International eRetailers gonna feel USPS Punch

USPS seeks deregulation of cross-border parcel service

Thursday, August 16th, 2012

Significant price rises are on the way for parcels being shipped by the Postal Service out of the United States, if regulators allow USPS to move its international First Class package service to the competitive side of its portfolio.

The US Postal Service asked regulators last week to transfer its First Class International Packages and Rolls service out of the current regulated market-dominant portfolio.
It said the service is already effectively a competitive service, competing in a “vibrant” marketplace against the likes of FedEx, DHL and UPS, and should therefore be treated by regulators as a competitive service.
Transferring the service to the competitive portfolio would allow the Postal Service more freedom in setting prices for First Class parcels sent out of the United States, with the service no longer bound by its annual inflation-based price cap.
The move could be significant for ecommerce shippers, particularly for items sent from the US to Canada, but would allow the struggling Postal Service to make the most of growing demand for Internet shoppers to buy from US-based websites.
Service standards would remain the same following the transfer, with the only major change likely to be prices.

Review

The Commission launched a review of the request today, inviting interested persons to send in comments under Docket No. MC2012-44. Comments are due by 24th August, 2012.
The request would see the existing Outbound Single-Piece First-Class Mail International Packages service withdrawn, to be replaced by a new “First-Class Package International Service” within the USPS competitive services portfolio.
Most of the service’s customers are believed to be commercial businesses, who do not send their parcels via post offices.
USPS is asking for a decision from the regulators by 10th September, 2012, to allow price changes to be included within a notice of market-dominant price changes expected to be issued mid-September.
The service transfer would not affect outbound single-piece international First Class letters, postcards or large envelopes/flats, which would remain on the Postal Service’s highly-regulated market-dominant product list.
Last month the Postal Regulatory Commission granted USPS permission to move its single-piece domestic ground service Parcel Post from its market-dominant portfolio to the competitive list. That service represents around 1.1% of the US ground package market.
Struggling severely financially, the Postal Service has found good growth in its express and package shipping services this year, including 9% year-on-year growth in its most recent quarter, up to the end of June.

Material impact

In its filing, USPS withheld data from the public domain on the potential impacts of the changes, describing the information as “commercially-sensitive and proprietary”.
However, in justifying its request for the transfer, the Postal Service cited the recent ruling from the Postal Regulatory Commission on Parcel Post that suggested that “most shippers, including small businesses” are already using private sector international parcel shipping alternatives, and that a price increase for the USPS international parcel service would therefore “not have a material impact on small business shippers”.
Under US postal law, the Postal Service is not allowed to subsidise its competitive products with income from its protected market-dominant services. USPS said its first class international packages service has a “healthy” cost coverage already.
The Postal Service said it does not wield enough market power in international packages to set its prices substantially above costs without risk of losing a “significant level of business” to competitors.
It said competitors have more than half of the market for US air exports under 70lbs (31kg).
However, USPS conceded to regulators that there could be opposition to its proposals regarding the modification of prices.
“One would expect this to be true of any customer of a product that is transferred from a market dominant classification to a competitive one,” said the Postal Service filing.
“First-Class Mail International customers ship in a broad competitive environment and currently shop the marketplace for prices and services comparable to their needs. Therefore, customers should not have major price concerns.”
USPS said following the service transfer, it intends to offer price discounts for larger volume customers, which may include small businesses.

USPS will default on $5 Billion Dollar Payment Tomorrow

U.S. Postal Service nears historic default on $5B payment

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15 hours ago  •  By HOPE YEN | Associated Press

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According to an interactive graphic athttp://apne.ws/QMOOzh, the U.S. Postal Service is looking to cut the equivalent of 27.8 days of service from 225 locations across North Dakota.

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WASHINGTON — The U.S. Postal Service is bracing for a first-ever default on billions in payments due to the Treasury, adding to widening uncertainty about the mail agency’s solvency as first-class letters plummet and Congress deadlocks on ways to stem the red ink.

With cash running perilously low, two legally required payments for future postal retirees’ health benefits — $5.5 billion due Wednesday, and another $5.6 billion due in September — will be left unpaid, the mail agency said Monday. Postal officials said they also are studying whether they may need to delay other obligations. In the coming months, a $1.5 billion payment is due to the Labor Department for workers compensation, which for now it expects to make, as well as millions in interest payments to the Treasury.

The defaults won’t stir any kind of catastrophe in day-to-day mail service. Post offices will stay open, mail trucks will run, employees will get paid, current retirees will get health benefits.

