USPS says Donahoe to replace Potter as Postmaster General in December

The United States Postal Service announced this week that Postmaster General and CEO John E. Potter will retire on December 3.

Potter, a 32-year USPS veteran will be replaced by Patrick R. Donahoe, Deputy Postmaster General and Chief Operating Officer. Donahoe was voted as Potter’s successor by The Governors of the Postal Service and will become the 73rd Postmaster General.

USPS officials cited Potter’s myriad accomplishments at the USPS, including:
-eliminating more than $20 billion in costs during the last 10 years, with cumulative savings of more than $50 billion.
-building a leaner, more flexible workforce and increasing efficiency and productivity through technology and the expansion of automation in mail processing and delivery;
-reducing career employment from 787,000 positions in 2001 to about 584,000 today through attrition, using strong and focused management practices;
-leading the Postal Service and the nation through the anthrax terrorist attack following 9/11; and
-creating a 10-year action plan that is a blueprint for necessary operational, legislative and regulatory changes to the current business model to ensure a viable Postal Service for decades to come.

USPS Board of Governor’s Chair Louis J. Giuliano said in a statement that Potter has been a “steadying and far-sighted leader throughout a period of dynamic change in America’s use of the mail and during times of economic uncertainty,” and he also cited Potter’s “ability to build respectful relationships with all stakeholders, customers, and employees that built a trusted level of credibility.”

Donahoe has been with the USPS since 1975, first serving as a clerk in Pittsburgh. And in 2001, he became responsible for all mail operations, including processing delivery, retail, engineering, transportation, and facilities and served in several senior management roles in operations and human resources before being named Deputy Postmaster General in 2005, according to the USPS.

“I don’t think it is surprising that Potter is stepping down,” said Doug Caldwell, principal of ParcelResearch. “Regardless of who is leading it, the USPS is going to see some fairly dramatic changes for itself and its customers over the next several years, and they are going to want to have some continuity of leadership during that process. I think Donohue is the perfect choice. He has a lot of experienced and is highly regarded within the USPS and its customers.”

This change in leadership comes at a time when the USPS is facing an uphill battle in terms of revenue and declining volumes.

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. It 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 last week, the USPS said it is planning to appeal the Sept. 30 ruling of the Postal Regulatory Commission denying the Postal Service exigent price request, which the PRC said “failed to justify rate increases in excess of its statutory CPI price cap.”

This proposal was part of the USPS’s exigent price case to raise rates filed on July 6. This case was comprised of four-to-six percent price increases for various products, including its 18 Market Dominant products. Among the proposed USPS rates changes were:
-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. 

These changes, had they been approved by the PRC, would have taken effect on January 2, 2011. When the USPS made this proposal, it said these price 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.