The Postal Service's Bid for Deliverance

The deficit-burdened agency asks Congress to consider new jobs for carriers, such as drug delivery, that utilize their 'last mile' advantage

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When letter carrier Gene Kahl noticed mail piled up at the home of an elderly couple along his Pensacola (Fla.) delivery route, he made chalk marks on their car tires, and after determining that it hadn't moved days later, called police, who discovered a husband, dehydrated and paralyzed with grief, sitting with his dead wife. Deeds like Kahl's are not unusual among letter carrier: Each year, dozens of U.S. Postal Service employees receive commendations for similar acts.

These days, the Postal Service itself is also in distress, expected to wrap up its fiscal year with a $7.1 billion deficit caused by a recession-led drop in mail volume and the burden of funding future retirees' health benefits. The fiscal crisis has some in the Postal Service and its unions suggesting that the agency is uniquely positioned to capitalize on some long-underleveraged assets: No other firm has the Postal Service's regular access to every U.S. residence, business, and post office box—some 150 million daily stops, except Sundays. UPS (UPS), for example, has 71,600 delivery vehicles in the U.S., while the Postal Service has more than 200,000, some of which travel to remote areas private transport companies won't. The service also employs a force of 268,000 carriers that could be deployed in new functions. Letter carriers' familiarity with customers and presence in every nook of the nation present entrepreneurial opportunities.

"We should experiment with utilizing our 'last mile' advantage in areas beyond traditional mail, whether that means conducting the Census or national polling, delivering medications, or helping law enforcement in any number of ways," Fred Rolando, the new president of the National Association of Letter Carriers, the union that represents 300,000 active and retired letter carriers, told a Senate panel on Aug. 6.

He believes Postal Service carriers could perform such services as helping with Neighborhood Watch efforts and checking on older people who might need assistance. The extra revenue would come from businesses and governmental and community organizations who would pay the Postal Service for performing services at their behest. And who better than to rely upon than the folks who deliver their mail? "A lot of letter carriers have the same routes for years and get to know the neighborhoods and the customers and see their families grow up," Rolando says. "It would be a wonderful thing for customers to have people they've come to trust perform these services." Rolando says he is eager to engage officials at the Postal Service in talks about how to harness the organization's resources to stir up new revenue. It's not clear how far such work could extend, or how much revenue potential there is. Carriers would not seek pay increases as part of any expansion into new revenue-generating services, Rolando says. "We need to look at ideas from workers and the community," he says. "They're the ones who know what could be done on a daily basis."

"Why shouldn't we do the Census?"

The Postal Service is already deriving extra revenue from the "last-mile" partnerships, whereby FedEx (FDX) and UPS (UPS) transport their own packages on the larger part of their journeys, then drop them at post offices that serve out-of-the-way areas for delivery to final destinations. FedEx's own revenue from SmartPost, its last-mile partnership with the Postal Service, increased 21% in the last quarter.

"We've always thought the Postal Service should leverage the way it goes to every home and business," says Bette Phelan, a spokeswoman for Senator Tom Carper (D-Del.), who is co-sponsor of the Postal Service Retiree Health Benefits Funding Reform Act of 2009, which if passed would relieve the Postal Service of some of its onerous multibillion-dollar payments to the fund. Dale Goff agrees. "There are places in this country where post offices are the nearest outpost to the outside world for 200 miles," says Goff, president of the National Association of Postmasters of the U.S. (NAPUS), based in Arlington, Va., which represents the 30,000 postmasters and retirees. "Why shouldn't we do the Census? Why shouldn't we be going to different government agencies and seeing what we can do for them?" Additionally, the carriers' union and Postmaster General both strongly favor utilizing post offices to sell products and financial services.