But a growing chorus of analysts, labor unions and business customers are troubled by continuing losses that point to deeper, longer-term financial damage, as the mail agency finds it increasingly preoccupied with staving off immediate bankruptcy while Congress delays on a postal overhaul bill.

Postmaster General Patrick Donahoe has described a “crisis of confidence” amid the mounting red ink that could lead even once-loyal customers to abandon use of the mail.

“I think for my generation it was a great asset — if you had a letter or package and you needed it to get up to the North Pole, you knew it would be delivered,” said Jim Husa, 87, of Lawrence, Mich., after stopping to mail letters recently at his local post office. Noting the mail agency’s financial woes, he added: “Times have changed, and we old-timers know that. FedEx and UPS and the Internet seem to be making the Postal Service obsolete.”

Banks are promoting electronic payments, citing in part the growing uncertainty of postal mail. The federal government will stop mailing paper checks starting next year for millions of people who receive Social Security and other benefits, paying via direct deposit or debit cards instead.

First-class mail volume, which has fallen 25 percent since 2006, is projected to drop another 30 percent by 2016.

Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, a group representing the private-sector mailing industry, said the payment defaults couldn’t come at a worse time, as many major and mid-sized mailers are preparing their budgets for next year.

“The impact of the postal default may not be seen by the public, but it will be felt by the business community,” he said. “Mailers will be increasingly wary about the stability of the Postal Service. The logical and likely move would be to divert more mail out of the system.”

The Postal Service, an independent agency of government, does not receive taxpayer money for operations but it is subject to congressional control. It estimates that it is now losing $25 million a day, which includes projected savings it had expected to be accruing by now if Congress this spring had approved its five-year profitability plan. That plan would cut Saturday delivery, reduce low-volume postal facilities and end its obligation to pay more than $5 billion each year for future retiree health payments.

USPS Set to default on August Payment

USPS to Default on $11 Billion in Payments

Thursday, 19 Jul 2012 08:47 AM

By Martin Gould

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The U.S. Postal Service (USPS) will default on a $5.5 billion payment which would fund health benefits for its future retirees on August 1, and on a slightly larger payment due in September unless Congress acts within days.

 

It will be the first time the financially strapped agency has missed the payments — but the House of Representatives is showing no signs that it is willing to help out.

 

“We are simply not capable of making either of these payments to the U.S. Treasury, in part or in full, while continuing to meet our other legal obligations, including our obligation to provide universal service to the American people,” USPS spokesman, Dave Partenheimer told the New York Times.

 

The Postal Service is in dire shape as email and private carriers — such as FedEx and UPS — have eaten into its services over the years. It is already considering scrapping Saturday services.

 

And the impossibility of making more than $11 billion in payments — the first due on Aug. 1 — shows just how far its finances have fallen.

 

The Democrat-controlled Senate voted in April to spread out its healthcare payments over 40 years and return $11 billion it overpaid to a pension fund, however the House has refused to take up the issue.

 

Sen. Scott Brown of Massachusetts criticized his Republican colleagues in the House, saying, “The longer the House delays consideration of the bill, the longer the uncertainty about the Postal Service’s financial future remains. This is irresponsible and unfair.”

 

But many House Republicans are opposed to a government bailout and leadership has not scheduled a vote on a bill, which like the Senate’s version would prevent Post Office closures.

 

Unions representing postal workers say Congress is at fault.

 

“This is an artificial crisis created by the Congressional mandate that the USPS, alone among all agencies or companies, pre-fund its future retiree health benefits for the next 75 years,” Fredric Rolando, president of the National Association of Letter Carriers told the Times.

 

“This unaffordable burden accounts for 85 percent of all the Postal Service’s red ink. If lawmakers fix the problem they created, the sharp cuts in service they want to impose on Americans and small businesses would not be necessary.”

© 2012 Newsmax. All rights reserved.

Read more on Newsmax.com: USPS to Default on $11 Billion in Payments
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Fedex could lose USPS Account

Fedex Could Lose Lucrative USPS Account

• By Wayne Risher, Commercial Appeal
• Posted July 17, 2012 at 8:06 a.m.

FedEx said on Monday it could be in danger of losing the U.S. Postal Service as its largest customer.

The financially strapped post office has informed FedEx and rival UPS that it will seek competitive proposals for air transportation services that are under contract to FedEx through September 2013.

