Is e-commerce the key to saving the U.S. Postal Service?

OregonLivePortlandPoliceAtPODid you know that revenues for the U.S. Postal Service actually increased last year?

Despite the rapid decline of the personal letter, revenues rose modestly to $67.32 billion last year.

Of course, the Postal Service still recorded a big annual loss — almost $5 billion — but it also faces a uniquely costly burden. Congress requires it to prepay health care costs for retirees and some active workers, an obligation that is layered on top of its debt, workers’ compensation and pension obligations. Postal Service workers and advocates say the requirement forces the post office to lose money and should be repealed; watchdogs say the mandate protects taxpayers.

The battle over benefits is political. Operationally, what can the Postal Service do in the meantime to improve its financial outlook?

Alibaba Group’s John Spelich says postal services around the world can benefit from the rise of international e-commerce. Writing in Quartz, Spelich notes “Parcels and logistics contributed 17 percent of global postal service revenue in 2012, compared to just 9 percent in 2002, as e-commerce generates ever-higher volumes of small parcels flowing through the global system.”

Alibaba and other international e-commerce companies, he says, can ride postal services capabilities to ever-increasing volume of parcel delivery. But he says postal services, “hardly paragons of innovation,” must adapt, cooperate and invest heavily in better IT systems.

In other words, despite the generally discouraging landscape for traditional mail delivery, there is at least one important bright spot: Parcel delivery.

Here’s a telling paragraph from the Postal Service’s 2013 10-K:

Shipping and Package revenue of $12,515 million increased $923 million, or 8 percent, on a volume increase of 210 million pieces, or 6 percent, compared to the same period last year. Higher consumer spending, higher e-commerce retail sales and increased marketing efforts drove much of the growth in Shipping and Packages revenue and volume during 2013. 

It’s an open question as to whether a massive bureaucracy like the Postal Service is culturally and operationally equipped to make the changes it must to flourish deep into the 21st century. Indeed, there are some indications that the agency resists innovation, rather than embraces it. (See Small Business Trends story “U.S. Postal Service Killed Startup Outbox.”)

But perhaps the situation isn’t as dark as it appears. Perhaps there’s still time, space and political will to reshape the institution established almost 240 years ago.

via Is e-commerce the key to saving the U.S. Postal Service? |

Leave a Reply

Required fields are marked *