Brief country report: United States of America – Main developments in the postal sector (2006-2008)
Brief country report: United States of America – Main developments in the postal sector (2006-2008)
Read MoreTag: PRC
USPS slashes overtime (U.S)
The US Postal Service has cut overtime expenses by close to a billion dollars in the first three quarters of its fiscal year. Reports filed with the Postal Regulatory Commission show that the USPS reduced overtime by over 28 million hours through pay period 14, which ended on July 4. The reduction translates to USD 923 million in overtime savings compared with the prior year. The year to date overtime rate for bargaining unit employees stood at 8.7 pct, down from 11.7 pct in 2007. In pay period 14 alone, overtime was 6.5 pct, compared with 10.2 pct in the same period last year.
The overtime savings were partially offset by an increase in straight time hours, which were up by 1.4 million hours. That number is somewhat misleading, since it includes almost 15 million straight time hours worked by new “transitional employees”, or TEs, in the letter carrier craft. Straight time hours for career bargaining unit employees were actually down by over 13 million hours.
The average hourly cost of a transitional employee, including benefits, is USD 23.24, compared with USD 39.47 for the average full time regular carrier. The increased use of lower cost straight time hours means that while the average bargaining unit employee has seen a 3.3 pct increase in hourly wages over 2007, the USPS’s average cost per hour increased by just 1.1 pct.
Read MorePostal Service wants limits on its universal service obligation (U.S)
The U.S. Postal Service wants to exempt its competitive products (like Priority Mail and package services) from the universal service obligation. Doing so would allow it to cut back on offerings in sparsely populated areas where business is thin.
The Postal Service argues that those services shouldn’t be treated differently than those of competitors such as FedEx, DHL and UPS. An exemption would allow the Postal Service to choose which competitive products it offers in a given market, and what standards of service to apply. Products covered by the universal service obligation such as first-class mail, must be offered in a uniform fashion across the country.
But even if the agency gets approval from Congress to exempt those competitive services from universal service, an international treaty would create a paradox: The Postal Service would still be required to deliver mail and packages coming into the United States from overseas, even if it doesn’t offer the products in a given market.
The Postal Service made its request for the exemption in a lengthy set of comments submitted to the Postal Regulatory Commission last week. PRC has also solicited public comment on the universal service obligation; the commission will submit a final report to Congress in December.
Under the 2006 Postal Accountability and Enhancement Act, postal products were divided into two categories: market-dominant and competitive. Products in the former group (like first-class mail) are covered by the universal service obligation because the Postal Service has a monopoly over their delivery. But the latter group competes with products offered by commercial shippers like UPS and FedEx.
An exemption for the competitive products would be just one step toward restoring profitability at the financially troubled Postal Service. The agency posted a USD 706 million loss in the second quarter of 2008; decreasing mail volume and increasing fuel costs have squeezed its bottom line. And, the Postal Service can’t rely on market-dominant products to reverse that trend: Price increases for those products are capped at the rate of inflation.
Read MoreCapital One, USPS in NSA dispute
The Postal Regulatory Commission may rule in August on the dispute between Capital One Services Inc. and the US Postal Service, regarding the issu¬ance of a contract between the USPS and the mailer that would provide customized pricing incentives.
Capital One filed a complaint about the negotiated service agreement (NSA) with the PRC on June 19, alleging that the Postal Service “unduly discrimi¬nated” against the company because it was denied a NSA under the same terms as one granted to its competitor, Bank of America Corp.
Terms of the Bank of America NSA, which went into effect April 1, required multiple operational commitments from the company, including implementing the Intelligent Mail barcode and other auto¬mated sorting tools, as well as waiving the physical return of certain First Class Mail and Standard Mail pieces.
The USPS claims that Capital One’s proposed NSA was not identical to that of Bank of America, and that Capital One had not exhausted all good faith negotiations for an NSA before filing the complaint.
A Capital One spokesman declined to comment beyond the company’s com¬plaint filing, which states that the company was denied a NSA that was “functionally equivalent” to that of Bank of America.
Capital One further alleges that the NSA between Bank of America and the USPS used thresholds for mailing dis¬counts based on industry rates from 1998, rather than current NSA baselines.
The USPS has approved a total of nine NSAs, with one extension, since the opportunity began in 2002. Capital One received the first NSA, which was approved, in May 2003. The agreement granted the bank a discount rate on mail volume above an annual total of 1.225 billion pieces for a three-year term. The USPS receives between 50 and 100 requests for NSAs each year, according to a USPS spokesman.
The Postal Regulatory Commission holds hearing on universal service (U.S)
The Postal Regulatory Commission is holding a public hearing on the universal postal service obligation on July 10 from 10am-12pm at its hearing room in Washington, DC.
Testimony from this hearing in addition to other pubic feedback will be used in developing a formal report due to Congress by December 19, on “universal postal service and the postal monopoly in the United States, including the monopoly on mail delivery and access to mailboxes.” The report is a requirement of the Postal Accountability and Enhancement Act of 2006.
According to the PRC, the report will focus on geographic scope, product offerings, access to facilities and services, frequency of delivery, rates and affordability, and quality of services.
The commission has already held field hearings on this topic in Flagstaff, AZ; St. Paul, MN; and Portsmouth, NH.
So far, a number of comments have been submitted to the PRC on the universal service obligation. They can be accessed from the commission’s Web site at prc.gov.
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