"Accordingly, upon the expiration of the current agreement, the transportation services we provide to the USPS could be transitioned, in whole or in part, to another provider," FedEx said in an annual report filed with the U.S. Securities and Exchange Commission.

"This would have a negative impact on our asset utilization and profitability," the company stated.

FedEx has carried First Class, Priority and Express Mail for the Postal Service under contracts dating to 2000, using the extra volume to maximize efficiency of its domestic fleet and the Memphis hub.

FedEx was the Postal Service's top supplier in fiscal 2011, taking in nearly $1.5 billion, while UPS came in 11th at about $102 million, according to an annual report on top Postal Service suppliers by David P. Hendel of the Washington law firm Husch Blackwell.

The bidding process would come at a time when FedEx Express is restructuring its domestic fleet and workforce in hopes of reversing less than satisfactory profits from that segment of its business. Company officials are expected to provide details of the retooling in October.

U.S. mail from across the country is funneled through the FedEx Express superhub in Memphis, putting planes, people and facilities to work in the daytime lull between overnight peaks.

FedEx spokesman Jess Bunn said, "The U.S. Postal Service is an important customer of FedEx Express, and we are very proud of the outstanding service and value we have provided to the Postal Service for more than a decade. By flying some of the fastest growing and most successful postal products, FedEx Express continues to provide the Postal Service and postal customers important services."

Atlanta-based UPS can be expected to compete vigorously for the new contract.

UPS has provided airlift for some First Class and Priority Mail since 2006 "and remains focused on providing the best, most reliable service possible and growing our relationship for the future," spokesman Norman Black said.

"UPS absolutely believes it can support the Postal Service's commitment to its mail customers while creating new growth opportunities for UPS. We believe the UPS air network and the company's proven logistics capabilities place UPS in a position to best satisfy the demands of the nation's mail system."

FedEx's contract with the postal service was first negotiated in 2000 and went into effect in 2001. It was renegotiated for seven years in 2006.

Perhaps reflecting the magnitude of the postal service's financial problems and urgency of cutting costs, this represents the first time the postal service has opened the business up for proposals. It was unclear when a request for proposals would be issued.

FedEx said even if the company retains the contract, "The terms of the new arrangement may be less favorable than those currently in place."

FedEx doubles as the largest single customer of the post office, which it pays to provide last-mile deliveries of FedEx SmartPost packages.

Analysts had been warning that FedEx stood to lose considerable revenues because of post office budget woes. Some predicted that FedEx could lose as much as $400 million a year in revenues from the post office after the current contract runs out.

The amount is large, but it's still a relatively small portion of FedEx total revenues, which reached $42.7 billion in fiscal 2012, which ended May 31, analysts said.

"The loss of that business would be a significant interruption, but I think there's a relatively low likelihood they would lose it," said Donald Broughton, analyst with Avondale Partners LLC.

Putting services out for competitive bidding, "That's standard procedure in a government contract. It's part of the regulatory process that they have to disclose it as a risk factor."

Broughton said when FedEx won the Postal Service business, the only other company interested was Emery Worldwide, which has since been bought by UPS.

© 2012 Knoxville News Sentinel. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. 

Online shopping forces post offices to change

Updated July 09, 2012 17:36:13

PHOTO: Australia Post has opened a 24 hour store on St Georges Terrace in Perth.(ABC News: Clarissa Thorpe)

MAP: Perth 6000

The dramatic rise in online shopping has forced Australia Post to change the way it does business.

It is opening a 24 hour store in Perth in response to a dramatic rise in the number of parcels arriving in the state.

There has been a 22 per cent rise in parcel volumes in WA in the past 12 months, well above the national average of 11 per cent.

The Saint George's Terrace post office re-opened today as a 24 hour store where shoppers can pick up parcels at any time, with three similar outlets soon to open across Perth.

Australia Post's Paul Lecher says the changes will help Australia Post keep up with increasing demand.

"With ten million Australians shopping online, 70 per cent of our parcels start with an online transaction," he said.

He says the organisation is committed to evolving.

"We're trying to link that digital economy to the physical world, that's what's changing our environment," he said.

"We've been around for over 200 years and we don't plan on going anywhere soon.

"We're a very customer focused organisation and we're driven by providing our customers with the best service we can."

Mr Lecher says similar 24 hour outlets will open later this year in Rockingham, West Perth and Cannington.

