The week that was: 8 April 2010

US legislation put forward, TNT Post to rebrand, and USO needs “fundamental reform”… Good afternoon one and all, ‘the week that was’ is here to keep you up-to-date with the biggest stories to come out the mail and express sectors over the last seven days. Enjoy.

This week, Democrats in the US House of Representatives put forward legislation to relieve the US Postal Service from a multi-billion dollar financial burden. Massachusetts governor Stephen Lynch, ranking member of the House oversight committee’s postal subcommittee, unveiled HR1351 in Congress on Tuesday. The bill seeks to correct the calculation system used to work out payments from the USPS to its Civil Service Retirement System pension pot. Although the US government’s Office of Personnel Management (OPM) has repeatedly stood by its calculations, federal regulators have estimated that the USPS has overpaid into the pension fund by anything between $50bn and $75bn. Congressman Lynch’s bill proposal, which has the support of other key Democrats in the House oversight committee, directs the OPM to bring the CSRS calculations up to modern accounting standards. Any surplus from the recalculated pension fund would then be handed back to the USPS, which would help the struggling organisation with some of its other big financial burdens, such as its retiree health benefits liability. Speaking during Tuesday’s oversight committee hearing into the recent USPS-APWU collective bargaining agreement, Congressman Lynch said that over the past two years, the USPS had done well to cut its costs by over $10bn and that since 2008, the size of its work force had decreased by over 100,000. But he said there were certain aspects of the Postal Service financial problems that were out of its control – specifically, its “overly aggressive” retiree health benefits pre-funding schedule and pension obligations. The new bill, he said, would help.

On Thursday, TNT Post revealed it is set to take a new name from the end of May – PostNL – when it becomes an independent mail company from the end of next month. TNT announced its plans back in December to demerge its mail and express divisions, stating that the two were increasingly operating as separate units, with limited synergies between them. Subject to approval by shareholders on May 25, the rebranding of TNT Post and independence from TNT is now expected to become official from May 31. The company will be able to continue proudly carrying its “Royal” designation (Koninklijk in Dutch), TNT said. Its new corporate identity will remain orange, with Royal PostNL branding being rolled out to vehicles, staff clothing, postal outlets and other company resources in stages from May 31. Outside the Netherlands, rebranding will be carried out at a later stage, the company said. Harry Koorstra, CEO of PostNL, said the new name symbolised a “reliability and down to earth approach”, while the three-sided logo represented the three focus areas for the company of mail, parcels and e-commerce. He said of the new brand: “We emphasise that we are a true Dutch company, with ambitions that go beyond mail and operations that reach beyond our borders.”

Industry leaders in the UK attending this week’s Mail & Express Delivery Show heard that the Universal Service Obligation (USO) is in need of “fundamental reform”. Alex Walsh, director membership services at DMA, spoke on the survival of the USO, and whether legislation and market changes force a radical re-think. Labelling Royal Mail’s financial problems as “severe”, Walsh said that the operator also has to contend with growing competition, and the relevance of physical mail in light of e-substitution. This in turn further reduces Royal Mail’s ability to fund the USO, which currently stands at approximately £4bn. On top of increasing the price of stamps, which came into force on Monday in the UK, Walsh noted possible solutions, including the reduction of the USO’s scale and fewer deliveries. However, he noted that projected savings from these solutions would only be “a drop in the ocean” compared to Royal Mail’s overall financial deficit. He said the operator needs to discover “what are the real needs for five years time”, evaluate the results, and conduct a true “root and branch review”. “The USO is in need of fundamental reform. Can it survive? Not in its current form, it’s unaffordable,” he said. Agreeing with Walsh, Ian Paterson, strategy and regulatory affairs, UK Mail, said that “USO has to develop, it has to evolve.”

And finally…

The shortlist for the World Mail Awards will be revealed next week. Stay glued to P&P for all the latest developments as they happen!