• on Dec 22nd, 2014 in OIG | 1 comment

     

    Pushing the Envelope wishes our readers a joyful holiday season and a prosperous new year. We will take a break this week, but we encourage you to read over the past year’s blogs and let us know what you think on any of the wide range of topics we covered in 2014. We post comments as they come in, even if you comment on a blog that ran years ago.

    On January 5 we will share our annual list of the Top 10 Postal Stories of the Year – one of our most popular blogs. As always, we look forward to your comments and insights. 

  • on Dec 15th, 2014 in Strategy & Public Policy | 22 comments

    Is the U.S. Postal Service a business or a public service organization? Well, it’s actually both, and those overlapping – and sometimes conflicting – obligations have created major challenges for the agency over the years.

    Historically, the Post Office was deliberately used by the government to expand transportation services such as roads and passenger air service. In the modern era, the 1968 President’s commission on postal issues, known as the Kappel Commission, declared the Post Office to be a business; however, the Postal Service continues to provide infrastructure services that not all businesses would provide, such as maintaining needed rural post offices that operate at a loss.

    It was easier to manage the ongoing tension between the Postal Service’s dual mandates when postal revenues were strong enough to sustain the infrastructure and also cover all of the agency’s operating costs. But today, the Digital Age is cutting into the volume of the product that contributes more than half of the funds to support the network: First-Class Mail. And this strain has led to more tension between the Postal Service as a public service provider and as a business. Meanwhile, new technologies and global commerce are changing the nation’s infrastructure needs. The Postal Service would benefit from more clarity about what it should offer in this evolving environment.

    Our new white paper, The Postal Service’s Role as Infrastructure, gives three broad options the Postal Service and its stakeholders could consider when deciding how to adapt the Postal Service’s role for the future. These options are not mutually exclusive. But they should be evaluated together so all potential uses are recognized and accounted for as part of major changes to the size and scope of the Postal Service’s infrastructure.

    • Option 1: Adjust the postal network to the changing demand for mail and the growth in parcels. The Postal Service is making efforts to do this now.
    • Option 2: Repurpose the existing infrastructure to address innovative services and new revenue streams, such as micro-warehousing.
    • Option 3: Increase the value of the physical postal infrastructure by digitally enhancing it. For example, carriers could use mobile handheld devices to perform more services at the door or from the truck, such as selling stamps, accepting Cash-on-Delivery (COD) payments, recharging debit cards, or even processing passports.

    What do you think? What options should stakeholders and the Postal Service consider? Is the Postal Service’s role as a national infrastructure still relevant today and how has it changed? 

  • on Dec 8th, 2014 in Mail Processing & Transportation | 7 comments

    Turns out the U.S. Postal Service isn’t just about collecting and delivering mail. It also has an essential role in the middle. Sorting and long-haul transporting, that is.

    That may run counter to the arguments of those who believe the Postal Service could be more efficient if it focused only on collecting and delivering mail (also known as first mile and last mile) and let private companies take over sorting and long-distance transporting (the middle mile). The argument has gained traction among some stakeholders and observers, but our new white paper – The First and Last Mile Strategy: A Critical Assessment  – says the opposite may be true.

    With the Postal Service beset by financial challenges, anything that might improve efficiency and the bottom line merits consideration. But outsourcing mail processing would be a pretty radical measure, not to be taken lightly. That’s why we asked Dr. John Panzar, a noted expert in postal economics, to look at the economic implications of the Postal Service completely abandoning mail processing and focusing exclusively on collection and delivery. We asked him to look only at letters and flats because parcels constitute a different market.

    Dr. Panzar developed a theoretical model based on key economic principles and found that overall efficiency would likely decrease should private companies take over the middle mile. Mailing costs, in turn, would likely go up for postal customers. The only winners would be the companies sorting and transporting the mail, but their combined gains would be less than the losses to the Postal Service and customers. Simply put, the Postal Service’s participation in mail processing is necessary for overall efficiency.

    Like all theoretical models, Dr. Panzar’s relies heavily on particular assumptions that are open to challenge. Still, his intriguing conclusions invite thoughtful discussion and debate. So, what do you think? Should outsourcing the middle mile be studied further? Do Dr. Panzar’s findings surprise you? What other ways could the Postal Service gain efficiencies? 

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