Monday, March 19, 2012

The United States Postal Service’s New Business Plan Model

The United States Postal Service (USPS) is at a crossroads. It currently owes the United States Treasury $12.9 billion and projects to lose $18.2 billion annually by 2015 if legislative action and reform does not take place.

In light of this financial crisis, the USPS has developed an aggressive five-year plan to achieve financial solvency and continue operating. The measures proposed are ambitious, but if implemented, the USPS believes they can come out a leaner and meaner business which serves the American people in a cost-efficient manner.

What This Five-Year Business Model Means to You
The Postal Service’s five-year plan revolves around a number of steps to achieve their goals. They have proposed the following changes to achieve financial solvency:

Cost Reductions: A reduction of annual operating costs of $20 billion by 2015 is planned with an increase to over $22 billion by 2016. A plan has been introduced to eliminate one day of mail service (Saturday) and move to a five-day delivery schedule. This will realize an annual savings of $2.7 billion.

Projected Lost Revenue: Current projected loses of First-Class Mail volume have shown a 25 percent reduction since 2006. If this trend continues, consumers should expect to see the cost of first-class stamps rise. The notion of a first-class stamp costing $.50 is well within the limits of possibilities. The issue here is that legislative action is needed to implement these changes.

Health Care Costs: A plan has been developed which addresses the spiraling costs of health care. A retooling of the way the USPS manages their healthcare costs are being explored. One model has the Postal Service providing their employees with health care benefits separate from any federal programs. A cost saving of $7.1 billion annually is projected from this move.

Business and Consumer Impact: Having one less day for mail to arrive and facing increasing stamp costs means rethinking how you use the mail system. You will have to think more carefully about your direct mail campaign costs in terms of targeting and also utilizing more email-related and digital campaigns – all tools that Advanced Mailing Services can provide you.

Action is Needed Now by Congress
Without comprehensive action by Congress, the United States Postal Service will face an almost insurmountable debt load. If legislative action is taken quickly and the above mentioned issues are addressed, the Postal Service believes they can be solvent and become profitable into the future and will not need the assistance of taxpayer money.    

The Road from Here
As the United States Postal Service navigates and implements changes to improve their bottom-line, consumers will increasingly see significant changes to the Postal Service. The rising cost of stamps is inevitable. The use of the Internet and other electronic sources has cut sharply into the USPS revenue. As you embrace these changes and challenges at the Post Office, Advanced Mailing Services is here to help. We are Albuquerque’s most trusted mailing services provider.

In addition, we are New Mexico’s only USPS certified full-service IMB mailer. Put your trust in us and let us assist you in navigating these changes. Stop by our office at 2701 Girard Boulevard NE in Albuquerque or call us at 505.899.3104 and get the answers to all of your questions.       

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