Topics: internet-culture, internet-technology, perth-6000

EU approves Swiss Post - LaPoste Joint Venture

EU green light for La Poste-Swiss Post international JV

Thursday, July 5th, 2012

The European Commission has given the green light for La Poste and Swiss Post to create their new joint venture to combine their international mail activities.

The French and Swiss national postal operators announced back in December that they wanted to merge their cross-border mail businesses, looking to better compete against the major players in the international market.
The EU Commission said yesterday that the move can happen so long as Swiss Post pulls out of its French subsidiary, Swiss Post International France.
Swiss Post had offered to sell its French unit in order to gain the EU antitrust clearance. The Commission had concerns that retaining the subsidiary would give La Poste further dominance in the French cross-border mail market.
Following the agreement of Swiss Post to sell the unit, the Commission said it had no further competition concerns about the new joint venture.
Joaquín Almunia, the Commission’s vice president for competition policy, said: “The commitments package includes the sale of Swiss Post International France to a third party. This will maintain the competitive dynamics in the international business mail market in France and customers will continue to benefit from choice and affordable services.”

Joint venture

La Poste and Swiss Post had requested EU clearance for their joint venture back in May 2012. The new business would include all of the companies’ international mail activities, except for inbound and outbound activities at La Poste in France and Swiss Post in Switzerland.
The new venture will provide international outbound business mail delivery services and mail preparation services, logistics services, express delivery services and freight forwarding.
It will also offer marketing and contract logistics for the print media industry, and international standard business-to-consumer parcel delivery – which would include ecommerce packages.
More details about the new joint venture could be announced by La Poste and Swiss Post as early as next week, once final adjustments have been made in the light of the Commission approval.
The EU Commission said its investigation had suggested that without the sale of Swiss Post International France, La Poste would have increased its dominance of the standard outbound international addressed mail delivery services for business customers in France.
The Commission said the joint venture would have put an end to the “dynamic player” Swiss Post International France in a market that has shrinking volumes and no new entrants expected.
Commenting on the decision by the Commission, La Poste spokesman David Drujon told Post&Parcel today: “La Poste and Swiss Post are satisfied by the obtaining of the statutory authorizations of the European Commission necessary for the creation of a joint-venture to develop more on the market of the international mail.”
Swiss Post spokesman Mariano Masserini confirmed that Swiss Post International France will now be sold, but could not say when this would take place.

Streamlite Closes

Streamlite Closes Doors - (Very Slight) Net Positive for FDX/UPS

Parcel consolidator, Streamlite, Inc., has shut down operations, which is a net positive for both FedEx (FDX:$86.84; Buy) and UPS (UPS: $77.37; Hold), but more so for FedEx, in our view, given its stronger market position in the parcel consolidator market with industry-leader FedEx SmartPost. From our prior meetings with Streamlite management, we estimate it had ~$200mm of annual revenue and delivered roughly
200,000-250,000 packages per day. The company's (price-sensitive) customers should find their way first into the networks of FedEx SmartPost, DHL Global Mail, and Newgistics, in our view, as those are the main
remaining small package consolidator options (vs. the faster and more expensive FedEx Ground or UPS
Ground products). It is good for the remaining players, in our view, when a competitor shuts its doors, but due to the relative size of Streamlite, we believe EPS accretion to FedEx from additional volume should be
minimal and practically immaterial.

The parcel consolidator industry [note: parcel consolidators use the U.S. Postal Service for last-mile delivery and try to feed as many packages as they can as deep as they can into the USPS network to lower costs - also known as zone-skipping] is littered with failures, and we now add Streamlite to the list that includes APX Logistics, Parcel Corporation of America, and DDU Express. There is significant density required to run the business (even if it's an asset-light operation) to make money, and most companies struggle to grow profitably. Of the $200mm in business going back out to the market, we estimate anywhere from 20%-50% should find its way to FedEx SmartPost (likely toward the lower end of that range). Even at the high end of that range, assuming an 85% operating ratio on the business, it would mean an incremental $15mm in EBIT, or an incremental $0.03 per share, which would be <1% accretive on our current $7.41 EPS estimate for 2013. Still, more EBIT is better than less EBIT. For UPS, the volume gains are less likely, as the company does not have a stand-alone consolidator product offering (a shipper has to use other UPS products to access its SurePost option) and the accretion potential is even less than at FedEx, as UPS handles many more packages than FedEx already and one would have to (at best) round up to get $0.01 of EPS accretion, which is immaterial on our 2013 EPS estimate of $5.50. Price is as of the close, June 14, 2012.

