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Caveat Emptor: Buyer Beware – Commentary

Attention members of the commercial mail production community: You’re being pitched. After nineteen months in office, and ten months after issuing his 10-year Plan, Postmaster General Louis DeJoy is getting out of his office at USPS HQ and taking his sales pitch to the people.

Actually, his Selling the Plan tour began last year; he appeared at selected USPS facilities, at carefully arranged Postal Customer Council meetings, and in a protracted infomercial during the virtual National Postal Forum. His most recent venue to win friends and influence customers was last week’s Mailers Technical Advisory Committee meeting.

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USPS Service Claims Require Readers’ Scrutiny

For the last seven months of 2021, the Postal Service’s public relations office has issued weekly releases touting service performance improvements.  However, a closer look at those releases suggests that, while the authors’ purpose seems to be to create a perception of improvement, that scenario isn’t supported by their own data, and shows a trend that actually isn’t as impressive as they want readers to believe.

Contexts

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PRC Exploring New Rules About Private Express Statutes

The Private Express Statutes can be traced back to 1792 when Congress, empowered under the Constitution to “establish post offices and post roads,” granted the federal government sole authority over the carriage and delivery of letter mail.  That authority, now codified in 18 USC 1693-1696 and 39 USC 601-606, originally enabled the Postal Service to suspend the statutes if that would be in the public interest.

The USPS implemented an exception in 1979, for example, to allow private companies, notably Federal Express and United Parcel Service, to carry “extremely urgent” letters outside the mail subject to conditions including payment of postage.  (The PES apply only to “letters,” so the private carriage of other matter – like newspapers and packages – is open to non-USPS providers.)  That authority ended in 2006.

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Exceptions and Selective Data Skew USPS Service Reports

In any public statement about its products or services, it’s to be expected that a private company will present information that frames those products and services as favorably as possible. Any commercial or advertisement is an example.

Whether the Postal Service should engage in such a practice is another matter. Though it’s supposed to operate in a “businesslike manner,” it’s fundamentally a government agency whose vaunted trustworthiness would make the transparency of operations and complete honesty of information no less than core values.

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It’s Showtime

After all the controversy, arguing, and heated exchanges, we’ve reached the point in postal matters that really counts. We’ve been told how the Postmaster General’s 10-Year Plan will make everything right, and how, as part of that Plan, the Postal Service is going to have an outstanding 2021 peak season. But now, less than seven weeks before Christmas, the hanging question remains how much of that will come to pass; will the 2021 peak season live up to the hype?

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The 10-Year Plan and The Virtual NPF

The unrelenting impact of the pandemic caused the National Postal Forum to be virtual again in 2021 – actually as two online events, one last spring and a second last month that coincided with National PCC Week.

However, the September session’s presentations offered less than the usual wide variety of topics and instead were dominated by a Postal Service multi-part infomercial touting Postmaster General Louis DeJoy’s 10-year Plan.  From the opening session to individual panel discussions, viewers were repeatedly presented with scripted “conversations” in which the PMG was fed softball questions, all designed to elicit planned answers that framed the Plan and its contents in the most favorable terms.

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Caught in the Spin

As everyone involved in commercial mail production realizes, we’re heading into a second atypical fall mailing season.  Supplies of the essential raw material – paper – are tight, trucking companies are busy moving backlogged shipments from ports, drivers are still in short supply, and companies are struggling to find workers despite high unemployment.

Concurrently, the Postal Service is reworking its processing and logistics networks – consolidating some operations while adding annexes and installing package sorting equipment – and planning to move more mail by truck and reduce its service commitments.

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OIG Examines the Postal Service’s Embargoes and Redirects

The 2020 peak mailing season likely didn’t go as the Postal Service or its customers had expected, to say the least.

Whatever preparations the agency had made for the usual seasonal volume were severely disrupted as the global pandemic impacted employee and transportation availability, and as package volume surged in response to orders from quarantined shoppers.  USPS processing facilities strained to move volume and maintain service but, as the Postal Service and commercial mailers learned, those efforts were unsuccessful in some locations, necessitating exceptional measures to redirect or completely halt the inflow of mail.

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Trend of Competitive Contracts Not Indicative of Package Growth

The Postal Service’s 10-year Plan, released March 23, optimistically assumes package volume will grow and provide a critical source of revenue to offset the Plan’s projected $160 billion loss over the period.

However, as we first reported last April, the continuing trend of competitive product contracts seems to not support the agency’s rosy expectations.  According to data available from the Postal Regulatory Commission website, from January 1, 2020, through August 13, 2021, 48% more competitive product (CP) contracts with the USPS were terminated (426) than were approved (287).

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DeJoy and His Governors: Dissenters Not Welcome

Given the circumstances of their nomination and confirmation, it’s no surprise that the majority of the sitting USPS Governors exhibit a common philosophy, regardless of their partisan affiliation.  Moreover, the six governors who were in place before this summer, having chosen the current Postmaster General, also display a singular allegiance to him, and back any decisions that he makes; he’s their man.  As a result, Louis DeJoy apparently can run the USPS as he wants, knowing he’ll be supported fully by those who selected him.

Insulation

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USPS Claims Service Improvements

Anyone even marginally attentive to USPS service performance knows that, over the past year, the agency has struggled because of pandemic-related absenteeism, process failures, a lack of air transportation, a surge of packages, and other atypical circumstances that led to network congestion and significant declines in service.  Though some of those conditions have eased – such as a slowly stabilizing workforce and more air transportation availability – service remains subpar in many parts of the country.

