preview

Usps

Satisfactory Essays

®

Pla n t o Profit a bilit y
5 Y e a r Busine ss Pla n

February 16, 2012

Introduction



The United States Postal Service (“USPS”) continues to endure the negative effects of electronic diversion combined with a weak economy and increased funding obligations



This confluence of events has had financial impacts on the organization which have become untenable



While the USPS has continuously sought to make operational improvements and improve efficiency, the organization’s current financial position requires additional action to ensure viability and self sufficiency



The following presentation has been prepared by the USPS in order to communicate its business plan (“Business Plan”) to key stakeholders …show more content…

Fixed cost base

 Transactional volume

declining due to e-diversion  Advertising mail is subject to more substitution options  Mail volume highly sensitive to economic changes  Mail mix changes – lost profit contributions These trends will continue to put pressure on USPS’s ability to provide affordable universal service

Price

Labor Costs
 ~80% of total costs  COLA increases  Benefits: pensions,

 Capped by inflation

 Price elasticities are in

flux due to growing alternatives Rising but capped Rising cost per hour

retiree health, health insurance  Limited flexibility

February 16, 2012

4

Electronic Diversion is the Primary Driver of First-Class Mail Volume Decline



Diversion of communication and commerce to electronic channels is a principal contributor to declining First-Class Mail volumes



Diversion reflects a permanent secular shift in customer behavior and is more pronounced during periods of economic weakness



First-Class Mail represents 44% of mail volumes and 66% of contribution



Diversion exacerbates the loss of profit as revenues decline
The Economy is NOT the Main Cause of Diversion
180% 160% 140% 120%

Recent Examples of Diversion



Alternatives to bill payments by mail



Online presentment of bills and statements



E-mail as a substitute for mailed correspondence
Index



E-file of tax returns

100% 80% 60% 40% 20% 0%
Loss of 45 bn pieces



Electronic

Get Access