Fed may cut mail spend significantly

USPS concerns with bid to cut government’s $1bn mailing spend

Tuesday, June 5th, 2012

The US Postal Service will be helping one of its largest customers – the federal government – to reduce its use of the mail, but said today it is concerned about the loss of revenue associated.

Altogether, federal government agencies spend more than $1bn a year mailing out communications, but last month the General Services Administration issued instructions for government bodies to make an effort to cut down on their mailing costs.
The GSA, the federal procurement agency, wrote to the heads of federal agencies to encourage various practices to reduce mailing costs.
Suggestions included consolidating mail with other agencies to benefit from bulk mail discounts, presorting mail to access work share discounts, and use flat-rate USPS boxes and envelopes where possible. The GSA also recommended training with USPS address management tools to reduce the frequency of mail being returned as undelivered.
And, the agency urged a general switch to electronic mail.
Commenting on the new GSA policy bulletin, USPS spokesman Dave Partenheimer told Post&Parcel today that the Postal Service was working with government agencies to help reduce their overall mailing costs.
But, he said it was also working “aggressively” to retain and grow the federal business.
“While mail may be declining, we are growing the package business and showing how the value of direct mail can enhance their other communications efforts,” said Partenheimer.

“Flawed concepts”

The USPS spokesman was critical of the GSA recommendations, particularly when it came to aspects like use of electronic mail as an alternative to physical mail.
Saying USPS “does not concur with all suggestions of the GSA” in the new policy bulletin, he stated: “Several of the suggestions in the bulletin are based upon flawed concepts and information.”
Among the misconceptions he said the GSA policy promoted were the ideas that using email and faxes instead of mail would improve the sustainability – pointing to the electricity consumption involved – and that switching to electronic communications could risk exposure to cyber-security threats and data security breaches.

“While a ‘paperless office’ is a wonderful vision, it is not typically a reality”

The USPS spokesman also said GSA recommendations that staff should scan hardcopy items to deliver electronically could prove a false economy taking account of additional staff time to scan items.
“Most importantly, each agency must assess the value proposition offered by each communication strategy and determine its strengths and weaknesses before making a reasoned decision concerning the best method of communications,” Partenheimer said.
“While a ‘paperless office’ is a wonderful vision, it is not typically a reality. Hardcopy scanned and sent electronically may, in many cases, simply turn into another printed copy by the recipient.”

Moving forward

Last month GSA officials visited the US Postal Regulatory Commission to discuss work with government agencies to reduce the costs of using the mail.
During a public meeting of the Commission, the officials said new developments within government organisations included use of sorting software within the Internal Revenue Service that cuts the need for mechanical sorting by 80%, and a pilot project by the Department of Defense in which hardcopy mail is converted to a digital delivery format so that officials can sent items electronically.
GSA mail management policy program manager Derek Miliner said agencies were now required to presort mail and consolidate mail under the new policy, and said agencies were now coming together to consolidate mail.
“I did a small survey, asking 28 large agencies that spend over $1m on mail – there’s already nine of them consolidating,” he said. “We are moving forward with the consolidation, the Postal Service is helping.”
Commission chairman Ruth Goldway said she believed the new GSA policy could prove a “win-win situation” for the Postal Service and in reducing government spending, particularly by increasing the amount of mail undergoing presorting.
While most federal government agencies do already carry out some presorting of their mail, a Commission white paper published last year suggested that more widespread presorting could save $100m a year on mail costs.
“The Postal Service actually makes more money per piece on First Class Mail that’s processed and presented workshared than it does single piece,” Goldway said. “And the taxpayers and the rest of the government would be paying less.”
The USPS spokesman said workshare discounts do help achieve overall operational savings, but he said of the GSA recommendation to presort mail: “The new directive to presort will have a slight impact on our revenue as currently over 90% of federal agencies presort. However, we are concerned that any reduction in hardcopy mailing will affect our bottom-line.”

Source: James Cartledge, Post&Parcel

Small Post Offices will remain open

USPS scraps plans to close 3,700 post offices

Wednesday, May 9th, 2012

The US Postal Service has abandoned plans to close up to 3,700 mostly rural post offices, in favour of a new strategy of reducing their operating hours.

