PostCom Quarterly - Association for Postal Commerce

POSTCOM QUARTERLY
VOLUME X, JUNE 2014
Monthly
Presort Data
Updates
!
SEPTEMBER 2014 IS
RIGHT AROUND THE
CORNER
SO, ON POSTAL
REFORM, WHAT’S
THE STORY?
USPS: IMPROVING
THE CUSTOMER
EXPERIENCE
SECURE,
SUSTAINABLE AND
SAVING YOU MONEY
PostCom Quarterly
Quarterly Journal Specifically for Mail Owners and Users
The Unions have
Met the Enemy and It’s
Everyone,
Including
themselves
WHAT CAN YOU
EXPECT IN 2015
PRICING UPDATE
PRIORITY MAIL OPEN
AND DISTRIBUTE
DROPSHIP THE
PRIORITY WAY
KATHY’S KORNER
MIDYEAR LOOK AT
OPERATIONAL ISSUES
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POSTCOM QUARTERLY
VOLUME X, JUNE 2014
Monthly Presort Data Updates
Terms and
Definitions
By Bob Schimek Senior Director Postal Affairs, Satori Software Inc PostCom PostOps Committee Chair
In September, the Postal Service will be transitioning to a new
schedule for label list updates, from quarterly to monthly. This
change was going to originally take place in July. This overview
provides some background, an explanation of the new schedule
and impact, as well as some supporting information on how to
manage these changes.
History
!
The update schedule for presort data has been in flux over the past
couple of years. Going back to 2012, label list files were updated
every other month (six times per year). At that time, the
publication date and effective date were the same day and the
industry had a 75-day transition window to switch from the
current label list to the new label list.
!
Due to the size and scope of the Postal Service™ network
rationalization efforts, along with changes to service standards,
the Postal Service needed to change the label list update cycle. The
industry was also expressing concerns around the mail direction
file and how USPS was updating it on a daily basis. At the end of
2011, MTAC Task Team #11 was created to address these needs,
issues and concerns.
!
Current Schedule
!
The biggest need for USPS was to reduce the 75-day transition
window. Having mail flow in two possible directions for 75 days
was having significant cost impacts because of the size and scope
of the network rationalization changes. The biggest need for the
industry was to get the mail direction file updates onto a regular
schedule (other than daily updates).
!
Based on the discussion in Task Team #11, the label list transition
window was changed from 75 days to a 15-day notification period
and a 30-day transition window. To help the industry absorb this
change, USPS agreed to align the updates of the mail direction file
and the zone matrix with the label lists. Also, there was an
agreement to change the number of updates from every other
month to quarterly (from six updates per year down to four
Publication date: The date
when USPS publishes the new
data set. This serves as the start
of the notification period.
Notification period: Time
between the publication date and
the effective date where the new
data set is published, but cannot
be used for mailings submitted to
USPS.
Effective date: The first day
that it is valid to enter a mailing
to USPS that has been prepared
using the new data set. Also
referred to as the begin usage
date.
Transition window: Time
between the effective date of the
new data set and the expiration
date of the currently active data
set. Both data sets are valid and
can be used for mailings that are
submitted to USPS.
!
Expiration date: The last day
the data set is valid. Currently,
PostalOne! determines if a
mailing is using an expired data
set based on the mailing date the
mailer specified in their
electronic documentation (also
when postage is paid). NOTE:
With the October release of
PostalOne!, the expiration will be
based on the mail induction date.
!
Induction date: The date when
USPS takes control of the
mailing. For mailers who are not
drop shipping, the mailing date
and induction date are the same
day. For mailers who are drop
shipping, the induction date is
the day the mail is unloaded off
of the truck at the Postal Service
entry facility.
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POSTCOM QUARTERLY
VOLUME X, JUNE 2014
updates). Another benefit to changing the update cycle to quarterly is that it aligns with the release of
USPS service standards.
!
This is the schedule we have all been living with since the start of 2013.
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New Update Schedule
!
After going through the first couple of updates on the current schedule, the industry expressed
concern with the tight transition window and the impact it was having on production planning. The
members of MTAC Task Team #11 were pulled back together to discuss and see what could be done.
!
