Postmaster General Brennan's View for the Future of the Post Office

Before a room full at catalogers at the American Catalog Mailers Association's (ACMA) Annual Forum and Policy Caucus in Washington, D.C. yesterday, Megan Brennan, the 74^th Postmaster General and CEO of the U.S. Postal Service — and the first woman to hold the position — addressed the future of her organization and why she believes it can still be a viable entity in an increasingly digital world.

My primary mission is to return the USPS to solvency, Brennan said, noting that there's been a 27 percent decrease in mail volume since 2007, which has contributed to eight consecutive years of net losses for the organization ($51.7 billion in total losses over that eight-year time period). To do that, Brennan is making a habit to engage key stakeholders, including mailers such as those represented at the ACMA event, postal union leaders and policymakers.

Specifically addressing the mailers in the audience, Brennan said there are some positives to report in the midst of the doom and gloom that's surrounded the USPS for some years now. For one, catalogs beget packages, a growing business segment for the Postal Service. Likewise, catalogs beget more catalogs, as one attendee pointed out. The more successful — i.e., profitable — a catalog drop is, the more likely that company will rush to get more catalogs in the mail.

In addition to growing its package delivery business, USPS is investing resources into giving print "a digital reflection." For example, the Postal Service has launched a pilot program in Northern Virginia called Real Mail Notification that enables people to receive an email that contains all of the mail that will be delivered to their physical mailbox that day. Customers receive scanned images of the outside of their envelopes and small packages the morning before they receive them. And as an incentive to direct mailers who want to participate in the Real Mail program, the email contains a "Click It" button that takes the mail recipient to wherever the marketer wants — e.g., its website, a map to their closest store, etc.

The Real Mail Notification pilot program, which was discussed in detail at an earlier session in the day by the USPS's Vice President of New Products and Innovation Gary Reblin, has seen close to an 18 percent participation rate among customers in Northern Virginia. The program is being rolled out to the New York City market this summer.

Keeping Mail Affordable
In order to keep mail affordable, the USPS has implemented a number of cost-cutting measures. It's consolidated postal facilities and delivery routes; overhauled its vehicle fleet, opting for more economical vehicles that offer expanded cargo capacity and operate on hybrid fuel types; and sold postal facilities that were no longer in operation.

Brennan and her team are looking at both sides of the financial ledger, however. Not only is it necessary for the USPS to control costs and improve operational efficiencies — without sacrificing service levels — but it must invest in its infrastructure as well. For example, the organization is introducing a new small package sortation system to help the flow of packages through the mail, and has invested $2 billion in capital investments in 2015, up from $700 million the year prior.

With all that said, Brennan conceded that the USPS needs fundamental reform. The facts are that for every 30 cents it has in assets, it has $1 in liabilities. Burdened with the responsibility to prefund retiree benefits, the Postal Service needs flexibility to grow its business. Increasing catalog volume is one such opportunity.

Brennan cited that possible pricing incentives for catalogers — e.g., a discounted postal rate for mailing books to prospects, making negotiated service agreements easier for catalogers of all sizes to get — are currently up for discussion, and she hopes to have them tested and rolled out the mailing community as soon as possible.

We recognize the challenges, Brennan said, but we also feel there's tremendous upside for the [catalog] industry. To her point, as one catalog attendee put it, the two entities are business partners. The better we do, the better the Postal Service will do.