The week that was: 5 March 2010
USPS Saturday postal delivery in limbo, La Poste becomes Limited Liability Company and more big changes in the mail and express industry this week…. On Tuesday the USPS postmaster general John E. Potter outlined a plan of cost cutting, increased productivity and an array of legislative and regulatory changes to maintain a viable USPS, which is facing volume declines and a projected cumulative $238bn shortfall during the next decade. Mail volume is projected to fall from 177bn in 2009 to 150bn in 2020.
USPS is renewing its drive to drop Saturday delivery and plans a rate increase in an effort to fend off a projected $7bn loss this year.
USPS has asked Congress for permission to reduce delivery days and has previously discussed the need for other changes such as closing some offices. USPS declares that cutting back Saturday home delivery, however, does not mean post offices would close that day. Potter said he would like to see mail delivery cut to five days a week starting next year.
The company has cut its work force from a peak of 800,000 career employees to currently about 600,000, and Potter said it wants to use more part-time people in the future. Over the next 10 years some 300,000 postal workers will become eligible to retire and that will offer an opportunity to make this change, he said.
A major problem for USPS is a new requirement for an annual payment of $5.5bn to prepay expected medical benefits for retirees. Most businesses handle that cost on a pay-as-you-go basis and Potter said he is seeking congressional approval for the post office to go back to that standard.
Major mailers associations and main stakeholders in the US postal industry commented:
Frederic V. Rolando, president of the National Association of Letter Carriers urged Congress to provide the post office with “financial breathing room,” but he opposed eliminating one day of delivery.
Members of the Direct Marketing Association haven’t united in one position to the proposal. “Some say they can adjust, but others say it will hurt their business model,” said Jerry Cerasale, senior VP-government affairs for the DMA. Businesses that rely on the mail might not necessarily be imperiled by the USPS plan, but they certainly will have to adjust.
None of this will happen overnight, of course. After receiving the formal request from Mr. Potter, the Postal Regulatory Commission must hold a series of public hearings around the country before issuing an advisory opinion. And then Congress has to become involved, since having six-days-a-week mail delivery is a federal law.
Later this week, the USPS also announced the return of the summer mail. The 2010 Summer Sale is scheduled to run July 1 through Sept. 30 and will provide a 30 percent rebate to eligible mailers on Standard Mail letters and flats volume above a predetermined threshold. USPS states that nearly half the 960 customers enrolled in the 2009 Summer Sale increased their mailing volumes. This resulted in approximately 1 billion incremental pieces during the sale period, producing a net revenue contribution of $24 million.
And finally…
Turbulence was also in France, as La Poste becomes a Limited Company with 100% Public Ownership. The company declares that this transformation opens the way for a capital increase of 2.7 bn Euros for La Poste to provide funding for its modernisation and development of its activities.
