At the end of 2015, I wrote an article that was an attempt to help the postal industry plan for what would be in store for 2016. One year later, I am attempting the same feat as I look into a very cloudy postal crystal ball. Many of the same challenges we faced last year still exist today.
If you were to ask any member of the postal community what was on his or her wish list for 2017, I believe it would be the same three things that were on the 2016 wish list. The first would be postal reform, which, to date, has not happened since 2006, even though a tentative deal was made between some of the major stakeholders in the industry. The second would be consistent, predictable delivery of postal products. Most of the industry would tell you that predictability trumps speed every time. It does not matter how fast or slow something was delivered, but was it on time? The third and final wish would be predictable, stable price changes. This last wish is the hardest to grant in 2017 with the Postal Regulatory Commission’s (PRC) 10-year Review of System of Regulating Rates and Classes for Market Dominant Products.
So what does 2017 hold in store for the postal industry? Even in face of the all the uncertainties, three things are evident:
1. A new president has been elected. There will be new leadership and committee members within key Senate and House committees. Education efforts for these new members will need to take place in order for any postal reforms to occur.
2. The PRC will have to determine whether or not the current system of regulating rates and classes for Market Dominant products is sufficient or if changes are needed on how the Postal Service sets it prices.
3. Individuals and businesses will continue to use postal services for business communication and commerce. Postal products will continue to be delivered to the best of the Postal Service’s ability.
Although the challenges we face in the first part of 2017 are no different than 2016, the postal industry must not lose focus. With so many changes happening so quickly, it will be way too easy to get caught up with one issue and let others slip by. Resource constraints plague every company, and most of the time, it is hard to see past the immediate issues.
I often have joked with PostCom members that for the past year, I’ve felt like a firefighter that was constantly working to put out the many postal fires around me. Every issue demanded immediate attention and focus, so any strategic thinking or planning was put on hold while I dealt with each fire. Throughout all of last year, I learned that joining forces with other postal stakeholders gave greater credence to my cause. The more groups that felt the same way, the greater the voice and breadth the issue took. More got done in educating the Postal Service, Congress, and the PRC in 2016 than any other year.
Why, you may ask? Well, for one, PostCom rarely took on an issue by itself. Whether it was comments to a Federal Register or the PRC, PostCom joined forces with others. Whether it was congressional testimony or legislation discussions, PostCom reached out to others to get their opinions and reasons on why supporting various aspects was beneficial to the industry.
Now you might be asking yourself why I am sharing these lessons learned. Well, in 2017, the postal industry is facing some of its toughest challenges. The review of the rate system could sharply change how the PRC regulates postal price setting for the next five to 10 years. A worst-case scenario would see the inflation-based cap be sun-setted and a brand new rate system would be put in its place. Other scenarios might include defining a different cap calculation or giving the Postal Service broader pricing flexibility, or even the off chance that nothing changes.
Regardless of the outcome, the process to get there will prove to be extremely tedious and quite stressful. Focus and collaboration will be needed throughout the nine- to 12-month process, as well as participation in creating the docket before the PRC. This will be resource-intensive and quite expensive for those using outside postal counsel. But this endeavor must be front and center for most of 2017. And from past experiences, the more the users of the system can agree on what a rate system should look like, the more power it will lend itself in advocating for its position. The voice of the industry cannot be divided in its pursuit to maintain predictable, stable prices.
But the review of the rate system is not the only major challenge in 2017. The need for reforming the prefunding payments continues to plague the entire postal industry, as well as new concerns around the Office of Personnel Management’s calculation of the Postal Service’s obligations into the Federal Employment Retirement System (FERS) and the Civil Service Retirement System (CSRS). There is also the ambiguity of what happens with the prefunding requirements now that the Postal Accountability and Enhancement Act (PAEA) is 10 years old. What will be required on an annual basis? How will this affect its current financial situation? Will USPS be required to make the payment?
Another challenge will involve the rollout of eInduction and Seamless Acceptance. Additional elements will be added to the Mailer Scorecard with more penalties and thresholds to accompany them. Informed Visibility has been delayed into 2017, and the industry is anxious to understand all the ins and outs of how it will affect them and what additional requirements will be placed upon them to help another USPS initiative.
The national rollout of Informed Delivery is slated for early 2017. There are still questions around how it will affect open rates. Some mailers would like an opt-out ability, but the Postal Service has not allowed that option through the testing phase. Another sensitive subject is the name change of Standard Mail to USPS Marketing Mail. The anxiety within the industry is quite high around the rollout of this name change, the potential effects on open rates, as well as the cost of implementing this name change in all postal facing systems, customer facing systems, and all marketing/sales materials. It will be quite a cost to the industry for such an unneeded name change.
Changes will be coming for Move Update. The Postal Service will be publishing a Federal Register Notice proposed rule with a comment period open to interested parties before a final rule is published.
And let’s not forget the Annual Compliance Determination. The PRC still has the ACD from 2014 and 2015 open with USPS responding to PRC questions. What does this mean for 2016? Although the determination is mandated to happen within 90 days of the report filing, the Commission has proven it can keep the docket open as long as it likes.
Have you written all of this down yet? The “to-do” list for 2017 is quite long. You can add to this list what your company requires of you, your daily tasks and projects, as well as anything new that the Postal Service tries to pursue. Add to that your company meetings as well as MTAC, PRC filing deadlines, and technical conferences, as well as the association meetings/calls/webinars required of you. Oh yeah, and do not forget your customers meetings, plant tours, and calls!
But I have hope! Well at least a little. I want you to hang up your firefighter suit, and instead put on your running shoes. For 2017 will not be the year of putting out fires, but the year of the postal legislative and regulatory marathon. Although it will feel like we are sprinting from one task to another on our to-do list, the enormity of changes in 2017 is actually more like a marathon. The industry will need the discipline and focus of a long-distance runner. Unity is needed now more than ever, because it is easier to run in a pack than alone. My one wish for 2017 is that the postal industry joins together to finally voice its concerns around the key elements that affect our businesses day in and day out.
Jessica Dauer Lowrance is Director, Postal Policy and Sustainability UPS Global Public Affairs. Prior to UPS, she served PostCom in a variety of capacities, including President-Elect. She can be reached at jlowrance@ups.com.
