Table of Contents

Reinventing the Postal Sector in an Electronic Age

Reinventing the Postal Sector in an Electronic Age

Advances in Regulatory Economics series

Edited by Michael A. Crew and Paul R. Kleindorfer

This compilation of original essays by an international cast of economists, regulators and industry practitioners analyzes some of the major issues now facing postal and delivery services throughout the world as competition from information and communication technologies has increased.

Chapter 21: Strategic Responses to Recession: A Comparison of the United States Postal Service to Leading Companies

Norma Nieto, Keith Strange and William Takis

Subjects: economics and finance, public sector economics

Extract

Norma Nieto†, Keith Strange‡ and William Takis§ 1 INTRODUCTION The United States Postal Service (USPS) has been buffeted by the global recession that has afflicted world economies over the past two years. Like many companies across the globe, USPS has experienced significant declines in the demand for its products and services, resulting in substantial revenue losses (over 9 percent in 2009). USPS also suffered a corresponding decline in net income, with a $3.8 billion loss in 2009. Despite comparable revenue declines, few companies exhibited this proportional level of net losses. Furthermore, the lingering negative net income exhibited by USPS is atypical – most companies rebounded with positive net incomes within one or two quarters. This chapter compares the response of USPS to the challenges of this current recession with those of companies across the Fortune 500 and within the mail, packages, and logistics industry. In Section 2, we provide a comparison of the financial results of USPS to the Fortune 500 and to other selected companies. In Section 3, we review some common strategies employed in recessions and highlight those that provide superior results. In Section 4, we compare the recessionary strategies undertaken by companies in the mail, packages, and logistics industry, including USPS, against the identified best-practice strategies. In Section 5, we discuss potential governance changes needed for USPS to both survive in a lower volume environment and weather future economic shocks in light of our findings. 2 REACTIONS TO THE CURRENT RECESSION The current global recession has affected virtually...

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