USPS: From Bankruptcy Woes To A Digital World
In 2011 the U.S. Postal Service announced that it is on its way off the fiscal cliff. The troubled institution is beginning to shutter offices across the country to stem an ever-growing $9.2 billion dollar deficit meanwhile the entire agency expects to lose another $14 billion dollars by the end of this year. As it struggles with near bankruptcy, the USPS is reacting with several measures to stop the financial bleeding. Some proposed solutions include cutting Saturday service to a 5-day delivery system, increasing the price of stamps to 46 cents for First Class Delivery, and asking Congress to restructure their health and retirement systems so USPS may have more control over labor operations.
The problem is Congress stands in the way of reform. The agency is currently lobbying a bill to gain independence from Congress so that it may start to make business decisions independently and pursue more aggressive cuts. As soon as the agency can begin to operate like a private business, it can cut back on brick-and-mortar locations to reach financial solvency and invest in digital innovation.
The next major challenge moving forward is how USPS can stay relevant in the modern world, where communication moves at the speed of mega bits per second on high speed broadband and 4G LTE networks and thanks to emergence of new communication technologies like texting, file sharing, and the rise of social networks in the recent decades. We are accustomed to connecting with friends and family, and getting the information we need instantaneously. An overwhelming 86% of Americans (ages 12-69) use email over “snail” mail. The postal service currently relies on the sales of First Class mail stamps as a major revenue stream. This financial model is broken and USPS must think about how they can leverage existing assets, such as improving service and using its large network of addresses and distribution routes to merge these with opportunities in the digital world.
