Regulators criticised over review of USPS network cutbacks

A leading US Senator criticised American postal regulators today for taking too long to review plans by the US Postal Service to right-size its mail processing network. Tom Carper, the Senator for Delaware and a leading voice in Congress pushing for major postal reforms, said that it was “unclear” why the Postal Regulatory Commission was expecting to take until this summer to produce its advisory opinion on USPS downsizing plans.

The Commission is currently scheduled to take until mid-July to take in testimony for its review of USPS plans, which call for First Class Mail standards to be adjusted so that at least 223 of its 461 mail processing plants can be closed.

The Commission’s advisory opinion will not be legally binding on USPS, but could influence the Postal Service plans, based on its stakeholder evidence.

At a hearing of the US Senate today regarding the nomination of Tony Hammond to return as a postal commissioner, Carper said if the Commission cannot produce even preliminary findings by May, it could find itself sidelined as USPS looks to begin plant closures as soon as possible.

“The Commission has indicated that it will not issue an advisory opinion on the Postal Service’s proposals until summer. The Postal Service, meanwhile, has a right to act sooner and plans to act in May,” said the Senator, who explained that if network changes are made any later, they could interfere with preparations for the busy autumn mailing season.

“I want to see the same sense of urgency from the Commission as it goes about its business,” he said. “Otherwise, I fear that the legitimacy and the role of the Commission in these matters could be threatened.”

In response, the Commission’s director of public affairs and government relations, Ann Fisher, told Post&Parcel today that the regulators recognised the concerns of Congress regarding the review.

She said: “The Commission is aware of congress’ concerns and intends to re-double its efforts to move forward as expeditiously as possible.”

Challenges

With mail volumes down 25% compared to five years ago, USPS is making annual losses upwards of $14bn at the moment. Meanwhile, the $15bn limit to its government borrowing capacity threatens to leave the Postal Service with no cash at all this autumn, if changes are not made.

Postal executives are aiming to reduce overall annual operating costs by $20bn over the next five years. But, some 50% of these cost-cutting plans require legislative reforms to achieve, with Congress itself guilty of seriously dragging its heels where those requirements are concerned.

But today’s hearing saw the focus on the Postal Regulatory Commission, with nominee Hammond supporting Carper’s view that the regulators had been taking too long to review USPS proposals, as seen in last year’s extended and ultimately inconclusive assessment of proposals to eliminate Saturday deliveries.

Hammond suggested in his testimony today that the Commission had been too accommodating in requests made by petitioners, including USPS, for more time during reviews.

But he also said that with USPS in such financial difficulties, the Commission had an “extra responsibility” to adjudicate fairly.

“We must be mindful that all our activities are carried out in a responsible and transparent manner,” he said.

Non-postal products

During this morning’s hearing, Carper also highlighted the need for the Commission to support the Postal Service’s efforts to find new ways to generate revenue.

“It’s not enough for the Postal Service or the Congress to just say ‘cut, cut, cut’,” he said. “We have to find some ways for the Postal Service to innovate and be more entrepreneurial.”

Hammond said he would ensure as Commissioner that proposals for USPS to provide a wider range of non-postal services were facilitated by the Commission, but that they had to meet the key test of avoiding competition with the private sector.

“I don’t see any reason for the Postal Service to compete with the private sector if it is already providing these services,” he said.