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A Meeting with Postmaster General Donahoe

[This article is from Associated Mail & Parcel Centers (AMPC).  Remember, ICFO members receive reduced membership pricing from AMPC. ]

AMPC belongs to the the Parcel Shippers Association, a trade organization whose primary mission is to foster competition in the parcel delivery market.  At the February 15, 2011 annual meeting the guest speaker was Patrick Donahoe, the Postmaster General of the United States.  A summary of his comments follows.

Associated Mail & Parcel Centers (AMPC) members pay dues to support the organization’s efforts to support their businesses. The money pays for a staff to develop benefits, programs, discounts, research, education, and advocacy for the members. Joining AMPC is easy. To help us support your industry and business, go to www.ampc.org and sign up.

If you have been following this blog, you know how the USPS got into financial trouble and the steps they have taken so far to become solvent.  Te steps taken so far are not enough and Mr. Donahoe has an excellent concept of what it is going to take:

Post Offices will have to be closed.  Many small towns will have to find a new way to establish their identity and a new place to meet friends and neighbors to discuss local news.  The USPS cannot justify Post Offices, some of which only have 1 1/2 hours of work a day and gross less than $30,000/year.  The rest of the mail purchasers will not stand for the postage rates required to keep these remnants of days gone by open.  See Postal Service Eyes Closing Thousands of Post Offices and 80% of Post Offices are Losing Money.

The USPS can no longer be required to pre-fund postal workers’ retirement and health benefits at 100%.  For more information on how this Federal Government deficit reduction trick works, see One Reason the Post Office is Broke.  Although no real money changes hands, it is unlikely that any money owed to the USPS by the Federal Government will be repaid soon.  It would make the Federal Government deficit look worse, and who in Congress is going to let that happen?

Five-Day Delivery will have to happen.  The PMG made it clear that eliminating Saturday delivery is necessary to get to break even.  Although you may not be concerned about Saturday mail, many very large mailers have built expensive systems around the fact that mail is delivered six days a week, and that will be expensive to change.  Nevertheless, five-day delivery is a priority for the USPS.

Who will step in? Definitely five-day delivery and Post Office closures will effect the retail side of the mail service significantly and with the demand for these services unchanged, the PMG is looking to the private sector to fill many of these gaps.  According to Mr. Donahoe, the Approved Shipper Program through small mail and parcel centers will become more significant players in the long term.  Small efficient shops that can diversify into a business center of services that have the ability to offer Postal Services, along with the ability to adapt to the changing needs and markets is part of the USPS’s long term strategy to continue serving the public at a reasonable cost and without taxpayer assistance.

None of these changes will happen without a fight.  Too many special interests will be effected.  Union jobs will be lost, small towns will lose their Post Offices, businesses will have to make expensive process changes.  Every interest will be contacting Congress with hyperbolic consequences and election threats, but unless the public wants to once again subsidize the Postal Service with tax money, these challenges must be met.

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