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Reading Between the Lines

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Last week, at the National Press Club, Postmaster General Donahoe delivered, one of what will likely be many, farewell addresses as his term nears its end. Tucked between reminiscence and appeals to Congress for more affordable approaches to health care and pensions for postal workers was an insightful look into the future state of mail, direct from its chief visionary, beginning with a few questions:

“Can the Postal Service operate profitably far into the future?  Absolutely.

Can it continue to adapt quickly to changes in the marketplace? We’ve proved that. 

Can it continue to meet its full potential as an engine of growth for the mailing industry and America’s businesses?  Yes. 

Can it do these things within its current business model?  Not likely.”

That said, a little later on in the speech it was time for a little reality check:

“As someone who’s leaving his job in a few weeks, I’ll offer some unsolicited advice on the way out.

First of all, acknowledge the reality that the mailing and shipping marketplace is changing… rapidly.

  • First-Class Mail volumes have declined by 35 percent in the past ten years. That would be worth $17 billion in annual revenue today – and it’s not coming back;
  • E-commerce is driving big demand for delivery services.  That’s what’s driving our package business growth;  
  • Location-based technology is enabling tremendous new ways of adding value to delivery; and  
  • Integrating mail with digital technologies is creating powerful strong business opportunities for the senders of mail.”

And there it is. $17 Billion and over one third of the volume in the top profit maker, first-class transactional mail, evaporated in the last decade. The shift towards packages and last-mile delivery logistics is significant but with smaller margins and increased complexity. And finally, TransPromo goes Multi-channel represents the new opportunity.

He goes on to reinforce that to survive and thrive, USPS must change its business model to be more flexible to meet the needs of its customers. If we read between the lines there is a parallel for all of us in this industry covering production print-to-mail. We all have to make sure our business models stay relevant as things change.

Some in our industry are trying to hop on the E-commerce bandwagon by shifting their focus away from customer communications to geo coding and a variety of package handling and sorting solutions. At Kern, we remain focused on Document Output Management with production printing and mailing at the core of our portfolio. Yes, we have diversified into adjacent areas that support our focus, like rapid application implementations for document driven workflows with Kern EDGE and eDiscovery services for the legal industry but you don’t have to read between the lines to know that Kern is not shifting our focus away from the document.

Mr. Donahoe closed his speech with a note of optimism. We applaud his efforts during his tenure join in his outlook for a dynamic mail industry, adapting our business model while remaining faithful to our focus.

-Dave Squires, SVP Strategy

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