US mailers warn of “dramatic” volume decline if Senate proposals pass
US business mailers have warned that the postal reform bill being marked up in the US Senate today could mean “dire consequences” for US mail volumes. The Senate’s Homeland Security and Governmental Affairs Committee is due to meet this morning to shape up a proposal to rescue the cash-strapped US Postal Service, but one of the proposals from committee leaders is to significantly increase postal rates in the long-term.
The US Postal Service was recently cleared by regulators to impose a three-times-inflation surcharge on postal rates to raise an additional $2.8bn in revenue to help with its struggling finances in the wake of the 2007-09 recession.
Senators Tom Carper and Tom Coburn, respectively Chairman and Ranking Member of the committee, want to see that surcharge turned into a permanent rate increase, and the annual price cap for USPS increased from inflation to inflation plus 1%.
Business mailers’ lobby group Coalition for a 21st Century wrote to the Senators this week in advance of today’s hearing, warning that the “unaffordable” rate increase could see “dramatic” reductions in US mail volumes.
The group will be backing Senator Tammy Baldwin’s amendment to strike out the Carper-Coburn price increase, but said if this fails it will lobby against the entire Senate postal reform bill.
The mailing industry and its suppliers have already been “badly damaged” by the nationwide shift from paper communications to electronic mail, the Coalition said, with the loss of “more than 1m jobs since 2007”.
The letter warned that mail was “quite price sensitive”, but that Postal Service studies on the impacts of price rises had not included “even a single conversation with a mailer”.
The Coalition claimed that mailers were already planning to reduce their volumes as a result of the temporary surcharge granted by the Postal Regulatory Commission, “That reaction should be observable in late 2014 and throughout 2015.”
The letter signed by Coalition co-managers Art Sackler and Ben Cooper said: “The bottom line is that one cannot get blood from a stone. Should [these provisions] of your substitute become law, mailers will move much more volume online, otherwise reduce their mailings, and some will cease to exist.”
Carper-Coburn bill
Along with the permanent exigent rate increase, the Carper-Coburn version of the Postal Reform Act of 2014 would seek to help the US Postal Service turn around its massive losses by restructuring its pension and healthcare funding arrangements,
The Senators want to reassess pension financing arrangements based on postal-specific, rather than merely public sector parameters, and return any surplus funds to the USPS. These surpluses could represent billions of dollars.
The proposals wold also seek to restructure retiree health benefit financing, and have USPS renegotiate retirement benefits for new workers with unions. A new health benefits programme would see increased use of the federal Medicare health insurance programme.
Other proposals would see arbitrators determining union contract disputes to take the financial state of USPS into consideration when deciding on collective bargaining agreements.
The proposals from Senators Carper and Coburn would require the Postal Service to maintain service standards as of October 2013 for at least two years. And, USPS would not be allowed to close any more mail processing plants that were open as of October 2013 for two years.
But, the Senators’ proposals would allow a move from six-day-a-week mail delivery to five-day if they can show it would “contribute to the achievement of long-term solvency” and if mail volume in any four consecutive periods drops below 140bn pieces. Package delivery would have to remain six days per week.
USPS would be required to move to centralised mail delivery – cluster boxes or community mailboxes – for new addresses and businesses to save money, as well as identifying residential addresses suitable for centralized delivery.
Other proposals for USPS within the Carper-Coburn proposals include allowing the shipment of alcoholic beverages by USPS, a reduction in the number of Governors on the USPS board, establishing of a new advisory commission on Postal Service solvency and the appointment of a Chief Innovation Officer at USPS.