After numerous discussions, the key “ask” from the industry was for 60 days of visibility (minimum)
for production planning purposes. The Postal Service solution to providing 60 days of visibility will
be to modify the notification period from 15 days to 30 days and keep the current 30-day transition
window. Also, software providers will have to publish the new data set for electronic download
within five business days of the USPS publication date. The current 15-day notification period has
generally been used by the software providers to create, test and release the new data. By expanding
the notification period to 30-days and compressing the software providers schedule to 5-business
days, it gives the industry roughly an additional 3-weeks of notification period time. There was one
other side-effect, it was noted by USPS that to provide the additional time for the notification period,
the update schedule would need to be changed from quarterly to monthly.
!
With the change to monthly updates, USPS committed to the concept of major and minor data set
releases. The major releases will occur the first month of every quarter. A major release will mean
that possibly every label list file could be updated. The minor releases will go out the second and third
months of the quarter, for these, only the 5-digit scheme labeling list files will be updated.
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The Transition to Monthly Updates
!
The new monthly update schedule was going to start with the July data set (published by USPS on
June 1). However, with the recent delay of the PostalOne! release, the monthly Presort data updates
also got pushed out. Monthly updates will not start until the September data set. This means that the
July data set will be treated as a regularly quarterly update. There will not be an August data set.
Keep in mind that the September data will be published on August 1.
!
Managing Monthly Data
!
Once transitioned into the monthly update cycle, any one data set will have a life span of three
months. Let’s use September as our example, life spanning from August 1 to October 31.
• Month #1:
o Notification period: August 1to August 31
• Month #2 & #3:
o Active data set, valid for mailing being entered from September 1 to October 31
o Data set expiration date: October 31
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At any given month, there will be three different label lists in play. Let’s look at the month of October
as our example. In October, the following data sets will include:
• September data: This data set will expire at the end of the month (October 31).
• October data: This data set is the current active set, it does not expire until November 30.
• November data: This data set is published and is in the notification period. The data set
cannot be used for mailings until November 1 and will expire December 31.
!
Let’s say it is currently October 20, and I have to run a presort which is scheduled to be inducted on
December 10. Can I do this presort and what are the valid data sets to use?
• On October 20, the three data sets in play are the ones noted above.
o September data will expire December 10.
o October data will expire December 10.
o November data (while in the notification period on October 20) will be an active data
set on December 10 and won’t expire until December 31.
• So yes, you can presort this job on October 20 for a December 10 entry as long as you use the
November data set.
• Looking at a December 10 induction date, the valid data sets that could be used would be
either November data (expiring on December 31) or December data (that would not be
published until November 1 and will expire on January 31).
!
If we modify the above scenario slightly by saying that it was likely the induction date would slide to
January, then on October 20, you would not be able to presort this job. At that point in time, there
are no valid data sets that have been published for January.
!
All of these changes are going to drive some pretty significant changes for mailers…
!!
EYE ON IT: USPS lost $2.2B for first six months of FY14
The Postal Service submitted its 2nd quarter results for Fiscal Year (FY) 2014 to the
Postal Regulatory Commission. It showed a net loss of $1.9 billion for the 2nd
quarter and a $2.2 billion loss for the first six months of FY 2014. This marks the
20th of the last 22 quarters it has sustained a loss.
!
Without the USPS’ workers’ compensation and prefunding requirement, the USPS
would have made $261 million for the 2nd quarter and $1.0 billion for the first six
months of FY2014. The Postal Service has stated that it will not make its prefunding
payment its retiree health benefits for FY2014.
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POSTCOM QUARTERLY
VOLUME X, JUNE 2014
So, on postal reform, what’s the story?
By Gene Del Polito President, Association for Postal Commerce
Having to write another article on the prospects of Congress enacting postal legislative reform is
becoming more like writing the next episode in a never ending TV serial drama. Now that I think
about it, there really is a soap opera character to the whole thing. Like some ephemeral specter in the
night, the prospects of reform appear, then disappear. And right now, it appears to be rapidly fading
from view.
Here are a few facts that can tell you whether or not you can take postal reform to the bank.
• House Democrats have no love for House Republicans
• House Republicans have narrowed the scope of their legislative vision to the upcoming 2014
congressional elections.
• House Republicans will never pass a postal reform bill that takes away money from the federal
treasury merely to grant the Postal Service a more stable fiscal platform.
• House Republicans will not pass a postal reform bill that doesn't include cost reduction programs
such as a move from six-day mail delivery to five-day.
