Anyone who was hoping for any form of postal activity during the lame duck session of Congress will be disappointed to find only lumps of coal as Congress recessed for the year without acting on any of the Postal reform bills that were introduced and without acting on any of the USPS Board of Governor (BOG) nominees.
One can hope the new Congress will re-introduce postal legislation and hold hearings on BOG and Postal Regulatory Commission (PRC) nominees. Unfortunately, with a new Congress coming in, it will take some time before they’re organized and working. Furthermore, it’s unlikely the new Congress and a new President will put postal agenda items on the top of their list of issues to tackle first.
This means that the mailing industry will need to quickly redirect its focus to the PRC’s mandated analysis of the Postal Accountability and Enhancement Act (PAEA). On December 20, 2016, it was 10 years since Congress passed the PAEA. The PAEA completely changed the rate making process for the Postal Service, PRC, and the mailing industry. Included in the PAEA is a requirement for the PRC to determine if the PAEA is achieving its statutory objectives. If it isn’t, the PRC is tasked to “make such modification or adopt such alternate system” to achieve the objectives.
The big question is, will the lack of postal reform legislation (to fix the USPS balance sheet) factor in the PRC decision? Most in the mailing industry would agree that the Consumer Price Index (CPI) cap on postal rates has been a good thing over the past 10 years. The cap has kept postage affordable, predictable (exigent surcharge aside), and forced the Postal Service to be very aggressive in controlling costs.
The Postal Service, on the other hand, has made it clear that it does not like being constrained by the CPI cap and will be doing everything possible to convince the PRC to remove the cap. In the December 2016 PRC Section 701 report, the Postal Service noted it was looking for Congress to pass postal reform legislation and for the PRC to use the 10-year rate review to effect “the replacement of the current price cap system with a more suitable regulatory structure.” The Postal Service letter (Appendix B of the Section 701 report) also states “the exigent surcharge should be restored as a policy matter” and “the Postal Service is disappointed that the Commission declined the opportunity to urge the President and Congress to restore the recently expired exigent surcharge.”
The 10-year rate review provides the opportunity for all parties to offer feedback and input into the PRC decision-making process. This is going to be a critically important review for everyone in the mailing industry. Even the PRC has stated it has been preparing for the past year to conduct this mandated review of PAEA. The Postal Service and postal unions will be actively involved in the process. What are the key issues that the mailing industry needs to bring forward? How does the mailing industry define a successful rate review?
There will be a number of topics that the industry will need to provide feedback on. Below are a few I believe are critical, with comments to spark some thoughts:
· Does the cap-based rate system need to be maintained?
o Yes… maybe the CPI is not the right index to use, but there needs to be some sort of cap established to control USPS spending and postage prices.
· Workshare discounts: What are acceptable pass-throughs for industry?
o Should there be a requirement for the Postal Service to pass through 100% of the workshare savings to the mailing industry? What would that mean for products that are not covering their costs?
· Service standards: Are they acceptable?
o Load leveling, network rationalization, USPS 24-hour processing clock, and the loss of pretty much all overnight service… and the USPS still struggles to hit target service performance goals.
Now is the time for the mailing industry to step up and ensure the mailing industry’s perspective is represented. Several mailing industry associations will be actively involved in the process. This is our opportunity to reshape the future of the mailing industry. Feel free to contact me if you would like recommendations by sending me an email at firstname.lastname@example.org.
Bob Schimek, Senior Director of Postal Affairs for Satori Software, serves as primary liaison with the USPS on technical matters affecting the mailing industry. His 27 years of industry knowledge and leadership provide product management and strategic direction for Satori Software’s mailing solutions. Schimek currently serves as Chairman of the Board for PostCom, Chair of Idealliance’s Mail.dat Work Group, and as an Idealliance representative for MTAC.