USPS Faces Imminent Insolvency

According to the latest, and remarkably candid, report from the U.S. Postal Service, the USPS will be insolvent on September 1.  That’s this Thursday.  Congress and Hurricane Irene have been hogging the recent headlines, making this the biggest underreported story of the year.

Despite operational changes at the USPS the inevitable has happened.  Recent cost-cutting steps have failed to keep postal operations solvent in the face of plummeting mail volume and profitability.

Read the latest analysis from the USPS, an uncharacteristically easy read, to see how the USPS reached this point and how it plans to turn around.  As I’ve said before, the USPS needs Congressional action to regain control of its operations and release itself from the prefunded pension mandate.

Here are some other recommendations to help the USPS improve its viability:

  1. Follow the mail volume. While mail volume has dropped overall, e-commerce has continued to grow. “You can’t email a sweater,” says Maynard Benjamin, President of the Envelope Manufacturers Association, and he’s right.  UPS and FEDEX have been all over this market, but the USPS has failed to promote Priority Mail within the e-commerce industry as aggressively.
  2. Take eco-friendly packaging further. Conformer happens to have recyclable mailers that can replace unrecyclable bubble mailers and space-hogging corrugate boxes.  Because the Conformer mailer conforms to fit the contents, it (1) reduces void spaces, (2) allows USPS to ship more cost effectively and save on fuel, and (3) eliminates the need for filler.
  3. Don’t copy UPS and FEDEX: outsmart them. Canada Post’s Priority Mail service uses prepaid mailers, an example of thinking differently.  Because the mailers are not distributed freely, Canada Post can afford to offer better packaging options (like Conformer mailers) to their customers.  By giving away mailers, the USPS incurs a big expense that may never get monetized (e.g., mailers stashed in every home office in America).  “Free” mailers also forces the USPS to go with the cheapest mailers rather than a packaging assortment that offers added benefit to the consumer.

Sari McConnell at smcconnell@conformer.com

About Sari McConnell

Sari oversees strategic partnership opportunities and heads up Conformer’s San Francisco office. Sari was formerly the managing director of a venture-backed music and multimedia agency in San Francisco and New York. She began her career in brand management at Hallmark Cards, Clorox, and LeapFrog. Sari is an appointed member of the Bay Area Regional Council of Northwestern University and is an active volunteer at her children’s schools. She received her MBA from the Kellogg School of Management and her B.A. from Northwestern University as well.
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