Vogel rejoins USPS as top Mailing and Shipping Services exec

The United States Postal Service (USPS) announced yesterday that Paul Vogel has been brought back into the fold as president, Mailing and Shipping Services.

Vogel, whom will assume his new role on August 16, is no stranger to the USPS. He is a 40-year USPS veteran, beginning his career there as a clerk/carrier in Boston and rising through the ranks in various positions in operations and logistics through his retirement in January 2009, when he joined Deloitte LLP as a director. Vogel replaces Susan Plonkey, who was named acting president in June.

Vogel’s most recent role at the USPS was as managing director of Global Business and Senior Vice President, focusing on international business management, global network strategy and technology, international relations and international operations, including the USPS’s five International Service Centers.

In his new role, Vogel will be responsible for all product management, product development, retail and commercial products and services, and commercial sales for the Mailing and Shipping Services group, which has annual revenues of $65 billion.

Vogel’s return to the USPS comes at a time when the organization continues to lose money on a quarterly basis. Due largely to an ongoing diversion to electronic alternatives, including e-mailing business documents and online purchasing orders, as well as other electronic mailing processes, the USPS has been under difficult circumstances for more than three years. What’s more, it is faced with the possibility of a projected $7 billion shortfall for Fiscal Year 2011.

“This is a real smart move by the USPS at the right time,” said Doug Caldwell, president of ParcelResearch. “Vogel retired with a great track record. He took the International division, which was kind of fragmented, and consolidated it and built some partnerships with other organizations and entities on the international side as the USPS does not do any deliveries outside of the U.S., and he grew it during a difficult time…when there was not a lot of growth in our economy.”

Caldwell added that having a USPS insider like Vogel in this position is key, due to his previous experience. And he pointed out that that his position is an important one at the USPS, given that Mailing and Shipping Services has significant growth potential compared to other USPS units.

The USPS also has challenges with pending rate increases and stiff private sector competition, which makes Vogel up to the challenge, said Caldwell.

“He is going to do exactly what he did on the international side…consolidate operations, make sure product offerings are clear and well-known to the shipping community so they can take advantage of the services and so that the USPS can streamline what the opportunities are and make sure the right people are in the right places underneath him,” said Caldwell.  “I would not be surprised to see some personnel changes along with some realignment. Having an insider who knows the ropes and how things work within the USPS and has a proven track record is a no-brainer.

The USPS has seen mail volume drop by more than 25.6 billion pieces—or 12.7 percent—in the last fiscal year, with total volume currently at 177 billion pieces. And the USPS also is working to restructure retiree health benefits for as many as 800,000 retirees, even though it only has an active work force of 596,000 career employees. Left uncorrected, that bill will reach $4 billion next year.

In an effort to remedy its fiscal woes, the USPS recently announced it is proposing price increases to get on better financial footing.
In a filing with the Postal Regulatory Commission, the USPS is proposing four-to-six percent price increases for various products, including its 18 Market Dominant products. These changes, if approved by the PRC, would take effect on January 2, 2011. The PRC’s decision is due in early October.
Among the proposed USPS rate changes are:
-raising First Class Stamps to 46 cents, with a new Forever Stamp available in October;
-an 8 percent increase for Periodicals;
-a 5.6 percent increase for Standard Mail;
-6.7 percent increase for Package Services;
-a 5.2 percent increase for Special Services;
-a recommended increase for catalogs of 5.1 percent; and
-Standard Mail parcels increasing by about 23 percent. 

The USPS said these prices changes would generate $2.3 billion for the last three quarters of Fiscal Year 2011 and an estimated $3 billion for the full 12 months of Fiscal Year 2012.

“We are facing this problem because of a massive drop in mail volume and the fact that the bulk of our costs are fixed by laws, contracts, or regulations. Our operating flexibility is severely limited right now,” said Stephen M. Kearney, senior vice president, Customer Relations. “Our network is expanding by a million delivery points every year, and we are subject to a lot of legal requirements that limit our ability to reduce service commensurate with the decline in demand.”