The week that was: 6 May 2011
Stroman “cautiously optimistic” over help from Congress, FedEx settles lawsuit with US government, and La Poste plans price hike… Good afternoon and welcome to ‘the week that was’. Post&Parcel is here to provide you with a quick glimpse of the key headlines from the mail and express industry over the past seven days.
In the US, the Deputy Postmaster General said on Tuesday he was “cautiously optimistic” that Congress will act to respond to US Postal Service budget problems. Ron Stroman told the National Postal Forum he was under no illusions about success, and that it was going to be a “tough challenge” to get the required legislation enacted before the USPS runs out of cash in September. But, he said there was now some momentum in efforts to educate lawmakers about the situation at the Postal Service. Without changes, the Postal Service is likely be up against a $2bn to $3bn shortfall in its budget by the fall, as it is squeezed by its health benefit prefunding obligations, declining mail and a Congress-imposed $15bn limit on its overall borrowing. Expectations are that the USPS would be on track to lose $100bn up to 2020 on its present course. “What we are cautiously optimistic about is that there have been discussions between both sides in this, and I feel the momentum is moving along these lines,” Stroman said. After a few months of postal issues being discussed in the House of Representatives, the issues are set to move to the Senate with the expected introduction by Democrat Senator Tom Carper of a new postal bill – perhaps within a week. The bill is likely to propose changes to help restructure the annual $5.5bn payments that the Postal Service currently makes to cover future retiree health benefits, delaying payments through use of money overpaid into USPS pension funds.
FedEx has settled a lawsuit with the US government regarding claims that its couriers took advantage of extra security measures in the wake of the 9/11 terrorist attacks as an “excuse” for late deliveries to government locations. The US Department of Justice said this week that FedEx Corp will pay $8m to avoid a lengthy and costly legal case. The allegations were first made by whistleblower Mary Garofolo, a resident of Maryland and a FedEx employee, who said FedEx staff were blaming extra security screening at government sites after September 11, 2001, for late packages “even after heightened security measures subsided or became routine”. Couriers were “misusing” delivery exception codes to avoid requirements to refund government customers for missing guaranteed delivery times, said the DoJ, primarily in Priority Overnight services requiring delivery by 10.30am, but also some standard services that should have delivered by 3pm. Court papers originally filed under seal suggest that over a period of years, the “deliberate scheme” netted FedEx millions each year. FedEx has denied the claims, but a spokesman said the company was settling to avoid a long legal battle. The DoJ was suing FedEx under the False Claims Act, which encourages whistleblowers to come forward on behalf of the United States and receive a portion of settlement or penalties awarded. Garofolo is to receive a $1.44m share from the FedEx settlement, the DoJ said. The settlement, which was unsealed on Tuesday, came as a result of action by the US Attorney’s Office for the District of Columbia, the General Services Administration and the Departments of Justice and Agriculture.
Over to Europe now where La Poste is set increase the price of mailing letters under 20g, as well as launching two new services. The French national operator said the price of posting a letter under 20g will increase by 2 cents to EUR 0.60, as it revealed the launch of sustainable and hybrid mail products. Upon announcing the price hike, which comes into force on 1 July 2011, the company said the “increase is accompanied by a commitment to rate stability in 2012”. It is expected that the move “will have little impact on households” in France, with the average outlay going-up by 10 cents a month. La Poste said that with this rate adjustment, “the price of stamps will have risen by 11% in five years, while service quality improves, and the number of letters have fallen by almost a quarter”. The operator confirmed that the new postage rate remains within the European “average”. Furthermore, with a view to reducing its ecological footprint, La Poste will launch a new delivery service for individuals and businesses. This new product, available from October, will be more economical, whilst ensuring levels of “reliability and quality” are kept. Since the product will not be transported by air, it will be cheaper than the new postage tariff at EUR 0.57. Additionally, October will also see the launch of a new hybrid mail service. Generated and sent via a customer’s computer, the letter is then printed and distributed by the operator. A next-day option is guaranteed for letters sent before 7pm French time. The cost of the service stands at EUR 0.99, including printing and the envelope.
And finally…
World Mail & Express Europe is a little over than a week away (17-19 May). But fear not, you still have time to book your place at the industry-leading event in Brussels. Click here for more details.
