Fixing the Mail: Neither Snow nor Rain nor…Red Ink?

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Rethinking Basic Services

Indeed, the Postal Service needs to run itself like a business, according to Brian Clancy, managing director of MergeGlobal, a financial advisory firm in Arlington, Va., that specializes in transportation and logistics. "Right now, it's operating like a corporation with one hand tied behind its back," he says. Unlike other government agencies, the Postal Service is expected to fund itself, through products and services it sells the public, instead of asking Congress for money. At the same time, however, it cannot eliminate thousands of jobs as in the private sector, because of strong union and political protections for its workers.

A simpler feat, endorsed by Potter and many others, of cutting mail service to five days a week, instead of six, seems to be almost inevitable. Potter has asked Congress for permission to eliminate Saturday mail service since so many businesses are closed that day. Others, such as Clancy, believe Saturday isn't the best day to axe, as it would mean two consecutive days without mail service. "Tuesday is typically the slowest day in the freight and shipping business anyway," Clancy says.

A move toward printing fewer physical stamps and offering more electronic ones seems certain, too. "Even though stamps are small, there's still the expense of selling them, printing them, etc.," Goodrich says. "And I would do away with special commemorative stamps." Switzerland's postal service, cited as one of the most efficient and financially healthy mail systems in the world, charges extra for traditional physical stamps with glue.

Other companies, such as Microsoft (MSFT) and Earth Class Mail, wonder why mail even needs to be a paper affair with a delivery person in the first place. Both companies are already pitching postal services around the world on Internet-based mail delivery service. Businesses or individuals would e-mail letters or documents to a secure server the postal service would maintain, which would then route them to secure—spam free—online mailboxes provided to the recipients. "Utilizing technology is the key for the Postal Service," says Prashant Malaviya, associate professor of marketing at Georgetown University's McDonough School of Business. "They need to use technlogy to differentiate themselves from the e-mail that has surpassed them."

Exploring Partnerships

Potter says that while he doesn't object to expanding the Postal Service's use of Internet technology, he generally does not believe e-mail growth has caused the USPS's current deficit. "We've been managing—and managing well—the reduction in mail due to the growth of e-mail," says Potter, pointing out that the USPS has been slowly reducing its workforce since 1999, when it employed upward of 800,000 workers. In the past decade, the USPS says it has eliminated 175,000 positions.

Finally, the biggest change the U.S. Postal Service needs, say Wiener and Clancy, is opening its mail service to private enterprise delivery as a way to foster competition. "Europe has progressively allowed private companies to jump into the mail business," Clancy says. Goodrich believes partnerships with delivery services like United Parcel Service (UPS) and FedEx (FDX) for first-class and standard-mail letters are worth exploring.

Whatever reforms may come, the Postal Service has one competitive advantage no other business can claim: near-daily access to virtually every U.S. home and business. That kind of contact, and the commercial opportunities it creates beyond mail delivery, could be a lucrative attribute in the marketplace. "There's no business that goes everywhere every day like the Postal Service does," says a spokesman for Carper, "and it can be leveraged to make money."

Rebecca Reisner is an editor at BusinessWeek.com .