The growing shortfall between established service standards and actual performance had been evident in the service scores for years, but that worsened as the pandemic took hold early in 2020, as shown in the quarterly scores beginning in PQ II/FY2020 (January-March 2020).

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Other Voices Heard About Proposed Service Standard Changes

 By late June, the Postal Regulatory Commission likely had received more comments than it had expected about the Postal Service’s proposal to change the service standards for First-Class Mail and some Periodicals.

Aside from the briefs and statements of position from the eleven intervenors in the case, plus the commission’s “public representative,” the PRC also got comments from other groups and interested parties, including from 478 individuals from all over the country.  (Whether there was a coordinated campaign behind those isn’t clear; many of the comments didn’t follow a pattern.)

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Mailers Hub Submits Statement of Position to PRC

On June 22, 2021 Mailers Hub submitted its Statement of Position, regarding First-Class Mail and Periodicals Service Standards Changes, before the Postal Regulatory Commission. 

In the two-page statement, the author - Leo Raymond, Managing Director of Mailers Hub - candidly and emphatically summarized the failings in the proposed changes, as well as the rationale behind them. Citing the "appalling abandonment of the customers that they should be striving to retain", the subordination of the role of the Postal Service as a service, and the clear connection between more costly, slower service and a loss in mail volume, he urges the PRC to advise the USPS against these changes. 

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Mailers Warn the USPS: Service Cuts, Price Increase Will Cost Business

Postmaster General Louis DeJoy may have just celebrated his first year in office but he remains resistant to customer input that differs from his perspective about the Postal Service.

Nonetheless, another group of commercial mailers has offered its own warning to DeJoy that his ill-advised service reductions, combined with an exceptionally large price increase, will cost the agency volume (and revenue) it can ill-afford to lose.

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Distilling Information from USPS Responses

Part of the Postal Regulatory Commission’s process for considering a Postal Service request for an advisory opinion – like the one now before it regarding changes to USPS service standards – is the opportunity for intervening parties to ask questions of Postal Service witnesses, based on their written testimony.

Last month, as an intervenor in the case, Mailers Hub submitted questions to three USPS witnesses: Logistics VP Robert Cintron; Stephen Hagenstein, Director, Logistics Modeling and Analytics; and Acting Budget Director Curtis Whiteman.  Some were about vehicle utilization and dispatch times, while others focused on the reasons for the changes that were proposed.  After some debate over what constitutes a “question” (the number that can be submitted is limited at 25), the USPS witnesses filed their responses on June 1.

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Pushing Forward, No Matter What

Clearly Louis DeJoy did his reading – reports by the Office of Inspector General, GAO studies, and such – and probably Envisioning America’s Future Postal Service, the 10-year plan developed by the Boston Consulting Group and released by then-PMG Jack Potter in March 2010.  All of that, plus what he’d been told by his circle of selected advisors and his own strong opinions, likely influenced what eventually emerged in his own 10-year Plan, also released in March (2021).

However, unlike Jack Potter or, for that matter, any of the PMGs who’ve led the USPS over the past two decades, Louis DeJoy has no real, first-hand knowledge of the Postal Service or the businesses of its customers.  Holed-up in his office at L’Enfant Plaza, he’s spent scarcely any time learning about the mailing business or the connected industries that take messages from concept to recipients’ mailboxes.

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As Expected, Clerks Union Opposes Plant Closures

If Postmaster General Louis DeJoy had hoped to avoid opposition from postal labor to his 10-year Plan, such as by avoiding any requests for concessions on labor agreements or wages and benefits, he scuttled them by his recent decision to resume the network rationalization process that was halted in 2015.

As would be expected, the American Postal Workers Union, representing the clerk craft employees who staff processing facilities and retail operations, promptly announced its opposition.  In a typically overwrought statement, the union’s president asserted

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USPS Reports Small Net Loss for PQII

In its Form 10-Q released May 7, the Postal Service reported an $82 million net loss for the second quarter of its 2021 fiscal year (January-March).  Adding its $318 million net income for PQI, the USPS is $236 million in the black halfway through FY 2021, nearly $3 billion better than it had planned and over $5 billion ahead of where it was in the middle of FY 2020.

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Operational Issues May Explain Service Standard Failures

A major focus of the Postal Service’s 10-year Plan, issued March 23, is the need to downgrade service standards for First-Class Mail because the current standards, which haven’t been met for several years, are “unattainable.” The Plan recites various reasons for this situation, including failures in air transportation and in compliance with facility operating plans.

The fundamental absence of operating discipline in USPS processing facilities was highlighted in two audits published in mid-April by the Postal Service’s Office of Inspector General: Delayed Mail at the Lehigh Valley, PA Processing and Distribution Center, issued April 12, and Delayed Mail at the North Houston, TX Processing and Distribution Center, released April 13.

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Will Lowering the Bar Enable Success?

On April 21, the USPS filed its Request for an Advisory Opinion on Changes in the Nature of Postal Services, seeking the Postal Regulatory Commission’s input on changes to the service standards for First-Class Mail and time-sensitive Periodicals. The fifteen-page filing was accompanied by direct testimony from five witnesses and eight “library references” containing supporting data.

Proposal

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