• House Democrats will not approve a postal reform measure that is vigorously opposed by postal
labor, and labor will not accept a bill that moves the Postal Service off of six-day mail delivery.
• The Senate will not approve any legislative measure that purports to use any savings from postal
program cost reductions as offsets for the increased costs of other measures. In other words, the
effort by House Republicans to use the savings from five-day as an offset to the costs of a
transportation bill haven't a chance.
• The chances of winning labor's support for a Senate bill that includes five-day or workers
compensation-related legislation is slim at best.
• Efforts by the Postal Service to win congressional approval to a proposal to require postal retirees
to use Medicare as their primary care insurance before tapping into some postal health care
program are dead on arrival as far as federal retirees are concerned.
So you get the picture here, right? And the prospects of moving a postal reform measure to
enactment have been lessened even more by the recent primary electoral upset suffered by soon-tobe former House Majority Leader Eric Cantor. Republicans who thought this might be a time to move
more toward the political middle now will be scrambling even more so to the right to ensure their
own electoral chances.
Oh sure, all the noise about the prospects aren't likely to go away. The rainmakers will still be out
there with their rain dances and diving rods, and they'll try to convince you that the gathering clouds
auger the imminence of legislative rain that will refresh the parched postal earth that has been
suffering its own version of a legislative drought. Well, there may be clouds, and you might even hear
the sounds of some thunder. But the chances that Congress will pass a meaningfully legislative
reform package before this it adjourns sine die will be about as likely as your being hit with lightning
while you're standing in the rain.
In short, stop holding your breath. Get on with business. Get on with life.
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POSTCOM QUARTERLY
VOLUME X, JUNE 2014
USPS: Improving the Customer Experience
By Judy de Torok Manager, Industry Engagement and Outreach (A), U.S. Postal Service
I'm delighted to be joining a team that is dedicated to providing excellent customer service and one
that is committed to building a customer focus throughout the USPS. !
My role, specifically, within Consumer and Industry Affairs, is to serve as a liaison to the mailing
industry and to help them answer their postal questions and address their postal concerns. I like to
say that we are the bridge between the mailers and the USPS. Our goal is to channel customer
feedback to senior management, and to share USPS policy and program updates with the industry.
The role is part advocate and part education. We have a variety of communication channels in place
to accomplish this including, the National Postal Forum, the Mailers Technical Advisory Committee
and Postal Customer Councils. And - we are evaluating all of our tools and ways that we
communicate with you to ensure that you are receiving the kind of information that you want and
need to manage your business. In fact, in the near future, we plan to survey the industry about their
communications needs, so heads up as we may be asking for your opinion and feedback!
!
PostCom asked me to share a little of my background with you. Like most professionals who join the
Postal Service, I thought I would work here for a few years and then move on. But - as many of you
know - the USPS is an interesting and complex place. So I have stayed on and nearly twenty years
later can say that I have had the honor and pleasure of working on progressively challenging
assignments, and a most interesting career.
!
I started my career in Pittsburgh, Pennsylvania as a Communications Program Specialist. The Postal
Service - at the time - was interested in hiring public relations professionals from "outside" the
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organization. At that point in my previous life, I had served as a newspaper writer for a weekly
business journal and daily newspaper, had worked as a Public Relations account executive and vice
president for a full-service advertising agency, and served as a Community Relations Officer for a
community college.
!
My time in Pittsburgh was short - it was only a year or so - before Corporate Communications asked
me to come on a detail to help manage the production of the Annual Report. That led to a permanent
corporate affairs assignment, and in the years since I have spent my time in Corporate
Communications and Government Relations positions. Highlights include serving as editor for
various postal publications, managing numerous Congressional USPS hearings, working as the Chief
of Staff for a Deputy Postmaster General who was new to the organization and most recently, serving
as the Acting Vice President, Corporate Communication.
!
In all of these roles, serving the customer was always a priority, but now it's fair to say, Improving the
Customer Experience is why the Consumer and Industry Affairs department at USPS exists and is the
purpose of my group, Industry Engagement and Outreach.
!
And, as always, I find myself in the center of another interesting assignment. In recent months,
we've opened three Customer Care Centers where agents are empowered to help customers; we've
designed a new customer survey that engages customers by asking fewer and more specific questions
and we've realigned the Business Service Network. More importantly, the team under VP Jim Nemec
is working cross-functionally to achieve the highest levels possible of customer satisfaction.
