September 14, 2016

We hope you have enjoyed a restful summer. Like major league baseball, the postal world keeps grinding it out throughout the dog days. So we decided to present brief updates on a number of issues important to nonprofit mailers.

Mailing industry exhibit launched: includes nonprofits

If you ever have had to explain why mail is critically important in the “digital age,” help is here. Maybe a new boss says let’s go all digital and save a lot of money. Or a young person mulling career choices wonders why they need to learn about mail when social media is where it’s at.

The Smithsonian National Postal Museum just launched a really cool new online exhibit. It explains how the private sector and the government have partnered to create, sustain and grow the world’s most effective mail system. “America’s Mailing Industry” does an excellent job of humanizing mail. It does so by telling fascinating stories from the macro level all the way to individual companies and nonprofits that have grown with mail and continue to rely on it.

The exhibit is a great resource and an interesting read. The Smithsonian is continuing to accept individual company or organization stories. These will be added to the 75, including 11 nonprofits, already presented.  So go to the “Submit Story” section and see if your story can be told in one of the world’s premier museums.

Test Period for Postage Assessment Notifications

A very big stage of the decade-long road to automating mail entry in the postal system is happening soon. The USPS is going to start penalizing mailers who do not meet minimum standards. They will take money from their account for “Full Service” discounts they did not earn. The Postal Service will begin taking penalties in November 2016 based on data from the prior month.

At the request of the mailing industry, USPS has agreed to a brief test period of the penalty notifications starting this week. It is for testing only with no money changing hands. Section 6 of this postal document explains the assessment process: Publication for Streamlined Mail Acceptance for Letters and Flats. Help with any questions can be found at the PostalOne! Helpdesk at 800-522-9085 or via email at postalone@usps.gov. Include the phrase “Mailer Scorecard” in the subject line of the email.

While automating mail entry is an important initiative, it is unfortunate that the assessment of penalties on mailers by the Postal Service is beginning at a point when the USPS needs customers and volume more than anything.

Robert Taub nominated by President to chair PRC

President Obama named Robert G. Taub as a nominee for Commissioner, and upon appointment designated Chairman of the Postal Regulatory Commission. Taub has served as the Acting Chairman of the PRC since 2014 and has been a Commissioner of the PRC since 2011. Commissioners serve six year terms and can continue for one year after their term expires pending action by the President and Senate.

In this case, President Obama is getting ahead of the curve by naming Robert Chairman well before the end of his term. We urge the Senate to take quick action to give its consent to this nomination. Experience and stability are critical at the PRC as we begin the re-examination of postal pricing regulation upon the ten-year anniversary of the 2006 postal law this December.

Window closing on postal legislation

It’s not impossible, but the calendar and other pressing priorities are making new postal legislation seem less likely this year. The House has only ten working days left in DC before the election. With other critical issues such as funding the government and the Zika effort, the chances of the House approving a postal bill are limited.

The Congressional Budget Office (CBO) scoring has not been announced; it is expected within days. CBO is likely to score big Medicare cost increases for the government related to the reform of retiree health benefits—USPS off-budget savings equal on-budget cost increases. The question will be how these costs can be offset. USPS has argued that avoiding additional “defaults” on its payments into the retiree fund would amount to savings for the government.

The House bill has the advantage of being more focused and simple than the Senate version. Most observers believe that the reform of the cost and pre-funding of retiree health benefits is the most significant element of each bill. The re-imposition of either half (House) or all (Senate) of the 4.3 percent temporary exigent postage surcharge is the main negative in the bills.

The challenge in the Senate will be to garner at least 60 votes and also avoid a hold by any individual Senator. In addition to the legislated postage increase, the Senate bill has a very ambitious reform of the government’s workers’ compensation system and moratoria on much-needed cost-reducing consolidations to overcome. Rural Senators are likely to insist on the delays of post office and plant closings as a ticket to their vote.

Both Chairman Jason Chaffetz (R-UT)and Ranking Member Elijah Cummings (D-MD) expressed optimism about the House bill, while acknowledging hurdles. This was at a luncheon held by the Women in Logistics and Delivery Services (WILDS) at the Capitol yesterday.

Rate system review to begin with objectives in law

We will get a notice on December 20 from the Postal Regulatory Commission (PRC) that it is officially beginning its review of the pricing regulatory system it set up ten years earlier in response to the postal law of 2006. The PRC set forth the following schedule for the regulatory review to find whether the system is meeting the objectives set in the law:

“December 20, 2016 – Commission issues Order beginning the review. The Order will describe the approximate structure and timeframe within which the Commission will complete its review, as well as define the opportunities for public comment within the review

Early Spring 2017 – Deadline for comments to be submitted

Early Autumn 2017 – Commission issues Order including its findings and, if necessary, preparatory rule-making information for any changes to the system.”

