Postal Service called slow to exploit IT

Independent regulator says USPS has yet to boost revenue by switching tracking systems, selling data and collecting fees for credentials issued by local governments.

The cash-strapped U.S. Postal Service has fallen behind in generating revenue from new applications of information technology, such as switching to a FedEx-like tracking system, selling USPS data to mailers and charging local governments to issue various citizen identification credentials at post offices, says the agency's independent regulator.

One of the biggest challenges in realizing benefits from IT has been how to expand the use of the so-called intelligent mail barcode -- a series of lines printed on commercial letters and packages that computers scan to identify each parcel as it moves through the processing system. The tool also can measure the amount of time it takes to process items.

The Postal Service launched the labels in May 2009, and the Postal Regulatory Commission had expected mailers nationwide would be using them by 2012. But USPS officials now say they do not know when all companies will transition to the coding, and only about one-third of the nation's mailers have adopted the IMB, mostly due to its cost, officials noted.

"I think we're all a bit frustrated that the IMB has taken much longer than we thought to be implemented," said commission Chairwoman Ruth Goldway in an interview with Nextgov. "But we still see its potential . . . as a service that will give the Postal Service a vast array of data and control over the mail stream."

USPS officials stressed that their technology is up and running and has the capacity to handle the nation's commercial mail volume but that deployment is customer-driven. "If the measure of success is 100 percent [adoption], then that is unrealistic," Thomas Day, USPS senior vice president of intelligent mail and address quality, said on Thursday.

The Postal Service invested about $100 million to build the system, but its customers do not have enough resources to install new hardware and software that allows USPS to read their data, Day added. Currently, the information retrieved from scans does not always align with real-world times and locations, PRC officials said.

"To the extent we can't process data, the errors are occurring on the side of our customers," Day said. Recognizing this problem, the Postal Service recently spent $2 million on an upgrade to help customers troubleshoot glitches.

Day noted that, already, IMB is helping customers and the agency because the service easily corrects addresses and provides USPS with greater visibility into its supply chain. "With that volume of data, it gives us significantly more information about our [postal] network," he said.

Commission officials said radio frequency identification is a proven, smart-tracking tool that European mailers currently use to test delivery times, but USPS and its customers deemed the technology too expensive. RFID tags transmit location data over the airwaves to remote readers, eliminating the need for physical scanning.

The regulator now is not considering an alternative to IMB, though if deployment continues to drag on, it could ask USPS to develop other systems, perhaps RFID.

"The stick we potentially have is that every year we file a report with Congress letting them know whether the Postal Service is in compliance" with performance standards, Goldway said. "We could make findings that the Postal Service is out of compliance and go through a complaint process to get [USPS] to do something or highlight it for Congress and ask Congress to do something about it."

USPS will file its annual compliance report to the commission by the end of December.

Day said that scrapping IMB for RFID would require the Postal Service to dole out hundreds of millions of dollars for an approach that even successful private-sector delivery services, such as UPS and FedEx, do not use for individual mail pieces.

The Postal Service's other ideas for using IT to boost profits include leveraging an agency database that contains the official physical addresses of all Americans. Post offices already offer citizens the ability to apply for passports on behalf of the State Department, in return for passport acceptance fees.

There is some discussion of USPS linking its datasets to state or local computers to manufacture other credentials, such as voter identification cards -- and recouping fees from those services. In addition, the Postal Service is thinking about selling some of its marketing, mail volume, transit time and certain IMB data to commercial mailers.

"I wish that these proposals were more developed than they are," Goldway said.

The Postal Service is making progress and moving forward on each of these concepts, Day responded. But he suspects USPS will face pushback from the industry over the suggestion to monetize agency data because customers take the position "that it should all be free."

Despite its criticisms, the commission is pleased with the Postal Service's strides in establishing partnerships with popular online services to attract more customers. For example, users of eBay and PayPal can print USPS postage from their desktops without paying additional fees or installing software. "They should be credited for being quite innovative within that field," Goldway said.