To the President, Members of Congress, Postal Customers, Postal Employees, and the American People:
Both literally and figuratively, the Postal Service delivers for America. Even in an increasingly digital world, the Postal Service remains part of the bedrock infrastructure of the American economy, serving its people and businesses, and binding the nation together.
The core function of the Postal Service is the physical delivery of mail and packages, provided reliably, safely, affordably, and universally, to every address in America.
While the Postal Service meets these obligations today, and supports a $900 billion mailing industry that employs almost 8 million people, it must adapt to a dynamic marketplace to continue to do so in the future.
Due to an inflexible and outdated business model and a weak economy, the Postal Service incurred significant financial losses in fiscal year (FY) 2011. Although expected to operate as a business does, the Postal Service is nevertheless restricted by laws that limit its ability to control costs and grow revenue in the way a business would.
Over the past year, the Postal Service accelerated ongoing, aggressive cost-reduction strategies that have reduced annual costs by more than $9 billion since 2008. It undertook significant actions to improve its long-term cost structure and advanced a series of proposals to improve its business model. The Postal Service reorganized its senior management structure and reduced its upper management ranks by 16 percent. The Postal Service also announced a radical realignment of its mail processing, delivery, and retail networks — which is projected to reduce $6 billion in total operating costs by FY2015.
The Postal Service worked closely with the Administration and Congress to encourage support for proposals to provide delivery frequency flexibility, speed up product and pricing decisions, address collective bargaining issues, enable the Postal Service to provide its own healthcare insurance, and return overpayments to its retirement plans. If enacted, these proposals would enable the Postal Service to achieve the savings necessary to return to long-term profitability and secure a sustainable financial future.
The Postal Service also set out four core business strategies: strengthening the business-to-consumer channel, improving the customer experience, competing for the package business, and becoming a leaner, faster and smarter organization. These core strategies — which emphasize revenue generation and cost control — provide the foundation for a more competitive and market-responsive Postal Service.
In adapting to a dynamic marketplace and establishing a profitable future, the Postal Service is striving to operate more as a business does: competing for customers and providing compelling products and services. In the past year, the Postal Service and its 557,251 employees took great strides toward achieving these goals and building a stronger foundation from which to continue delivering for America.
Patrick R. Donahoe
Postmaster General and Chief Executive Officer
Louis J. Giuliano
Chairman, Board of Governors
