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Using cluster boxes would save Saturday mail delivery, says US greeting card industry

Thursday, July 18th, 2013

The US greeting card industry has insisted that the massive budget deficit at the US Postal Service can be closed without cutting services or raising postal rates.

Restructuring healthcare funding and using community cluster boxes to reduce mail delivery costs are the most important ways to turn around the losses at USPS, which reached $15.9bn last year, according to the Greeting Card Association.

The trade body stated, following a Congressional hearing on prospective postal reform legislation, that there are ways to implement structural reforms in the Postal Service while preserving the universal service and affordable prices.

Representing nearly 200 greeting card publishers, the GCA released a report just ahead of yesterday’s hearing in Washington DC suggesting 100 ways to help cut the multi-billion dollar annual losses at USPS. It said cutting “essential” services like Saturday mail delivery is “not necessary”, and claims that rate increases would “only add to the problem” by driving more postal volume away.

At present, Republicans in the House of Representatives have shown favour for cutting Saturday delivery, with Democrats opposed. House Republicans have proposed use of cluster boxes in place of doorstep delivery. Both political parties have stated support for moves to require loss-making postal products to cover their costs, which could require postal rate increases for those products.

Rafe Morrissey, GCA Vice President of Postal Affairs, said: “We want to help shift the conversation toward real solutions that preserve the Postal Service without cutting critical services or raising rates.

“While we are glad to see Congressional movement, today’s hearing perpetuated the claim that to save the Postal Service we need to cut critical services or raise rates. Our analysis shows this need simply does not exist.”

Proposals

The GCA report offers two priority ideas for cutting the USPS budget deficit. Firstly, it wants to consolidate household mail delivery into community cluster boxes to cut USPS operating costs, in place of address-to-address delivery. This, the association believes, would mean USPS would not have to abandon Saturday mail delivery.

Using cluster boxes would save $4.5bn a year in delivery costs, the GCA claims. By comparison, the USPS-preferred approach of scrapping Saturday mail delivery, though keeping Saturday package delivery, would save around $2bn a year according to USPS.

The second priority reform the GCA wants to see is for Congress to reduce or end the Postal Service’s Retiree Health Benefits (RHB) pre-funding system, in which USPS is paying future retiree healthcare liabilities ahead of time, with obligations running to more than $5.5bn a year. Yesterday’s Congressional hearing suggested that both sides of the political aisle in the House of Representatives do not believe the RHB pre funding system can be terminated completely, but both Republicans and Democrats want some form of restructuring to reduce the impact on USPS.

The GCA report also states various additional ideas that could be used if these two priority areas do not achieve the $20bn in annual cost savings needed for USPS to balance its books.

Some of the ideas are already being implemented by USPS, such as large scale cuts to the work force through attrition and early retirement incentives and an accelerated consolidation of the processing network.

The Association states that 54 of the proposals would not require any legislation from Congress or additional collective bargaining with the unions. This could include selling up to $85bn in USPS real estate assets, moving more post office activity to partners’ stores or self-service facilities, and closing 12,000 post offices.

The GCA calls for a simplification of mail acceptance rules, fresh volume incentives for bulk mail, and for new products and services to generate revenue.

USPS should adopt a new vehicle purchase strategy to replace the “fix as fails” policy, the Association states, adding that the Postal Service should use electric vehicles and adopt end-to-end GPS tracking technology to increase efficiency in transport and delivery.

Some of the GCA proposals do require Congressional action to implement, such as using pension surplus funds to incentivise staff to leave, bringing in officer salary caps and offering more non-postal services.

Morrissey said: “Our commonsense approach focuses on structural reforms that will achieve the necessary operational efficiency and cost savings. More importantly, we provide flexibility to all stakeholders with more than 100 alternative proposals that preserve the universal service and affordable prices that consumers expect and deserve from the Postal Service.”

Source: Post&Parcel/Greeting Card Association

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