Around the Hub

MTAC Session Examines Future Price Changes

One segment of the November 3 Mailers Technical Advisory Committee meeting’s focus group session on Customer Experience, Product Solutions, and Innovative Business Technology featured Sharon Owens, USPS VP for Pricing and Costing.

In her presentation, Owens sought to explain trends in the Consumer Price Index, on which the price cap on market-dominant rates is based, and the factors that determine the additional pricing authorities derived from the Postal Regulatory Commission’s November 2020 decision.

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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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Multi-State Complaint Filed with PRC About PMG’s 10-Year Plan

Last year, in the heat of allegations that Postal Service operational changes being implemented by then-new Postmaster General Louis DeJoy were politically motivated efforts to delay election-related mail, a group of attorneys general from several jurisdictions brought suit in federal court and successfully delayed some of DeJoy’s plans.

That group is no happier with what DeJoy is doing – or proposing – in his 10-year Plan announced last March.  On October 7, a complaint was filed with the Postal Regulatory Commission by the attorneys general from California, Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Virginia, and Washington.

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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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OIG Finds Inefficiency in USPS Manual Processing

Though it’s generally understood that manual operations are less efficient than those that are mechanized or automated, a September 21 report by the USPS Office of Inspector General further highlighted the chronic inefficiency in Postal Service manual distribution operations.

Overview

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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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The Current State of Privacy Laws

The following article was produced by David Swetnam-Burland and Stacy O. Stitham of Brann & Isaacson, exclusively for Mailers Hub.

The privacy of personal information – online and elsewhere – is in the news as tech giants like Facebook, Google, and Apple are facing questions (and lawsuits) seemingly from all directions – probing what personal information they collect; how they get it; what they do with it; and whether they are being honest when they say they are committed to personal privacy.

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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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