Archive for August 3rd, 2010

Postage Increases Will Hurt USPS in the Long Run

without comments

Written by Lisa.Bowes

August 3rd, 2010 at 3:47 pm

Posted in USPS

USPS Responds to Affordable Mail Alliance Filing

without comments

This press release was posted by the USPS this morning, printed verbatim with my comments below. My comments are bolded:

U.S. Postal Service Seeks Dismissal of Pricing Protest
Urges Regulator to Decline ‘Invitation to Go Through the Looking Glass’

WASHINGTON – Saying the Affordable Mail Alliance made “manifestly misleading comparisons” and advanced a “strained and fatally flawed interpretation” of existing law, the U.S. Postal Service today asked the Postal Regulatory Commission (PRC) to deny an alliance request to dismiss the Postal Service’s current pricing request.

“The Commission should refuse the Alliance’s invitation to ‘go through the looking glass,’ deny the motion and proceed to a consideration of whether the Postal Service’s requested rate increases are ‘reasonable, equitable and necessary,” the Postal Service response states.

The Postal Service filed recommended price changes with the Postal Regulatory Commission on July 6, providing data and evidence that “exceptional and extraordinary circumstances” exist, allowing the Postal Service to seek prices above the current .6 percent Consumer Price Index cap. The Affordable Mail Alliance (AMA) last week asked the PRC to deny the request.

The Postal Service motion filed today lists a number of mistakes, misrepresentations and misinformation with the AMA’s request, including:

The Postal Service has proven extraordinary circumstances:

Precipitous, unprecedented and unforeseen drops in mail volume are inarguable and meet the definition and spirit of the law. In fact, a letter from two primary authors of the Postal Act, Sen. Thomas R. Carper (D-DE) and Sen. Susan Collins (R-ME), noted that “extraordinary or exceptional circumstances” include not only terrorist attacks and natural disasters, but also “other events that may cause significant and substantial declines in mail volume…that the Postal Service cannot reasonably be expected to adjust to in the normal course of business,” such as the worst recession since the Great Depression.

Senator Susan Collins supports the spirit of the Affordable Mail Alliance, with this statement: http://affordablemailalliance.org/Sen_Collins_statement_070610.pdf,

As the principal author of the 2006 postal reform act, I am disappointed that the Postal Service is seeking rate increases that far exceed the rate of inflation, averaging between four and six percent and for one class of mail as high as 23 percent. Only when the Postal Service can demonstrate ‘exceptional or extraordinary circumstance’ does the law allow for rate increases that exceed the rate of inflation. The Postal Service cites as one factor justifying the exigent rate case ‘continued movement toward electronic alternatives’ despite that trend being neither unexpected nor extraordinary.”

“Rather than engage in arcane disputes about whether a particular circumstance could arguably have been foreseen, the focus on the exigent inquiry should be of its impact on the Postal Service,” the Postal Service filing states.

The AMA knows that the Postal Service has very specific legislative and regulatory restraints in labor and workforce issues:

The Postal Service has no discretion under the law to suspend any benefits, payments, including matching contributions to workers’ Thrift Savings Plans. More than 93 percent of private sectors companies and 88 percent of public sector companies do not have union representation. Those that do are not forced to rely on an interest arbitrator to resolve contract negotiations.

These statements are both true. The AMA and the USPS should work in collaboration to make changes to these legislative and regulatory restraints. Labor issues need to be addressed. Many of the AMA member companies and associations have had to deal with these economic times with many of the initiatives described by the USPS as “can nots”. What is the USPS doing to help promote the changes that are necessary? What can the mailing industry do to assist them with this task?

The AMA erroneously and purposefully compares the Postal Service to its private-sector competitors:

The Postal Service is not a private sector company and faces unique constraints. Many of the cost-cutting efforts by other shipping companies are not an option for the Postal Service. These companies raised rates, increased surcharges, adjusted service levels and stopped payments into 401 (k) plans. These are either not options or require regulatory approval for the Postal Service.

