More than half a million people work for the U.S. Postal Service making it the seventh largest employer in the world. But like a lot of other businesses, this one is being hit hard by the tough economy and transformed by the Internet.

Today, only three percent of what the Postal Service handles is actually letters. Just in the last four years mail volume is down 20 percent, so the agency is struggling to reinvent itself. But change isn’t easy. Postmaster General Patrick Donahoe went to Congress recently to ask for help, but his plan could mean layoffs, post office closings and the end of Saturday delivery.

Rep. Darrell Issa (R-CA) blames the leaders of the Postal Service for its problems and wants the service to be under tighter controls. He says the agency’s $15 billion in debt – their credit limit — is a sign that they have “more than a small cash flow problem.”

Issa’s plan would create a “control board” that could, among other things, re-negotiate union contracts. Sen. Tom Carper (D-DE) agrees there’s a problem with the Postal Service, but the solution he’s proposing is very different.

“Part of what we need to do is to enable the Postal Service to take the steps that are appropriate [and] right size their enterprise for the 21st Century, much like the auto industry did a couple of years ago,” Carper told weekends on All Things Considered guest host Rachel Martin.

One of the Postal Service’s current complications is 2006 legislation that says the agency must set aside upwards of $5 billion to $6 billion to have on hand to pay for health benefits for retiring employees. Carper says almost no state or local governments — and very few private companies — do something similar.

Carper says one solution could be taking money from one of two pension plans that he says the Postal Service might have overpaid into. If that is indeed the case, he says that money could instead be used to absorb that cost of health care benefits for retirees.

“The money could be drawn down from one of the overpayments and used over a number of years to prepay retiree health benefits for pensioners,” Carper says.

Regardless of what plans the Postal Service moves forward with, Carper says the bottom line is that they cannot continue to do business as usual.

Thinking Globally

So what model would work for the U.S. Postal Service? James Campbell, co-editor of the Handbook of Worldwide Postal Reform, says the U.S. could learn lessons from postal systems in other countries.

Campbell says that what’s happened in other industrialized countries is similar to what’s happened in the U.S. – most notably the decline in mail.

“In general, other countries have looked at this situation and decided [they] have to allow the post office to become more commercial and make them become commercial,” Campbell says.

Campbell cites postal systems in Germany, Sweden and New Zealand that have allowed their post offices to become more profitable, more commercial and more customer oriented in order to survive.

Germany in particular has rethought its transportation network, sorting systems and has expanded globally. In 2002, Deutsche Post, Germany’s postal service, acquired leading international transportation company DHL.

“Their view is that the express business and package business is a global business,” Campbell says.

The U.S. Postal Service is beginning to act more commercial through partnerships with Federal Express and UPS, Campbell says. It’s a natural partnership because Federal Express has an excellent collection system, while the Postal Service has a great household delivery system.

Post offices are another area where other postal systems have streamlined. In Germany, Deutsche Post only operates a single post office, Campbell says. All of the remaining post offices are operated by small businesses or retail stores.

“They find that they wind up providing better service [and] longer hours at lower cost by this sort of a system,” he says. “It’s possible to imagine in the U.S. that the post office adapts and transforms into another useful, important operation – but it’s not going to be a carrier of letters and sentiments.”

The Rural Post

Though trimming the number of post offices in the U.S. might save the Postal Service money, the loss could be felt in other ways.

Tom Gamble has been with the Postal Service for 24 years, currently as a rural carrier along a route in Middleton, Ohio. Gamble is also the president of the state’s Association of Rural Letter Carriers.

Gamble says the loss of post offices in rural communities would have a devastating effect there.

“There are a lot of people in the rural community that rely heavily on the post office,” Gamble says, “we carry feed, livestock, seed – a lot of things that the rural community depends on.”

Gamble has delivered everything from baby chickens to rabbits and even crickets to rural customers. He says for some folks in rural communities the postal carrier might be the only person they see for weeks.

“There’s countless stories of carriers that have been looking out for some of their older customers and saved the lives of customers because their mail started to build up the mailbox,” he says. “We kind of keep an eye on the neighborhoods.”

Gamble says as the Postal Service evolves and the pressure builds to do more in less time, carriers have less time to communicate with their customers. He says he feels like he’s part of the family with some customers, but that could all start to change.

“I know who’s in trouble and who’s not, just by the mail that comes out. I know who’s having a birthday and who’s lost a loved one,” he says. “You just can’t replace those kinds of things.”

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