Can Postal Service survive a Digital Age?

E-mail threat: U.S. agency must embrace changes but needs help from Congress to compete.

May 22, 2000

HOW DOES a slow-moving, labor-intensive organization with 800,000 workers and revenue of $63 billion adapt to the lightning-fast changes of the Internet era?

That's the question top Postal Service officials must answer in the next few years as electronic messaging becomes a more dominant communications force.

A General Accounting Office study shows that by 2003, Postal Service volume will start to decline 2.5 percent a year largely due to e-mail. That puts at risk $17 billion in first-class postal revenue from delivering bills and return payments.

Postmaster General William J. Henderson has been blunt about the e-mail threat. "Bills and payments will eventually go electronic," he said last week. "It's not if but when."

To meet the challenge, the Postal Service now offers or is planning to offer a series of electronic products, including postage, priority mail, secure messaging and bill-paying.

One of the more intriguing ideas ties into the Postal Service's success as the delivery man for e-commerce sites such as amazon.com, eToys.com and Eddiebauer.com. A big-ticket item for these businesses is merchandise returns. The Postal Service is studying how it could run an auction site to quickly and profitably dispose of returned merchandise.

Such innovative thinking is what it will take to make it in this emerging Digital Age. Much more will be required, though.

The Postal Service is a cumbersome, inflexible behemoth. If it were a private corporation, it would rank in the top 10 in revenue and employees.

It has a highly unionized workforce and is hamstrung by congressional mandates that make it difficult to compete with the new e-commerce messengers.

Mr. Henderson admits "we're barely keeping our heads above water."

Even a $2-billion cut in overhead the last two years hasn't sufficed. He has ordered another $4 billion cut over four years, bringing job reductions -- mainly through attrition -- to 20,000.

He also will need help from Congress. Other national postal agencies in Europe, New Zealand and Australia have been given increased freedom to act more like a private company in setting rates, offering new products and making investments. Unless Congress agrees to reforms, the Postal Service may not survive.

The new electronic threat is serious, but this country's public mail delivery operation has weathered other storms in its 200-year history, such as the advent of the telegraph and the telephone.

No one else delivers the mail -- in whatever form -- to every American household and business (130 million of them) six days a week. It's a universal public function worth preserving.

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