Is it Time to Consider New Uses for Facilities?
With a large network of facilities and post offices, and yet mail volumes in decline, the U.S. Postal Service finds itself with a good deal of unused capacity. The dynamics over closing and consolidating facilities has raised the question of whether there are other uses for them. Further, the Postal Service could still own the facilities even after it closes or consolidates operations. Rather than sit empty, could the Postal Service use some of that capacity in non-traditional ways to generate additional revenue?
Read MoreNaming Rights, Retail Ad Space and Other Ideas
Twenty years ago, when professional sporting teams started selling naming rights to their stadiums and arenas, many purists called it a low point in the commercialization of sports. But today, the number of arenas and ballparks not named after a corporate sponsor is small. For revenue-seeking team owners, it is just too hard to pass up the money that comes with selling your stadiums’ name. Strategy, business development and marketing all play huge factors in naming-rights deals, with top prices for these deals reaching about half a billion dollars, according to Sports Business Journal.
As a business-centered organization looking to boost revenues, does the U.S. Postal Service have opportunities to sell naming rights? The idea of selling the naming rights to an entire Post Office might not be palatable to Congress, as lawmakers like to name post offices after fallen soldiers or local heroes. But what about selling space in parts of the Post Office? For example: this retail counter brought to you by XYZ Co.? Sides of vehicles or automated postal centers in high-traffic areas of retail centers could also hold valuable advertising space. With its national reach, yet local presence, the Postal Service is visible in every community nearly every day. Companies and nonprofit organizations would likely find the opportunities to reach such a large audience appealing.
Read MoreUnused Land Parcels – Sell, Hold, or Develop?
The U.S. Postal Service is one of the largest real estate owners in the United States with more than 8,600 facilities and 950 million square feet of land. (The Postal Service leases another 24,600 facilities.) It also has about 357 unused land parcels with no structures on them, which have a book value of $128 million. The lands’ assessed values are likely to be significantly higher.
The Postal Service has contracted with real estate company C.B. Richard Ellis to sell its surplus real estate, which includes both buildings and land. You can find the properties on the following website, http://www.uspspropertiesforsale.com/. The sale of properties would generate cash flow for the financially strapped organization. It would also contribute to streamlining its physical footprint as the Postal Service aligns itself to be a leaner, faster, and more market-responsive organization. However, the sale of real estate assets would not produce recurring revenues.
Read MoreIs it Time to Redesign Post Offices?
Could post offices be redesigned to improve their appearance and ease of use, perhaps modeled after the pleasant, comfortable designs of other retail outlets?
The business world has seen a recent explosion of interest in design. Apple is a great example of a company that has reached an astounding market capitalization based largely on its focus and skill in design, both of its products and retail spaces. Starbucks has successfully positioned its retail locations as a “third place”— neither home nor work — where customers can savor a cup of coffee and enjoy a comfortable atmosphere for work or leisure. Retail bank lobbies use smart, neat designs that facilitate efficient customer transactions.
Read MoreWhat would an optimized Postal Service infrastructure look like in the 21st century and beyond?
This is the second topic in our “Five Elements of a Postal Solution” blog series. Link to last week’s topic.
Link to the March 13 blog by Cliff Guffey.
Link to the March 14 blog by Alan Robinson.
Link to the March 15 blog by John Callan.
Link to the March 16 recap.
The Postal Service Network of the Future
The Postal Service has proposed to reduce its network of post offices by more than 3,200 and consolidate over 250 mail processing locations. The goal is to optimize Post Office locations and streamline the processing network to better align with mail volumes that have declined more than 20 percent over the past five years. The Postal Service’s infrastructure was built to handle a mail volume of over 213 billion pieces. It is driven by a Congressional mandate for 6-day delivery to every delivery point, First-Class Mail® overnight delivery service standards in local areas, and a Post Office network viewed as a community infrastructure.
The Postal Service estimates that streamlining/optimization would generate over $3 billion in annual savings to help reduce the losses that topped $5.0 billion in 2011. Much of the projected optimization savings is associated with reducing the size of the workforce as approximately 80 percent of the Postal Service’s costs are employee related. The Postal Service is subject to collective bargaining and must follow its union agreements in any downsizing effort. More than 480,000 members of the workforce are covered by union contracts with binding arbitration frequently used to settle contract negotiations. In certain cases, these contracts have no layoff provisions and the ability to cross craft employees from one function to another is limited.
Many community leaders especially from small towns and rural areas have voiced significant concerns about elimination of needed postal services in their neighborhoods. Others have raised concerns regarding downsizing of needed jobs in the midst of an economic downturn. However, it is difficult for the Postal Service to justify a network built for mail volumes that are significantly higher than the current volumes being processed. It is also difficult to envision a future scenario in which mail volumes approach the numbers needed to support the infrastructure that is in place. Finally, in the digital age, the services needed by communities are evolving and the infrastructure for the 21st century may need to change to meet those needs.
We would like to hear from you on what an optimized Postal Service infrastructure looks like in the 21st century and beyond?
For this week’s topic, we’ve also asked the following guest commentators to discuss this topic over the next three days:
- Cliff Guffey, President, American Postal Workers Union, on Tuesday, March 13.
- Alan Robinson, President, Direct Communications Group, on Wednesday, March 14.
- John Callan, Director, Ursa Major Associates, LLC, on Thursday, March 15.
We hope you can join the debate. Please check in throughout the week for their thoughts, and share your comments along the way. On Friday, March 16, OIG will summarize and conclude the discussion on this important topic.
Our Guest Bloggers
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| Cliff Guffey | Alan Robinson | John Callan |
Cliff Guffey is President of the American Postal Workers Union, which represents 220,000 employees in the clerk, maintenance and motor vehicle crafts.
Alan Robinson is the President of the Direct Communications Group. He has thirty years of experience helping firms and government officials deal with the regulatory, policy, marketing, and management issues associated with changes in competition within transportation, parcel delivery and postal markets. His thoughts on the challenges facing the Postal Service can be found at the Courier Express and Postal Observer.
John Callan is Managing Director of strategy consultancy Ursa Major Associates, LLC, focusing on the growth opportunities and transformational challenges in the postal-parcel-logistics space. He is also the founder of The PostalVision 2020 Initiative designed to envision the American postal ecosystem of the future.
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