!
At a recent meeting, a customer asked me what my title meant. My answer was succinct: "to help
customers." And I truly meant and mean that. So, to that end, my direct phone number is
202-268-3662 and my email address is: [email protected]. It will be a pleasure to get to know
many of you in the industry better and I am looking forward to working with you.
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EYE ON IT:PRC Happenings
• PRC puts together a list of all NSAs
!
• PRC publishes final rule on USPS incentives and de minims rate increases
• PRC adopts a fast track process for advisory opinions on nationwide service changes
• PRC publishes two request for proposals: Economics of Terminal Dues and Study of
Postal Service Institutional Cost
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POSTCOM QUARTERLY
VOLUME X, JUNE 2014
Secure, Sustainable and Saving You Money
How Secure Destruction solves many problems
By Jody Berenblatt Senior Consultant, GrayHair Advisors
How much money does your company spend dealing with returned mail? Do you even know? Have
you ever wondered why the postal service returns the whole mailpiece when they can’t deliver it?
Why doesn’t the USPS dispose of the physical mailpiece in a safe, secure, sustainable manner and
send the mailer an electronic notification explaining why the mailpiece was not deliverable? Now, a
new postal program will do just that. After a lengthy period of live beta testing by the USPS
Sustainability Office, the Postal Service will introduce “Secure Destruction” nationwide on November
12, 2014. Mailers will register via the USPS Business Customer Gateway. To qualify for Secure
Destruction (SD), First-Class Letter Mailers must participate in the Intelligent Mail program, use the
correct STID (Service Type Identifier) and subscribe to ACS (Address Change Service).
How much UAA (Undeliverable as Addressed) can there be? In fiscal year 2013 the USPS counted
1,405,623,000 undeliverable First-Class mail items (see tables below). The costs of handling and
returning First Class UAA mail are steep. The USPS estimates that the new program will save enough
money to provide the Secure Destruction service to its First-Class customers, at no additional charge.
The postal handling costs break down into three categories: the cost of forwarding, the cost of
returning the physical mailpiece and/or the costs associated with disposing of the mailpiece.
The Postal Service reports that they surveyed 1,000 major mailers about their interest in the Secure
Destruction service and determined that up to 30% of Return to Sender (RTS) volume (421,687,000
pieces) could be captured by Secure Destruction. Could your company benefit from participating?
Mailer’s returned-mail expenses include mail pick up, handling and disposal. Some mailers pay a
courier to pick up returned mail from the USPS as part of the Remittance mail pick-up process.
Typically, the mailer’s staff (in-house or outsourced) will go through the mail to look for stray
payments and/or correspondence. Astute mailers take the additional step and expense of deleting
these bad addresses from their mailing lists. Once the undeliverable mail ready for disposal, some
mailers perform this step in-house; most outsource it to companies like Iron Mountain. These steps
may not be taken immediately; returned mail often gets piled up in a corner while workers attend to
other priorities.
Secure Destruction and electronic notification pave the way for mailers to take immediate action that
avoids re-mailing to customers and prospects who simply aren’t there. It enables an automated, costeffective process for managing returned mail that delivers a considerable return on investment. How does it work? The Secure Destruction program has a unique Service Type Identifier (STID) that
triggers postal sorting machines to move pieces to a specific bin for designated handling. Human
inspection verifies the mail before it is shredded and sent for recycling. The data transaction is
delivered through an “SD” datafeed and an ACS transaction is sent separately via the ACS datafeed.
To take full advantage of the intelligence associated with the program and see dramatic cost
reductions, mailers need to marry the two datafeeds. GrayHair Software’s Select Solutions platform is
ready to deliver this service.
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At the March 2014 National Postal Forum (NPF), USPS Sustainability Executive Tom Day lead a
discussion with participating panelists Jody Berenblatt of GrayHair Advisors; Sharon Harrison of
AT&T; Tom Lloyd of Capital One; and Ken Metroff of State Farm Insurance. Each of the companies
had taken part in the beta testing, and their representatives spoke about the internal challenges
associated with implementing secure destruction. The NPF presentation is available here.
The national rollout is contingent on the shredder manufacturer's ability to deliver the equipment to
the remaining 54 processing sites. A full 61 mail processing sites will support Secure Destruction.
