Hello, thank you for joining me to discuss a very important topic — the future of the United States Postal Service. It’s a conversation that that I’ve been having with our largest customers, with Congress, with the people who talk about the Postal Service on TV, on the radio, on the web and in the papers. I’ve also been talking to the leaders of the organizations that represent you — the unions and the management associations.
Today, I want to talk to you because without you, there is no Postal Service. You brought our performance to incredible levels — during one of the toughest periods we’ve ever faced. I want you to know how much I appreciate that, and how much it means to our customers.
From talking to so many of you directly, I know you have a lot of questions about the future. I want to give you some of those answers and share our plans for the future. You’re going to be hearing quite a bit about the Postal Service over the next few weeks. That’s why I wanted you to hear it straight from me. I’m telling you the same things I’m telling everybody else.
Let’s begin with a little level setting. Our business is in crisis, like so many others are these days. One of the biggest problems is the economy. With jobs disappearing and money tight, families and businesses pulled back on spending. That includes spending on the mail. I’m sure you’ve heard that things have improved a little bit in some parts of the economy. But we haven’t seen that in the mail we’re handling. Volume continues to decline.
Major advancements in technology have given people more communications choices than ever — and they keep expanding, with things like smart phones and new tablet computers. Over the last 10 years, we’ve seen a shift from hard copy communication to electronic. And its not just mail, it’s books, it’s newspapers, and magazines. Even music and movies are moving on-line. The reality is that more and more information is going to move electronically in the future.
In just four years, we’ve seen our volume fall from a record 213 billion pieces to the 168 billion we expect this year.
That means for every five pieces of mail we handled in 2006, we’ll only handle four this year. That’s a drop of 20 percent. We’ve looked at this data from every angle possible going forward and even brought in outside experts to help develop a forecast.
Their conclusions are very sobering. Mail volume is not going to come back.
Over the next ten years, volume is projected to decline gradually by over another 20 billion pieces of mail.
What makes this projection worse is the expected future mix of mail.
We expect First-Class Mail to decline by 30 billion pieces with modest growth in advertising mail.
This means that we will have less revenue per piece as the mix changes.
And after losing $11.7 billion over the last three years, if we don’t address our fundamental challenges, we’re going to see those losses continue to grow. In 2020, just ten years from now, we can lose $33 billion — and that’s just for that one year!
Obviously, we can’t go on this way. That means we have to change the way we do business now and keep changing with the times. Our health as an organization isn’t based on mail volume alone — it’s based on our ability to adapt to the changes in how our customers use the mail.
That’s going to take some focused planning and some very hard work. But I think we’re ready. I know we can do it. Here’s the plan.
We’re going to start with costs.
We’re asking Congress to restructure our payments for retiree health benefits. Right now, they cost us more than five-and-a-half billion dollars a year. That’s a payment we just can’t afford.
And we can make this change without taking a penny away from your benefits.
We’re asking Congress to change the law so we can change delivery frequency to five days. That’ll save us more than $3 billion a year. Many of our customers — from the biggest businesses to the family next door — have told us they support this change. In fact, they’d prefer it to raising prices or going back to a taxpayer subsidy for the Postal Service.
We’re going to bring new flexibility to managing our traditional retail network — focusing on expanding access and helping customers do more business with us through new and existing channels and retail partners. We can’t live with a retail network built for the 20th century. We have to construct a network that suits the 21st Century. It’s all about making it easier than ever for customers to choose the Postal Service.
We’re working to bring new pricing flexibility to all our products. Smarter pricing — pricing that makes our products more attractive — will help us grow some categories and help us manage our mail volume challenges. And we do intend to use exigent pricing as a tool to help close a portion of the gap.
We want to make sure we’ve got the right people in the right place at the right time — and have the flexibility to deal with the changes in demand in the coming years. That’ll make us more efficient, by making sure we’re serving our customers when they need us and where they need us. We’ll be focusing on this during the upcoming rounds of collective bargaining.
And finally, we want to assure that the legal and regulatory processes enable these changes — changes which are vital to the future health of the Postal Service. The law and regulation must enable us to fulfill our mission of affordable universal service to the American public.
Given the magnitude of the challenge facing the Postal Service, no single element of this plan can close the gap we are facing. The plan works because it is balanced and reasonable. Everyone must be part of the solution.
It’s a simple plan. But it makes sense and it can and will work.
Here’s what I’m asking you to do to help.
First, stay focused on the basics. You know what they are:
Keep service strong.
Help us find ways to pull costs out of the system.
Treat customers the same way you like to be treated as a customer — that’ll keep them with us.
Look for new ways to grow the business — no matter where you work or what you do. No one knows our customers better than you do. We all have a role in this. The more we do, the more stability we can bring to mail volume, and the more we can influence our bottom line.
And most important of all, don’t get discouraged. We have a lot to offer. And 168 billion pieces is still a lot of mail. Customers trust us. They appreciate our value. With a positive attitude, with the determination I know you have, we can get ahead of this. And we will succeed.