USPS Does the Right Thing: Commits to 90 Days Notice on Rates
The following is a Postal Perspective by PostCom Vice President
I don't think it is too presumptuous of me to thank the Postal Service on behalf of the entire mailing industry for committing to provide at least 90 days notice of price changes for its market-dominant products. It's a holiday gift, many long years in the making for industry.
The Postal Service said in a DMM Advisory this week that the next price change for mailing and shipping services would take place under the new pricing rules. And while the Postal Service Governors will decide when this price change will occur, the USPS will provide at least 90 days' notice to customers on market-dominant products. Future price changes will occur annually, on a predictable schedule, the Postal Service said.
The new law, the Postal Accountability and Enhancement Act, caps the average price change for market-dominant mailing services at no more than the rate of inflation, as measured by the Consumer Price Index (CPI). The price cap applies independently to each market-dominant class of mail First-Class Mail, Standard Mail, Periodicals, and Package Services (including single-piece Parcel Post). The law requires the Postal Service to provide 45 days notice of rate changes. The Postal Service had promised for many months that it would give more than 45 days notice. Industry had remained hopeful that the USPS would commit to 90 days, but given the past track record, optimism was not high.
So when the announcement came out this week that the USPS would commit to 90 days, I swear I heard a few corks popping. This commitment illustrates how the Postal Service can tap into the flexibility allowed under the new law while providing some degree of stability to mailers. Mailers have harped for years that 60 days between final rates and their implementation was not sufficient. It was taxing to their operations as well as for postal employees. Vendors had to update software and then mailers needed to integrate it and test it in a production environment, all in two months' time. Further, as data-exchange technologies get ever more sophisticated, the need for greater time to integrate changes becomes more urgent.
The Mailers Council made this need for sufficient implementation time on rate changes a priority and set up an ad hoc committee to address it. PostCom, as a member of the Council, was an active participant in this effort. PostCom members consistently put this issue high on their "needs' list."
I admit that over the years I sometimes worried that postal officials were secretly rolling their eyes each time the industry asked for at least 90 days notice to implement new rates. I am glad I was wrong. No doubt, the old law hamstrung the Postal Service. Because it took so long to litigate a rate case, the Postal Service's financial position could change fairly dramatically between the time the case was prepared and the new rates were final. The Postal Service was always reluctant to give more than 60 days because it worried about losing millions of dollars each day it delayed implementation.
I'd usually argue at this point that it was mailers' money and why not just push up the next rate increase by a month etc. But that's an old-world argument. The Postal Service has shown us with its latest announcement that it is capable of new-world thinking and making conscientious decisions. And for that, we should applaud the organization. Let's hope it's a sign of things to come.