Executives said today that the consolidation process launched last summer, and suspended until May 15, will now end.
But, Postmaster General Patrick Donahoe told Post&Parcel today that plans to close hundreds of mail processing plants look set to continue, with USPS not intending to comply with a US Senate request to hold off on closures beyond the end of the current moratorium on closures on May 15.
An update on network consolidation plans is expected to be announced next Thursday.
Protecting rural access to post offices became an important issue last month as the US Senate passed postal reform legislation that included a measure banning closures for 12 months.
Today Donahoe said the new rural post office strategy came in response to talks with rural communities involved with the 3,700 post offices slated for possible closure last August.
“We think we have ended up with a win-win solution for rural post offices,” he said. “We have been listening to our customers and are going to keep listening.”
However, he conceded that he hoped the new plan would “take the issue off the table” for Congress as it looks to get postal reforms through the House as well as the Senate, allowing lawmakers to debate bigger financial problems for USPS like pension and healthcare reform.
The plan to reduce operating hours at a broader number of post offices is expected to save USPS $500m a year – more than double the $200m projected to be saved from closing 3,700 post offices outright.

Post office plan

“Very few post offices will be closed in rural America”

Americans have made 350m fewer visits to their local post office since 2005, and since the year 2000 the proportion of retail products sold through alternative outlets like the usps.com website, rather than post offices, has increased from 8% to 39%.
While post office usage is decreasing, operational costs are increasing, and while rural post offices currently cost on average $114,000 a year to operate, the weakest 4,500 earn an average of just $15,000 a year.
The new USPS rural post office plan has already been through an initial review of more than 17,000 outlets, 4,500 of which will definitely keep their eight-hour window service.
This autumn, subject to a 90-day advisory opinion from regulators, the Postal Service will launch a fresh series of community meetings to review 13,000 rural post offices, looking mainly into what the appropriate opening hours will be for each one, from two to six hours a day.
It is expected that around 9,000 rural post offices will have their operating hours significantly curtailed, with the process taking until the autumn of 2014 to complete.
Rural postmasters are set to be offered $20,000 voluntary retirement incentives, and currently about 61% or 13,000 are already of eligible age to retire. Donahoe said today that the postmaster associations are on board with the plan.
Some 400 post offices already slated to be closed will now remain open, while more than 100 non-operating post offices will close. Executives also said post offices that have already been closed will not be re-opening.
“We are discontinuing the process we applied to the 3,700 post offices and we will begin a review process that allows each community to retain their post office with reduced hours,” explained Megan Brennan, the USPS chief operating officer.
“We believe that very few post offices will be closed in rural America.”
Communities will have options other than simply reducing operating hours in their post offices, and could, for example, favour consolidating one post office into a nearby post office so that the surviving post office could keep its eight-hour window service.
Work to provide alternative postal access will continue, meanwhile, including an expansion of the current 19 “village post offices” in which postal services are provided at local gas stations and grocery stores, to support communities where post offices are open only a few hours a day.
Donahoe said rural communities will then “vote with their feet” regarding the future of their post offices, with an annual review set to modify opening hours based on customer traffic in each outlet.

Processing plants

“We need to move forward with reductions in capacity like any responsible business would”

Meanwhile, the Postal Service looks set to continue its previous announced process to close at least 223 of its 461 mail processing plants to reduce the excess capacity in the network now that First Class Mail volumes have dropped more than a quarter in six years.
Some confusion over exactly when plants are to be closed has emerged with the continuing advisory opinion process within the Postal Regulatory Commission set to take until at least July, while Congress is also yet to complete its reform legislation, which could affect closure plans.
Next week the Postal Service will announce an update on what is happening with the network consolidation initiative.
Asked specifically about the US Senate’s request to hold off on closures until reform legislation is completed, Donahoe said today that closures had to go ahead.
“Our volume is down so we have buildings that are empty, and we need to move forward with completing reductions in capacity like any responsible business would,” he said, adding that even postal workers were now calling for resolution to the excess capacity in the network, noticing the considerably drop in the Postal Service’s main money-maker, First Class Mail.

Source: James Cartledge, Post&Parcel

Parcel Select is moving to Competitive Services

USPS asks to remove price cap from budget parcels service

Monday, May 7th, 2012

The US Postal Service is requesting regulators allow it to move its Parcel Post service from its portfolio of monopoly services to its competitive shipping portfolio.

The move would mean a “nearly identical” less-than-urgent parcel product but without the inflation-based price cap that the Postal Service’s market-dominant parcel service currently faces.

The Postal Service said it would leave its special “Alaska Bypass” service, using third-party aircraft to ferry household essentials up to remote parts of Alaska, out of the move into competitive products.

