The Five-Year Strategic Plan

Despite telling Congress early last year that it was finalizing a ten-year plan, and later explaining the delay in its issuance by the need for its review by oncoming members of the Board of Governors, the document released last week by the USPS, Ready-Now ➔ Future-Ready, The US Postal Service Five-Year Strategic Plan 2020-2024, was somewhat less than what was anticipated.

In the optimistic language typical for business plans, the USPS described itself in 2024:

“In 2024, we envision a financially sustainable Postal Service that enables all Americans to connect, businesses to grow, and communities to thrive in an increasingly digitally-connected world, including individuals in rural or urban communities that are digitally underserved.  Specifically we envision a Postal Service grounded in its core public service mission of providing universal, affordable, high-quality mail and parcel delivery to all Americans, and expanding that public service mission to include the provision of essential e-government services.  We envision a business model that enables the flexibility to best serve the changing needs of our customers and respond to marketplace trends, including continued and significant de-clines in mail volumes due to electronic diversion and continued, but lower growth, in parcel deliveries due to increased last-mile competition.  We envision a Postal Service that is an employer of choice able to attract, retain, and develop high-quality, customer-focused employees.  And finally, we envision that the Postal Service will maintain its position as the world’s most efficient and affordable postal operator and the most trusted federal agency.”

Continuing its ambitious plan, the agency explained how it would get to where it wants to be five years from now:

“To realize this vision, we intend to make the following broad transformations over the next five years:

•     Transform our services from only providing a physical delivery into a service that also enables a digital connection and pro-vides other value-added services.

•     Transform our last-mile operations from the most efficient last-mile mail delivery service provider into the most efficient local logistics and e-commerce delivery platform.

•     Transform our middle-mile operations from a fixed processing and transportation network into an adaptive and resilient national and international logistics ecosystem.”

The Postal Service conditioned achievement of its vision, as anyone cognizant of the agency’s circumstance would realize was necessary:

“The Postal Service cannot realize this vision alone.  Though this five-year plan lays out our efforts to make this vision a reality, creating a financially sustainable Postal Service requires changes to existing laws and regulations as well as new agreements with our labor unions.  Ultimately, Congress determines the contours of the Postal Service’s statutory business model and therefore has the unique authority to enable this vision or direct the Postal Service toward a different vision.  ...”

The USPS put the question very succinctly:

“Resolving these conflicting mandates requires a national public policy discourse that hinges on a basic question for the American public: What would you like the Postal Service to be-come and how would you like to pay for it?

The USPS framed it well when it asked, not entirely rhetorically, what it’s supposed to be and, more importantly, how fulfilling that expectation will be funded.  It may come down to four words: monopoly and universal service obligation.

Much is made of the Postal Service’s monopoly that keeps mail users captive, and the related threat to them if there were no restraint on postage rates.  While it’s reasonable to require protection against the unabashed abuse of pricing power that the USPS would have if there were no limitation on prices, that fear overlooks some important footnotes to the agency’s monopoly.

First, the monopoly is over the carriage of what’s usually translated as First-Class Mail and Marketing Mail letters and flats – physical, hard-copy mail.  While that monopoly effectively enclosed personal and business communication for decades, the internet, email, and related electronic tools poked a hole in the fence.  What’s left is a monopoly over only one form of communication, and people have shown that their need to use the monopoly products is less than it was before, and will be less in the future.  As a result, while those still using hard-copy mail are subject to the terms of a monopoly provider, they have clear and ready access to other media not under monopoly control.

Accordingly, the real latitude the monopoly has to arbitrarily raise prices (if afforded such power) clearly would be constrained by the ability of mail users to take their communication business to other, non-monopoly media.  No matter how liberated the USPS could be to price as it wished, it’s not reasonable to believe it can’t see the obvious folly of raising prices beyond what mail users – with alternatives – would accept.

Second, the universal service obligation might be described as idealistic, anachronistic, and decreasingly feasible.  It can also be described as politically popular and the postal third rail, not unlike the third rail of Social Security.

The nineteenth-century notion was that the revenue from monopoly products would offset the public service costs inherent in the USO – but that no longer works.  As the USPS showed in its plan, there’s less mail, representing less revenue, going to more places.  And two-thirds of post offices cost more to run than they generate in revenue.

But the public – the people not using the mail and not going to the local PO – and the politicians who cater to them so as to win re-election – won’t let delivery frequency be reduced or let the retail network be rationalized.  Of course, they don’t want tax dollars to pay for any of that, either, so commercial mailers are left to foot the bill.

A little more is being said now about how to pay for the USO – a public service obligation not supported by tax dollars – but the prospects that any politician will grab that third rail are slim – slimmer than dealing with prefunding.

It’s good that the Postal Service can generate a vision, even within its statutory confines, but in a caveat early in the document, the agency reminded readers that

“The goals and strategic initiatives identified in this five-year plan are subject to change by the Board of Governors (BOG) as changes in strategy become necessary or business conditions warrant.”

In other words, what the USPS may plan to do clearly relies on external circumstances (read: Congressional actions) that could enable or disable achievement of that plan.  No matter what the Postal Service may do around the edges, it can do just so much until fundamental issues are addressed. 

In that regard, to paraphrase Proverbs, the USPS proposes, Congress disposes.

 

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