These sites are equipped with the Postal Automated Redirection System (PARS) where mail is
forwarded or re-routed. In this case, the pieces would be routed for destruction. For those who want
to start coding Intelligent Mail with Secure Destruction service type IDs (STIDS) right away, don’t.
Undeliverable-as-addressed (UAA) mail with a premature SD STID will require manual processing.
The USPS has advised mailers not to apply the secure destruction STID to their mailings prior to the
official nationwide launch, targeted for mid-November. GrayHair Advisors encourages all First-Class Mailers to include Secure Destruction in their nearfuture mailing plans. If you have security concerns, start with mail that doesn’t contain any
personally identifiable information. As you gain confidence in this new service, you can code the IMb
to use the Secure Destruction STID on more sensitive mail. Most new postal programs, particularly
those that require process changes, take a long time to implement. In this case, once the USPS
decided to proceed, the collaborative beta testing process was conducted quickly and effectively. The
result is a win for the USPS sustainability program and a win for First-Class Letter Mailers.
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1st Class UAA Mail Statistics: Volume Perspective
Total UAA
Cost (000)
Volume (000)
FY1998
$
-
FY2004
$
939,016
FY2008
$
FY2009
Unit Cost
-
RPW*
UAA
Volume
Percentage
-
101,172,828
0.00%
3,331,352
$ 0.282
97,926,396
3.40%
842,874
2,957,966
$ 0.285
91,696,737
3.23%
$
870,226
2,746,661
$ 0.317
83,770,183
3.28%
FY2010
$
878,674
2,687,071
$ 0.327
78,203,156
3.44%
FY2011
$
832,513
2,510,247
$ 0.332
73,738,431
3.40%
FY2012
$
840,401
2,537,143
$ 0.331
69,639,569
3.64%
FY2013
$
789,957
2,444,872
$ 0.323
66,700,419
3.67%
!
*Source is RPW (Revenue, Pieces and Weights): https://ribbs.usps.gov/index.cfm?page=uaamail. The detailed data
posted by year shows the statistics by shape. 1st Class UAA Mail Statistics: Cost Perspective
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POSTCOM QUARTERLY
VOLUME X, JUNE 2014
The Unions Have Met the Enemy – And It’s Everyone,
Including Themselves
By Leo Raymond Vice President, Association for Marketing Service Providers PostCom Board Member
One of the benefits of a long
tenure is the availability of a lot of
history to use in evaluating
current events. Looking back over
nearly a half century of association
with the Postal Service and the
mailing business enables a person
to see how things change, or don’t,
over a long span of time.
Looking at the recentlyannounced “alliance” between the
four major postal labor unions and
the list of objectives they hope to
achieve gave rise to a sense of
déjà-vu or, more accurately,
renewed frustration that some
things seem perpetually immune
to the changes that occur around
them.
In this case, the unions’ leaders
are again talking about preserving
something whose time may be
past, ignoring changes in the
Postal Service’s business
environment (driven by changes
in how people communicate and
use the mail), and urging both
their members and their would-be
allies in the general public to
pursue preserving a romanticized
view of traditional postal services
that’s increasingly unsustainable.
Ignoring change
Three of the unions’ objectives
involve maintaining the status
quo: six-day delivery, current service standards and the network to support them, and post offices in
every community. Inherently, there’s nothing wrong with any of these, but taking them in the
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context of current USPS business or, more accurately, how the USPS is used by the public, it’s clear
that each requires a less wishful evaluation.
Six-day (or more) delivery requires the volume (revenue) to support it. In the recent past, the
revenue value of what each carrier delivers has decreased, as has revenue per mailpiece and revenue
per delivery, while there are more stops to which to deliver less mail every year. The resulting
economics would argue strongly that maintaining six-day delivery – regardless of its pure service
value, competitive advantage, or employment importance – is decreasingly affordable. Whether a
change to five-day delivery is fiscally imperative now may be debated but, if it isn’t, it’s no less likely
to be imperative before long.
Similarly, citizens and businesses long ago shifted the transmission of critical, time-sensitive
messages away from hard copy mail into electronic form. First-Class Mail may still be relevant but
overnight service is obviously not still vital to the average sender. Moreover, the volume of hard copy
messages is about 25% lower now than a few years ago, and the downward trend is virtually
guaranteed to continue. Together, these make a strong and reasonable case for reducing the mail
processing and transportation infrastructure to better align with workload, i.e., the volume of mail
and public expectations in the near- and long-term future.
