Postal Service uses private sector for new model

Postal Service uses private sector for new model

The destitute Postal Service has asked Congress to preserve its government status but make it more commercial to improve its competitive stance, postmaster general Jack Potter said today at the National Press Club in Washington.

Yesterday USPS sent its strategy for continuing universal mail service to the Senate Committee on Governmental Affairs. The service has projected a $1.35 billion loss for this year, and last fall’s anthrax scares imposed large new expenses not factored into the loss.

The General Accounting Office said in a recent audit, “USPS' financial outlook is becoming increasingly dire. Tinkering with the existing system will be insufficient to produce a comprehensive transformation that will enable USPS to fulfill its mission."

Among the changes under consideration are USPS e-commerce initiatives adapted to the new business model.

“All e-initiatives have gone slower than we would have liked,” said John Nolan, the deputy postmaster general. “We must make sure we are focusing our resources on those products and services that will provide convenience and value to our customers.”

Nolan said the Postal Service will take a hard look at the e-commerce initiatives this year and decide which ones it needs to keep and which ones to abandon.

The transformation plan considered three possible business models, ranging from full privatization to full-fledged government agency status. The chosen model would leave ownership with the federal government but would structure USPS to operate in a private-sector manner.

“This model is markedly different from what we have today,” Potter said. “Instead of breaking even, our financial goal would be to generate reasonable returns. Earnings would finance capital projects instead of having to resort to increasing our debt load.”

He said the chosen model would let the Postal Service develop new revenue streams, introduce flexible pricing and explore ways to make collective bargaining work better.

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