USPS Office of Inspector General

Starting in April, the private company TNT Post UK plans to test street delivery in the West End of London. Currently, TNT collects and sorts mail and then hands it over to Royal Mail, the traditional government-run postal provider in the United Kingdom, for final street delivery. Now, however, TNT Post UK wants to provide street delivery as well. TNT is seeking assistance from the UK government to provide a level playing field that will allow it to compete effectively with Royal Mail’s delivery service.

This is the first in our "Five Elements of a Postal Solution" blog series.

Link to the blog by Richard Kielbowicz.
Link to the blog by Steve Hutkins.
Link to the blog by James Campbell.
Link to the recap of the week.

Offering volume incentives is a common business practice in the U.S. and around the world. Although the U.S. Postal Service offers incentives to businesses that presort their mail, the agency does not offer incentives based strictly on the volume of packages shipped. One reason might be that offering volume incentives would lower the profit margin on each package shipped; yet, the potential volume increase of items shipped would make up for the smaller profit margins.

Coopetition, is a buzzword cropping up in many business publications these days. Basically, it means that competing firms look for ways to cooperate with each other, rather than compete head-to-head for business. Working in conjunction with the U.S. Postal Service, the United Parcel Service (UPS) now has a program that allows customers of participating retailers to return merchandise by dropping it in any U.S. Postal Service mailbox, or at any post office. The program features a special label that makes the service possible.

On September 30th, the Postal Regulatory Commission (PRC) turned down the request by the Postal Service for an exigent price increase averaging 5.6 percent across all market-dominant products, such as First-Class Mail and Periodicals. Although current law cape increases in these products to the inflation rate, the PRC can consider rate increases beyond the cap if the Postal Service has been affected by “extraordinary or exceptional circumstances.”

There is no question that a country’s postal service is a valuable national asset. On one hand, it is a functional asset that supports commerce and binds the nation together. On the other, postal operations are capital assets, with distribution networks, vehicles, machinery, and labor resources that have some sort of value.

When the topic of competition for the Postal Service comes up in casual conversation, the discussion usually involves FedEx or UPS. However, packages are a relatively small part of the Postal Service’s business. Certainly, these firms are direct competitors, but are there other competitors for Postal Service business? [poll id="51"] What alternatives compete with each of the various Postal products? What, if anything, can the Postal Service do to better compete in each product line?

Should the Postal Service be allowed to freely award employees for a job well done? The Postal Service operates as a businesslike entity, but it is also part of the government. Appearances count — particularly in tough economic times. The Postal Service has an interest in recruiting and retaining talented employees to remain competitive, but what is appropriate? Competitors of the Postal Service are free to award employees with pricey gifts, tickets to major events, conferences held at resorts and other perks.