Alliance Alert — July 30, 2015

Late yesterday, the Postal Regulatory Commission (PRC) issued what we hope will be the last word on the campaign by the United States Postal Service (USPS) to receive above-inflation revenue from its customers to compensate for volume losses caused by the 2007-09 recession. This action comes five years after the USPS first filed a request for an exigent price increase in July 2010, and a year and a half after the PRC first granted an exigent surcharge on Christmas Eve 2013.

The PRC order yesterday should put to an end the USPS attempts to either make the exigent surcharge permanent or extend it for about five more years. The PRC kept the “new normal” in place, and gave USPS the go-ahead to collect about 8 more months of the exigent surcharge until next spring. The extension is based on the appeals court saying the PRC should not count lost volume for only one year but should count it until the “new normal” was reached following the recession. The PRC declined to revisit the criteria for the “new normal” as the USPS had suggested.

Here is a link to the PRC press release. And here is a link to the PRC order resolving issues on remand.

We believe that ending the exigent chapter will be good not only for customers of the USPS, but it also will enable the Postal Service to retain more of those customers and to focus on more long term strategic issues. We urge the Postal Service to use the PRC order as a positive turning point for its future. We strongly believe that how  Postal Service leadership communicates its pricing intentions is one of the most important ways that it speaks to its customers.

An announcement by the USPS that it will not pursue any more litigation related to the 2007-09 recession will enable it and its customers to engage in positive teamwork to collaboratively build the future of the Postal Service. And it will positively affect many decisions being made about the future use of mail by many customers. We also suggest that the Postal Service announce soon that it will have only one mail-related price adjustment next year, combining its Consumer Price Index (CPI) increase authority with the exigent surcharge removal in March or April 2016. Finally, the more visibility and advice the USPS can give its customers about when and how the 2016 price adjustment will occur, the better.

Satisfied customers are the best allies the Postal Service can have.