2012 Annual Report to Congress
& Comprehensive Statement

In the early 1970’s the nation’s economy was expanding and the Post Office Department, as it was called before 1970, faced limited direct competition for mailing and shipping service. One-to-one communication was by letter and phone, with television delivering messages and entertainment to mass audiences. The Post Office Department faced challenges. Population and economic growth created more demand for service which required increasing government subsidy. There was lack of investment in improvements and postal service performance declined.

With the enactment of the Postal Reorganization Act of 1970, the Post Office Department became the United States Postal Service. This resulted in a change to the Postal Service’s business and operating model. As a result of the Postal Reorganization Act the Postal Service was required to become self-supporting, leaders were developed from within the organization rather than through external political appointment, and the organization assumed responsibility for labor negotiations with its unions.

The 1980’s and 1990’s saw technological innovations including growing use of computers which resulted in changes in consumer behavior. The Postal Service of the 1980’s ad 1990’s was facing an increasing workload including an increase in the number of delivery points, an increase in the number of postal employees, the emergence of direct competition, and rate regulation. It responded with operational innovations. This included increased mechanization and automation in the processing of mail, a ZIP Code/Presort system, new costing and pricing strategies, and other management process innovations.

Since 2000, there have continued to be increases in the number of delivery points, but the rapid rate of Internet adoption has caused diversion of mail away from hard copy to online messaging resulting in lower mail volume per delivery point. There have been substantial disruptions and lifestyle changes resulting from the 9/11 attack, anthrax found in letters in the mail stream, and more recently recession and a slow economic recovery. The Postal Service has also been required by Congress to pre-pay Retiree Health Benefits. The Postal Service has responded with Transformation Planning including enhancements to productivity, increased emphasis on improving service quality and customer satisfaction, as well as improving the workplace environment. In 2006 Congress passed the Postal Accountability and Enhancement Act tying rate increases to the Consumer Price Index and expediting the USPS ability to test and launch new products. Nearing the end of 2012, the Postal Service continues to face declining First-Class Mail volume and serious financial challenges. As part of its Path to Financial Stability, the Postal Service has begun to look for ways to optimize its mail processing, delivery, and retail networks, launched new products and new service features to generate additional revenue, and asked Congress for legislative relief from pre-payment of health care benefits and greater flexibility in making operating decisions which could have substantial impact on the financial outlook for the Postal Service.