NAPFE NEWSLETTER OCTOBER 2000

THE POSTAL SERVICE STRUGGLES TO REINVENT ITSELF

Two recent Congressional hearings highlight the challenges facing the Postal Service as it struggles to reinvent itself in the Internet age. On September 7, 2000, the Subcommittee on International Security, Proliferation, and Federal Services held hearings into the E-Commerce Activities of the United States Postal Service. On September 19, 2000, the Postal Service Subcommittee held a Postal Service Oversight hearing. Both hearings reveal the dilemma of the Postal Service: how does it maintain its mission and legislative mandate and survive the impact of the Internet – declining first-class mail volume. The Postal Service has taken tentative steps in the direction of e-commerce and is increasing its associations with private delivery corporations. The future of these ventures is uncertain but they form the debate about the future of the Postal Service.

This year, the Postal Service will lose money for the first time since 1994, as much as $300 million. This loss is attributed the slow growth of mail volume, the high cost of postal delivery costs and the diversion of mail to the Internet. To offset these losses, the Postal Service has begun a foray into e-commerce. However, this effort is not moving smoothly and success is not guaranteed. The General Accounting Office report discussed at the hearing on the Postal Service’s e-commerce activities found flaws in Postal Service’s approach to e-commerce. The government auditors found that the Postal Service failed to properly document its revenue gained from e-commerce activities and could find no legislative authority for the Postal Service to enter into such ventures. Nevertheless, the Postal Service made a strenuous case that it must enter into e-commerce if it wanted to survive. Current e-commerce activities are electronic postmark (EPM), bill payments (ePayments), Internet change of address products (MoversNet), electronic certified mail (NetPost.Certified), electronic transmittal of documents to be mailed (NetPost Mailing Online), electronic document delivery (PosteCS), and online stamp sales (Stamps Online).

Deputy Postmaster General John Nolan also suggested that because e-commerce activities are outside its mandated mail-related services, they are not subject to governmental oversight. This thinking reflects a regulatory gap since the 1970 Postal Reorganization Act does not address such the possibility of electronic commerce. A fact highlighted in during the Oversight Hearing in class to overhaul current postal laws. Despite this regulatory gap, the Postal Service feels that it must adapt to the changing world and to do so it must enter into electronic commerce.

Another way the Postal Service is adapting to changes is through alliances such as the current discussions with FedEx for a package-delivery partnership. The partnership would allow FedEx to carry Postal Service next-day packages and the Postal Service would deliver FedEx Ground packages. However, this partnership calls into question the Postal Services sole access to the home mailboxes. As, the deal with FedEx is still being negotiated but the question of the Postal Service’s sole access to mailboxes is unanswered. I am certain that the Postal Service’s struggles to redefine itself will be at the forefront of the 107^th Congress’s agenda.