The law lays out nine objectives that will be the focus of the review:

`(1) To maximize incentives to reduce costs and increase efficiency.

`(2) To create predictability and stability in rates.

`(3) To maintain high quality service standards established under section 3691.

`(4) To allow the Postal Service pricing flexibility.

`(5) To assure adequate revenues, including retained earnings, to maintain financial stability.

`(6) To reduce the administrative burden and increase the transparency of the ratemaking process.

`(7) To enhance mail security and deter terrorism.

`(8) To establish and maintain a just and reasonable schedule for rates and classifications, however the objective under this paragraph shall not be construed to prohibit the Postal Service from making changes of unequal magnitude within, between, or among classes of mail.

`(9) To allocate the total institutional costs of the Postal Service appropriately between market-dominant and competitive products.

The PRC will need to determine the Congressional intent of each objective and how to measure it. It also will have to deal with the fact that they are all equally-weighted and perhaps have been satisfied to varying degrees. And the regulator will have to take into account the fact that while these are objectives of the rate system, not all issues can be solved by rates alone.

Court sets arguments in USPS exigent appeal

The U.S. Court of Appeals for the D.C Circuit set September 20 at 9:30 am for oral arguments in the ongoing appeal of the PRC rulings on the removal of the exigent surcharge.  The three judge panel will hear oral arguments in United States Postal Service, Petitioner v. Postal Regulatory Commission, Respondent, Alliance of Nonprofit Mailers, et al., Intervenors for only ten minutes by each side. Most observers believe the USPS has little chance of prevailing.

USPS fall mailing season webinar

The Postal Service is offering to update mailers on the upcoming fall mailing season. Robert Cintron, Vice President Network Operations, and his staff will present a webinar to update mailers on important information regarding fall mailing season 2016. It will be held on Thursday, September 15 from 2:00 to 3:00 PM EDT.

Agenda topics will include:

• Processing Operations Update
• Service Performance
• Election / Political Mail
• Mail Transport Equipment Update
• Informed Visibility (IV)
• Peak Season Surface / Air Preparedness
• Technology Advancements

Participant information is provided below:

Toll-Free Attendee Dial In: 1-866-381-9870
Conference ID: 57996764

Attendee Direct URL: https://usps.webex.com/usps/onstage/g.php?MTID=ee954ee852cbb3c5d9acc2f5afbfd5a35

Digital recommendations by USPS OIG

The degree to which USPS should be exploring new things beyond reliably delivering the mail at reasonable pricing has always been contested. Some think the Postal Service should stick to the already large and daunting task of binding the nation together with quality mail services. This group would prefer the private sector do the innovation while USPS remains a kind of public utility. Others believe that the USPS must expand beyond its eroding core to supplement its revenue and remain relevant.

The Inspector General just released a report that urges expanding, enhancing and reviving the USPS digital role.  The main recommendations of “Riding the Waves of Postal Digital Innovation” are:

• Leveraging data and the Internet of Postal Things to gain more real-time control over fleet and operations, and build more customer-centric and information-rich value environment.

• Digitally enhance core products and services, for example, developing a connected mailbox equipped with sensors that could enable temperature-sensitive deliveries or monitor delivery and pickup times.

• Rejuvenate its digital portfolio of revenue-generating digital services, such as by modernizing legacy products like hybrid mail, the Electronic PostMark (EPM), or electronic money transfers. New use cases for these products could also be explored, such as a secure supply chain assurance solution based on the EPM.

• Accelerate digital transformation by adopting best practices when it comes to stimulating digital innovation from within, or the Postal Service could learn to partner with nimble external innovators, as some foreign posts have done.

USPS management responded very positively to the OIG paper. It agrees with the four building blocks and says it is actively pursuing them all. On the other hand, USPS operates in a different legal and cultural context than the rest of the world, so comparisons with other posts are not very useful. Management cites legal constraints that it must deal with.

Existing mail customers of USPS mainly want to ensure that its digital efforts enhance cost-effectively the hard-copy delivery services that they rely on. They are concerned that innovation efforts might drain financial and management resources from the core mission.

MTAC working for you

The Alliance has three excellent representatives on the Postmaster General’s Mailers Technical Advisory Committee (MTAC). They would like to hear from you about any questions, suggestion, or concerns you have.

One of our reps, Trista Niswander (tniswander@osv.com) is representing us on the very important Working Group #179, and she would love to hear from you regarding anything related to its objectives:

Objective 1: Identify critical challenges with PostalOne! including eVS.

Objective 2: Define key business needs for letter/flats and parcels to improve acceptance and payment experience.

Objective 3: Define key performance criteria.

So please feel free to contact Trista or our other reps: Steve Smith (base60consulting@gmail.com) and Deb Damore (ddamore@fairrington.com).

(c) 2016 Alliance of Nonprofit Mailers