Introduction

This document is an update to the Strategic Transformation Plan 2006-2010 published in September 2005. The Plan remains the Postal Service‘s roadmap for the future. The Postal Act of 2006 made a number of major changes to the oversight and management of postal business.¹ However, the mission has not changed — provide trusted, affordable, universal service. The Postal Service must design and deliver products that meet customer needs in a rapidly changing market. It must control costs to remain competitive. Service must be reliable and convenient, and must improve continuously. And to assure success, employees and business partners must be fully engaged in the changes needed to sustain the mail for future generations.

For decades, mail volume grew dependably, financing a steady expansion of the postal network, from 85 million delivery points in 1971 to 148 million today. Volume growth also helped to moderate postage rate increases. Since passage of the Postal Reorganization Act in 1970, the price of a First-Class Mail stamp rose at roughly the same rate as the Consumer Price Index. Expanding volumes also eased the elimination of federal subsidies, which represented 23.8 percent of postal funding in 1971. The subsidies were fully phased out in 1982. Then in 2001 mail volume growth began to stall and, in the case of single-piece First-Class Mail, volume began a slow decline as the Internet offered readily accessible alternatives to traditional mail applications.

Transformation was launched in 2002 with aggressive goals proportionate to the challenge. By any calculation it has had a major impact. The Postal Service has achieved great improvements in service, multiple advances in customer convenience, and eight straight years of productivity gains. But the pace of change has not slackened. It is time to raise the bar even higher.

The new law brings new challenges. The legislated constraint of a CPI-based price cap for most mail classes means that cost control efforts must be expanded beyond the aggressive efforts taken to date. Additional pressure has been created by a requirement for the Postal Service to accelerate funding of future retiree health benefits. This annual cost will range from $5.4 billion to $5.8 billion over the next decade. A growing segment of other costs are rising faster than CPI, including health benefits, which now represent one-sixth of the postal budget, and fuel. Even so, opportunities remain to increase efficiency in all areas, and a minimum of $1 billion in costs will continue to be eliminated every year. Meanwhile, new technological tools are uncovering many new ways to make operations more efficient and eliminate processes that add no value. More detailed information about mail flows is guiding efforts to reduce the waste and unnecessary costs resulting from incorrect or incomplete mailing addresses.

¹Public Law 109-435, Postal Accountability and Enhancement Act.