If these are truly exigent times, then everything should be considered an option, by both the USPS and the mailing industry. And that means everything, even if something hasn’t been considered a possibility in the past.

The Postal Service clearly and indisputably demonstrated honest, efficient and economical management:

The Postal Service has achieved cost savings of $1 billion per year every year since 2001; in 2009 the cost savings reached $6.1 billion by reducing through attrition its workforce by the equivalent of 65,000 full time employees. In fact, it was able to reduce its career workforce from an all time high of 802,970 in 1999 to today’s 588,561, while focusing on improving service and growing postal products. Other successful efforts include halting construction of new postal facilities; negotiating an agreement with the National Association of Letter Carriers that adjusts letter carrier routes to reflect diminished volume; consolidating mail processing facilities.

It all depends on how success is measured. If the efforts were fully “successful”, why the exigency price increase request?

“Considered as the basis for the relief it seeks, however, it (AMA filing) quickly collapses into a pastiche of selective memory, misunderstanding, and misrepresentations, leavened with a healthy dose of willful ignorance of the legal and political context in which the Postal Service operates,” the Postal Service filing states.

In every instance, the AMA chooses to ignore the political and legal realities the Postal Service faces, despite its members long and involved history with the Postal Service. The Postal Service cannot close facilities for economic reasons. There are a number of legal constraints and provisions affecting labor costs. The number of days mail must be delivered and pre-paying for retiree health benefits also are mandated and part of the political and regulatory reality for the Postal Service.

Strike the word “ignore” and replace it with “EXPLORE”. The AMA chooses to explore all possibilities, like successful businesses need to do. If the USPS cannot close facilities for economic reasons – changes need to be made to those restrictions! If there are legal constraints – change them! Laws evolve, mandates are not set in stone, and change is inevitable. Exhaust all possible changes, and don’t make excuses for not doing so. Both the Alliance and the USPS have a major stake in these changes, work together, collectively, to make the changes necessary a reality.

In its filing, the Postal Service urged the PRC to dismiss the AMA’s request.

“Substantively, the Motion is wholly deficient, in both its interpretation of the ‘extraordinary or exceptional circumstances;’ prong of the exigency standard, and in its interpretation of the requirement that an exigent increase be ‘reasonable and equitable and necessary’ to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States.”

Over 800 member associations and companies supporting the Affordable Mail Alliance disagree. The exigent increase is not reasonable, equitable – nor is it necessary. Per Senator Collins’ statement:

“The Postal Service’s proposal could actually worsen the erosion in its customer base. Raising the rate for catalogs by more than five percent will cause some businesses to reduce their mailings of catalogs and to direct more of their customers to websites for information about their products. The Postal Service’s plans to hike rates so substantially as well as to cut services may well produce a death spiral of fewer customers and ever declining volume, exactly the wrong direction.”

The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.

###

This press release could not have been issued at a worse time. Mailer’s Technical Advisory Committee meetings are scheduled at USPS HQ next week, with many of the represented associations also Affordable Mail Alliance members. A request was made from the Postmaster General to change the usual MTAC agenda on Wednesday, and replace it with a “MTAC Innovation Symposium”, where we are expected to share ideas on how to grow the mail.

An advance copy of the release (it wasn’t posted to the USPS press release website until this morning) went out to all MTAC members yesterday. The accompanying note mentioned that although we will be having the “Innovation Symposium” next week, discussion of the pricing request was not going to be debated in that venue. So, if any of MTACs mail growth ideas has to do with refuting the need for an exigency increase, it is clear that is off the table. This isn’t a good way to go about promoting a spirit of collaboration and an honest and constructive exchange of ideas, I hope that I am just being overly-sensitive.

It will be very interesting to see how the Alliance responds to the press release. And MTAC will certainly be interesting as well. I have a feeling this may be one of the most important MTAC sessions in the long and storied history of the Mailers Technical Advisory Committee. It is my sincere hope that we all remember that many hands make light work, and the importance of working together to get past these difficult times.

Written by Lisa.Bowes

August 3rd, 2010 at 1:55 pm

Posted in USPS