Integrated Plan(s) for Financial Self Sufficiency

The Board of Governors and Congress requires an Integrated Financial Plan that illustrates the financial course necessary for the Postal Service to be financially self sufficient under both the current business model and regulatory framework as well as alternatives to the existing model.  The 2011 Integrated Financial Plan does not meet this requirement.    Alternative plans are needed reflecting what could be accomplished under different business models and regulatory frameworks.  These plans have to look beyond marginal changes in the business model that the Postal Service proposed last March in its Action Plan.    Those changes all assumed maintenance of the current business model and a regulatory framework that is not [...] Read more »

New Integrated Financial Plan Needed

Why would the Postal Service need a new Integrated Financial Plan less than a month after it was presented to the Postal Regulatory Commission?  A new plan is needed to reflect changes in economic trends and costs of key inputs and operating plans.   The problem of changing economic trends, input trends and operating plan changes exists because by the time a plan is produced approved by the board of governors nearly all of the economic and cost assumptions used in the plan are out of date.   The older economic forecasts most likely underestimate both revenue and costs Revenue - Revenue estimates are driven by  forecasts of GDP, retail sales, [...] Read more »

Is Deputy PMG Pat Donohue moonlighting as a letter carrier?

Is it just me or does the letter carrier photographed on the upper right corner of the cover of the Fiscal Year 2011 Integrated Financial Plan look like Pat Donohue?   If true, I wonder what provision of the NALC contract allows the DPMG to deliver mail?  Or is this an indication that the Postal Service may be used in an episode of undercover boss? Tweet Read more »

APWU Contract: Facing a Tradeoff

Recent statements from APWU President Cliff Guffey clearly indicate that union leadership realizes that the next contract will result in a trade-off of job security and wages.  In announcing the extension of negotiations for an additional three days, he stated “Every proposal we have made to preserve jobs for our members.  Restoring work that has been outsourced or assigned to managerial personnel will bring stability to APWU members who have suffered extensive excessing and reassignments.”  In agreeing to extend negotiations, APWU President Cliff Guffey clearly understands that the union faces the question:  “Is the risk that the trade-off between jobs and wages could provide less job security if consummated as [...] Read more »

Social Value of Mail

Last week the Postal Regulatory Commission announced on its website that it has funded six studies examining the social value of mail.     The Commission’s studies provide a couple of snapshots as to the impact of the Postal Service on the markets and communities that it serves.   The summary of the studies are as follows: SJ Consulting will quantify the benefit of the Postal Service’s rural services by measuring the percent of population affected by Delivery Area Surcharges and determine if there is a cost basis for the Delivery Area Surcharges by the two major parcel carriers and the benefits from the Postal Service having a more frequent delivery network in [...] Read more »

How Does Walmart Offer Free Shipping?

Today, Walmart announced that purchases on its website will ship for free.   Walmart is not alone in offering free shipping as Amazon.com, JC Penney, LL Bean and Target all offer free shipping, although Amazon, JC Penney, and Target currently have minimum purchase amounts for their free shipping offers. How do these companies justify free shipping?    The New York Times article cites the Distribution Management Group which has reported air shipping prices for big retailers are about 70 percent less than for a small company.   For large shippers to get discounts this large, they have to negotiate sharp discounts in surcharges for home delivery and rural delivery.   While discounts of 70% [...] Read more »

Hits and Misses in Parcel Pricing

Most analyses of the Postal Service’s proposed parcel rates and service initiatives will come from the shipper perspective.  However, given the Postal Service’s financial condition, they need to be viewed from the same perspective that investment analysts look at pricing decisions of FedEx and United Parcel Service.   From this perspective, the changes look like a mix of hits and misses. Hits Expansion of the number of flat rate boxes and envelopes is a hit for consumers and small businesses – It allows the Postal Service to sell pre-posted boxes at nearly any retailer in a manner similar to its arrangement with Office Depot. Expansion of Hold for Pick-up Service – [...] Read more »

Postal Service Prices Last Mile Aggressively in 2011

The Postal Service has just released its 2011 rates for Express Mail, Priority Mail and Unregulated Parcels.   Going through the entire proposal will take some time.   However, a quick review of Parcel Select rates indicates that the Postal Service has not chosen to follow the rate increases of United Parcel Service and FedEx in its pricing of the last mile.   Instead, its pricing for 2011 suggests an aggressive effort to gain market share over the last mile while focusing on ensuring that delivering parcels under 1 pound are profitable.  The Postal Service’s rate increases for Priority Mail also suggest an aggressive effort to gain market share on end to end [...] Read more »

Is Advertising Mail Dying or Are New Uses Replacing Old?

This week Direct Marketing News presented two contradictory headlines on the same day. Are advertisers “Abandoning the mail” or is it true that “direct mail gains new potency as online marketing evolves?”  After reading both articles, what is a person to believe? David Hay, VP of marketing at Plow & Hearth, which has catalog, bricks-and-mortar retail and Internet sales arms. They began reducing its marketing dependence on USPS three years ago, after significant rate increases. The move was also driven by customers migrating to online retail.  In the interview, Direct Marketing News published, he stated: “We are reappraising our reliance on catalogs as our main marketing vehicle, and we are [...] Read more »