tell if the new workforce flexibility significantly reduces labor costs. But our early audit work suggests savings are available. What is your experience with the changes in the types of employees and how they are used? Is mail processed as efficiently, more efficiently, or less efficiently using postal support employees and non-traditional full-time employees? Have there been any unexpected effects (positive or negative) of the changes? Has overtime usage increased or decreased as a result of using part-time and non-traditional full-time employees?

  • on Jun 3rd, 2013 in Ideas Worth Exploring | 1 comment

    Powerful forces like globalization and the digital revolution are changing how, when, and where things are produced, purchased, and delivered. Look at how our shopping habits have changed in just the past few years. With your smartphone or tablet you can shop anytime, anyplace. Offshore production trends are reversing, and some manufacturing jobs are returning to the United States. And major urban areas continue to grow and link into a global transportation supergrid that connects people, commerce, and ideas. If you’re left off the grid, you could find yourself disconnected from the new global economy.

    The U.S. Postal Service Office of Inspector General recently released a white paper discussing the new logistics revolution and all the challenges and opportunities it presents — The Global Logistics Revolution: A Pivotal Moment for the Postal Service. The paper asks, in the face of all these changes, how can we make sure citizens and commerce continue to thrive? Perhaps postal organizations – here and around the world – have a key role to play. Some foreign posts already provide an array of logistics services ranging from comprehensive warehousing to customized, end-to-end cross-border and returns solutions that better serve customers and the new global economy. For some of these posts, these “value-added” logistics services are providing a new revenue stream to offset steep declines in traditional mail volume.

    The Postal Service is also well positioned to move into the large and fast-growing logistics market. With its extensive first and last-mile reach to nearly every household and business in the United States and mission to “bind the nation together” through communications and commerce, the Postal Service is unmatched in keeping communities connected. Either on its own or by partnering with private sector companies, the Postal Service could offer a range of new services and products to meet the evolving needs of citizens and business across the country. A service could be as basic as comprehensive track and trace to more complex offerings like warehousing solutions. If the Postal Service does not at least keep up with emerging customer expectations for improved and expanded logistics services, it could jeopardize its position in the evolving expedited and small package market.

    We encourage you to read the white paper to learn about how the Postal Service could respond to the Global Logistics Revolution and then weigh in with your thoughts below.

    Do you think that the Postal Service’s ability to offer new, value-added logistics services could help respond to customers’ changing needs?

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