Friday, September 9, 2011

Future of the US Postal Service

Neither rain nor sleet nor the Internet Protocol nor bankruptcy...

(I frequently write about emerging technology topics. Today, I'm writing about the impact of modern communications technology on more traditional national communications infrastructure)

When I was growing up a postage stamp sold for 8 cents and there was a post office quite literally a stone’s throw from my house. The daily mail often contained actual hand written letters from people we knew and liked. When I was a little older, I can remember occasionally getting a letter from a girlfriend and the envelope would sometimes have the scent of her perfume. The mail connected us and mattered to us.

If you are old enough to remember a time when the US Mail was key to personal communications, and the Internet didn’t figure so heavily in the ways in which we communicate, you know that over time the role of the US Postal Service has really changed. Back then, correspondence we very much wanted, such as letters and maybe certain important financial correspondence, came through the US Mail. Now personal communications are often email or text messages, and financial transactions are very often handled through bank web-sites. What we call junkmail (what businesses call advertising) is sent through the US Mail with the cost benefits of bulk rates.  Is it any surprise that we feel differently about the mail? Is it any surprise that we’re using it less often, and that the US Postal Service has financial troubles today?

Early this week, Postmaster General Patrick Donahoe told a Senate panel about a dire situation for the Postal Service, which now appears to be on the verge of financial failure with an $8.5B loss in 2010 and an anticipated $10B loss at the end of the current fiscal year. Plans for dealing with these problems, announced earlier this summer, included possibilities such as layoffs, branch office closures (perhaps 10% or more), and discontinuation of Saturday delivery.

The key questions now are about finding the right role for the US Postal Service for the future. What business models have the best chances to work well for them?
  1. Should the Postal Service make some straightforward moves (eliminate Saturday delivery, close some branches, perhaps raise the stamp cost)?
  2. Should the Postal Service more fundamentally change it’s businesses, exiting some (bulk rate mail? parcel delivery?) and entering others (online services of some types)?
  3. Could they leverage their 32,000 locations around the country, entering a partnership with an office supply store (like Staples or Office Depot) to enable document prep and then fax, email or overnight delivery?
  4. Could they partner effectively with package delivery services like FedEx or UPS?

It seems clear that things will continue to change for the US Postal Service, perhaps dramatically, or they may cease to exist entirely. My own sons may never receive a perfumed letter in the US Mail, but their sons may not know paper mail delivery at all.


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