John E. Potter
Postmaster General and Chief Executive Officer
Louis J. Giuliano
Chairman, Board of Governors
To the President, members of Congress, postal customers, postal employees, and the American people:
This past year has been a pivotal one for the U.S. Postal Service, as we have set about the ambitious task of turning a financial crisis of significant proportions into an equally sizable opportunity. While we continued to contend with the significant marketplace and financial challenges that began with the 2008 economic recession, in this past year we took significant steps to lay the foundation for an historic redirection for the organization.
Our work began in earnest early in the fiscal year by asking fundamental questions about trends in America’s use of the mail, and what the future holds for our business. We commissioned independent projections and analyses, which described a marketplace increasingly migrating to digital means of communication, a steady decline in mail volumes through 2020, and a less profitable mix of mail in coming years. Indeed, without significant productivity improvements and changes to our current business model, the Postal Service could face a cumulative $238 billion shortfall in the coming decade.
Our response to this challenge was to set forth an aggressive and balanced plan that envisions significant changes to our business model, enables the Postal Service to continue to play its vital role in the American economy, and our communities, and to deliver great value to business and residential customers. We also committed to engaging the American people in a dialogue about our plan and our future.
We began this dialogue in early March, when we released: Ensuring a Viable Postal Service for America: An Action Plan for the Future. This document set out our goals for cost-cutting, increased productivity, product and service offerings, and identified legislative and regulatory changes necessary to ensure our future viability and a return to profitability. Most importantly, it set the foundation for a more competitive, market-responsive organization, better able to meet the evolving mailing needs of the American people.
Since March, we have continued to communicate about our plan, and we have made meaningful progress in a number of areas.
- We asked Congress to examine our retiree health benefits pre-funding obligations and to consider legislation to address overpayments to the Postal Service’s Civil Service Retirement System (CSRS) pension fund. Restructuring retiree health benefits payments to the “pay-as-you-go” method used by the rest of government and the private sector would result in an average of $5.65 billion in additional cash flow each year through 2016. Likewise, transfer of the excess CSRS contributions to the health benefits fund could significantly reduce, or offset entirely, future pre-funding requirements.
- We submitted a filing with the Postal Regulatory Commission, seeking an advisory ruling on a five-day delivery schedule to better reflect current mail volumes and customer usage. Survey data show that the public supports a five-day delivery schedule to strengthen the finances of the Postal Service.
- We implemented a strategy to modernize our retail network while expanding access to postal products and services. Increasing and enhancing customer access through partnerships with retailers, use of kiosks and self-serve options in high-traffic areas, and improved online offerings will allow us to provide more convenient and efficient service for our customers.
- We have taken steps to establish a more flexible workforce that is better-positioned to respond to changing demand patterns and to ensure we have the right people in the right place for optimal efficiency. We have engaged in this year’s labor negotiations with this goal in mind, and have every confidence that, together, we can better position the organization for the future.
- We sought to increase prices for our Mailing Services products using the exigency provision of the Postal Act of 2006. Although the request was denied, we will continue to seek the authority to price our products appropriately in the marketplace.
- We expanded our array of products and services. We continued to build on the success of our Priority Mail Flat Rate shipping campaign by introducing additional flat-rate products and enhancing successful Standard Mail initiatives like seasonal incentives.
- We continue to seek greater flexibility in our current oversight structure to improve our speed to market through a streamlined price and product approval process.
- We continued an aggressive pace of cost-cutting. Building on record savings of more than $1 billion every year since 2001 and reducing our total costs by $3 billion in 2010, on top of the $6 billion in savings achieved last year.
The first steps in a new direction are often the hardest, and success tomorrow depends upon our willingness as an industry to take those initial risks today. We are committed to our vision of a more nimble, competitive and financially sound Postal Service, an organization that will endure as a cornerstone of American society, providing unparalleled service through “snow, rain, heat and gloom of night” for generations to come.
“Since March, we have continued to communicate about our plan, and we have made meaningful progress in a number of areas.”
