The Postal Service's challenges are considerable. Up to 2 million new delivery points are added to the postal network each year, equivalent to adding cities the size of Chicago and Baltimore. Meanwhile, First-Class Mail, which produces the greatest contribution to cover network costs, has been declining. Therefore, the Postal Service will require other means of financing growth of the universal service network. The ability to find financial relief through growth in other postal products is challenged by intense competition. Postal costs, especially for employee compensation, retiree health benefits, and fuel, are rising at rates much greater than inflation.

How the Strategic Transformation Plan 2006–2010 is Organized

The Plan is organized around the Postal Service's four strategic goals:

• Generate Revenue.
• Reduce Costs.
• Achieve Results with a Customer-Focused, Performance-Based Culture.
• Improve Service.

Each chapter includes strategic challenges and trends relevant to the goals. These are followed by the Postal Service's transformation strategies for 2006–2010. Recent accomplishments are discussed where they contribute to an understanding of future plans.

The Plan integrates and satisfies the requirements of four previously separate publications: the Transformation Plan, the Five-Year Strategic Plan, the annual Performance Plan, and the annual Transformation Progress Report. Appendix A provides details required by the Government Performance and Results Act.³ Appendix B summarizes the stakeholder outreach program that supports the transformation process. Appendix C provides an overview of the Postal Service's fixed versus volume variable costs.

In addition to the Strategic Transformation Plan 2006–2010, the Postal Service will continue to publish its Annual Report and the annual Comprehensive Statement on Postal Operations (including the annual Performance Report). Each publication is available at usps.com, along with other substantive information on postal operations and finances. Together, these reports provide stakeholders with detailed information on postal policies, programs, resources, and performance.