Parcel Post is mainly a ground package delivery service that accounts for just 1.1% of the Postal Service’s packages overall, but a greater proportion – 17.6% – of packages shipped from post offices.

Data from last year suggests around 57% of Parcel Post shipments were sent by consumers or small businesses through post offices and other outlets like FedEx Office and The UPS Store.

Filing with the Postal Regulatory Commission, USPS attorneys insisted the move to competitive pricing would not have a “disproportionate” impact on small businesses because they accounted for just 15% of the volume, with 43% of the volume sent by larger commercial mailers – including UPS and FedEx.

The two US shipping giants used Parcel Post to send more than 2.5m items to American households during the 2011 financial year.

Competitive

USPS, which filed for permission to make the change at the end of April, said it believed the US parcel market was generally of a competitive nature, and therefore USPS parcel services should have a competitive pricing flexibility.

Should regulators at the Postal Regulatory Commission agree, the move of Parcel Post to the competitive portfolio would almost certainly come with a price increase attached.

Last year the Parcel Post service covered only 89.2% of its operating costs, and under US postal rules competitive services cannot be cross-subsidised by other products or services.

Currently, Parcel Post prices are on average 24.1% lower than UPS Ground retail rates and 14.7% lower than FedEx Ground retail rates, although the USPS service is not quite as fast, and does not come with a guaranteed delivery day.

In its filing, USPS argued that this meant it did not hold a real monopoly on the economy parcels market with its Parcel Post service.

USPS received approval from the regulators last year to move its commercial Standard Mail Parcels service from its market-dominant to its competitive portfolio. The new Lightweight Parcel Select subcategory that replaced it now avoids the annual inflation-linked price cap that the Postal Service must generally stick to for its monopoly products.

The Postal Service ended its International Parcel Post service in 2007, after 120 years of existence, turning it into part of International First Class Mail.

Source: Post&Parcel/PRC

Tags: Parcels, Postal Rate Commission - PRC, Postal rates, USA, USPS

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Postal Reform Approved by Senate

US Senate passes reform bill to rescue US Postal Service

Wednesday, April 25th, 2012

The US Senate has passed a major postal reform bill designed to rescue the US Postal Service from its current financial crisis, by 62 votes to 37.

The 21st Century Postal Service Act (S.1789) includes measures to reform USPS pension and healthcare financing arrangements, with $11bn in surplus pension funds to be used by the Postal Service to buy employees out of their contracts, or encourage eligible workers to retire.
Senators said this key provision would allow the Postal Service to reduce its workforce by around 18%, eliminating 100,000 roles.
Other important measures in the bill will see a two-year moratorium on changing weekly delivery frequency from six-day to five-day to save operating costs as USPS looks to reduce its multi-billion dollar annual losses in the face of ongoing declines in mail volumes.
US Senators voted on around 38 amendments over the past two days, and today saw provisions added that will preserve doorstep delivery of mail for those households that currently have it, while among measures that were defeated were attempts to limit the political influence of unions.
But, an amendment that would have required USPS to stick to its current mail service standards – protecting First Class Mail overnight delivery – was defeated.

House

The bill S.1789 now waits for a deal with the House of Representatives, which is awaiting a floor debate on its own rival bill, to hammer out some kind of compromise between the Senate and House proposals.
A proposed amendment to dump the Senate bill in favour of a measure similar to the House bill was rejected in a vote in the Senate yesterday.
Republican Senator Susan Collins, one of the leaders of the Senate bill passed today, said this afternoon: “I talked earlier today to Congressman Issa to encourage him to move the House version of postal reform, which is very different to our approach, to the Senate floor as quickly as possible so we can get to conference.”
Amendments added in yesterday’s debate on bill S.1789 add extra review requirements and further regulatory scrutiny on the process of closing post offices and mail processing facilities, and could prevent rural post offices from being closed for 12 months.
Today’s voting rejected an attempt by West Virginia Senator Joe Manchin to prevent the Postal Service closing any of the 3,700 post offices it proposes to shut.
But, the voting today also declared a “sense of the Senate” measure – not mandatory for USPS to follow, though laying out the feeling of lawmakers – not to close any mail plants or post offices until S.1789 is finally added to the statute books.
Senators are concerned that USPS could start closing facilities as early as next month, as the Postal Service’s self-imposed moratorium on closuresends on 15 May.

“Vital Step”

This evening the US mailing industry welcomed the passage of S.1789, calling it a “vital step” in saving the US Postal Service.
Art Sackler, coordinator of the Coalition for a 21st Century Postal Service, a group of major USPS customers, said: “The bill will help restore some financial stability to the Postal Service by returning overpayments that the agency has made into federal pension funds, and reform its retiree health prefunding to a more realistic level.
“The mailing industry is grateful to the Senators who supported it and especially to Senators Joe Lieberman, Susan Collins, Tom Carper and Scott Brown, and their staffs who worked tirelessly to keep this bill on track,” Sackler added: “It’s now critical that the House follow suit quickly, or we risk a shutdown of the Postal Service and an ensuing economic calamity.”

Source: James Cartledge, Post&Parcel

Senate votes on Postal Reform today at 2pm

The final bill (S. 1789) is expected to pass the Senate but faces an uncertain future. The House has yet to begin consideration of a different version of a postal bill, which seeks to create a national commission that would make major decisions on postal cuts and make it easier to eliminate Saturday delivery. The commission, which would have authority to do away with no-layoff clauses in postal employee contracts, is fiercely opposed by postal unions. “This of course kicks the can down the road,” complained Sen. John McCain, R-Ariz., who unsuccessfully pushed for a commission in the Senate bill. He argued that the current bill failed to address longer-term fixes, instead hiding behind studies and reviews that unnecessarily delayed major decisions. “We’ll be on the floor in two years addressing this issue again, because it is not a solution.” Postmaster General Patrick Donahoe also has criticized the Senate bill as a short-term answer. Noting that more people every year are switching to the Internet to send letters and pay bills, he has called the Postal Service’s business model “broken.” The agency has estimated that the Senate bill would only provide it enough liquidity to continue operating for two or three years.

Postal Reform is Coming

US postal reform bill heading for vote by full Senate

Tuesday, April 24th, 2012

The US Senate could vote as soon as this afternoon on measures to rescue the ailing US Postal Service, with around 38 amendments to the main bill on offer.

The likely shape of the Senate’s 21st Century Postal Service Act (s.1789) is anything but certain, with many of the proposals to reshape the US mail processing network and cutback on under-used post offices splitting US lawmakers.
Divides over many issues, like the elimination of Saturday deliveries, are not falling along Party lines, while in other matters like network cut-backs, job protections and attempts to reduce union powers, the Democrat-Republican influences are more clear among the Senators and their proposed amendments.
Local influences are also strongly apparent for Senators, particularly those living in rural areas facing a loss of post offices, or in areas where major USPS mail processing plants are being targeted for consolidation.
Among the amendments being voted on are proposals to further review, delay or stop outright the closing of rural post offices, adding requirements on USPS to provide alternative postal retail outlets, and even to bring in state governments to decide on the survival of local post offices.
There are also lawmakers proposing limits to the downsizing of the USPS workforce and mail processing facility, and measures to protect mail service standards.
Other amendments seek tougher measures that the core bill proposals, such as requirements for eligible USPS workers to retire, powers for USPS to close unprofitable post offices, a pilot of alternative delivery arrangements, stronger requirements for postal products to cover their costs, a new Commission on Postal Reorganisation and even a proposal proposing to end the current monopoly that the Postal Service has in accessing household mailboxes.
Proposed amendments also include efforts to limit union power within USPS contract negotiations, and efforts to force top executives to reduce their salaries.

Reform

Amendments supported by the full Senate will join the S.1789 bill that seeks to help the Postal Service turn around its current multi-billion dollar annual losses, a situation caused by the dramatic fall in mail volumes since 2006, and worsened by serious pension over-funding and a punitive system of pre-funding future healthcare liabilities.
It would appear that all US stakeholders support change at the US Postal Service in some way to cope with an increasingly digital age. Unions, professional associations and industry groups have been pushing their members to contact their local Senators to support their favoured amendments.
However, Senators as with mail industry stakeholders all have a different idea of the best approach for change – whether it be restructuring pension and benefit systems, reducing the size of the processing and retail networks, cutting back the workforce, raising postal rates, altering First Class Mail standards – or innovating to find new ways to bring in revenue into the Postal Service.
With some Senators still threatening to block the entire bill if it does not satisfy their key demands, passage of the bill is not guaranteed. Even if it does pass, it would then require a challenging vote in the House of Representatives, which has a different political make up to the Senate with a Republican majority. The House has its own postal reform bill to counter S.1789, a bill which has also passed through committee and is awaiting a floor hearing.

Source: Post&Parcel