Along that same line, the use of brick-and-mortar post offices has been in steady decline, with users
opting increasingly for on-line or alternative access that is more convenient. For those retail
customers who still want to buy stamps or mail packages, they’ve shown little concern over whether
the person providing the service is an employee of the USPS or of Safeway, Staples, or another
private outlet. Of course, the poster children for retail services are the poor, elderly, and rural
residents who, allegedly, will suffer most if underutilized postal facilities are shuttered. But that
argument begs the questions of why, if indeed their use of postal services hasn’t ebbed like everyone
else’s, would they not find alternative access any less convenient than wealthier, younger, or more
urban customers? Do the people in West Treestump Junction really prefer to have access to postal
services at a USPO that’s only open 8am-noon, Monday through Friday, instead of at a postal kiosk,
contract unit, or Village Post Office in a general store that’s open 6am-10pm seven days a week?
On each of these, it should be obvious to readers that the cloak of maintaining traditional forms and
levels of service – in the face of evolving market needs – is simply to conceal the unions’ true motive:
preserving jobs. Of course, there’s nothing desirable about shedding jobs per se, but such an
outcome can’t always be avoided just because it’s distasteful. Moreover, the unions are omitting one
important fact: no postal employee gets fired or laid off. Excessed employees, whether from delivery
routes or processing facilities, are moved to other vacant positions. Those could be in a different craft
or location but, unlike in the private sector, being a redundant postal employee doesn’t result in
unemployment.
Beating the same drum
Two of the unions’ other objectives reprise long-standing gripes: subcontracting and “privatization,”
and “excessive presort discounts.” This is primarily – if not exclusively – an issue for the APWU
(representing clerks), though the others support it out of union solidarity.
Years ago, mail was sorted by hand, and the APWU still lusts for a return to yesteryear when endless
rows of letter cases, staffed by armies of clerks, would be how the USPS (like the Post Office
Department before it) did mail distribution. Of course, the mechanization and automation of that
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process, especially for letter mail, made letter cases obsolete (and reduced the APWU’s membership
by thousands), but the introduction of presort rates in 1976 (and the subsequent rise of mailer
presorted mail) is what really galls the union.
Looking at the situation as objectively as possible, however, leads to the question of why presort rates
were ever introduced. Mechanization and automation allowed the USPS to sort more mail faster, but
still employed postal labor. Incentivizing mailer presorting allowed the Postal Service to lower its
costs further by having the producers of the mail do some or all of the sortation before the mail ever
reached a postal facility. For decades, despite the union’s bitter opposition and legal challenges,
presort rates (discounts) have been affirmed as appropriate tradeoffs for mailers’ work.
This has not allayed the union, however, but neither has it brought them to accept why presort exists:
it makes economic sense; it simply costs less to have mail distributed by non-postal employees than
by the APWU’s members.
The union may not like that, and it may rant about “poorly trained” and “low paid” private sector
workers, but the numbers (and people who pay postage) don’t care. It doesn’t take a genius to learn a
distribution scheme or operate a piece of automated letter sorting equipment, so – whether the union
likes it or not – there’s no reason (other than unionism) to pay “X” for an APWU member to sort mail
rather than 10% or 20% less to have the same task performed by a non-APWU worker. Private sector
workers also get more done, frittering away less time than postal workers on their many
contractually-assured breaks. So, in the end, mailer presortation exists because it’s a lower cost
alternative to the relatively less efficient use of postal employees for the same work. In response, the
unions claim their workers are just as efficient, but so far have never put themselves into a situation
to prove it.
And the rest
Of the other seven objectives of the union alliance, one supports introducing banking (and other
financial) services into the postal portfolio. Banking has become the latest panacea to be promoted
as a service the USPS should offer to make money. (Other services, like notary services, are offered
now in some places but, collectively, hardly make a blip on the postal balance sheet.)
Politicians advocate for postal banking because of its populist appeal and alleged value as a new
source of revenue. But the problem with introducing banking is simple: it would require a significant
investment of time and resources to implement, has no guaranteed ROI, and, even if eventually
successful, would be a relatively minor source of revenue. And, of course, it assumes that the nation’s
many existing financial institutions wouldn’t mind the competition by a government entity.
Like the preceding five objectives, of course, this one is also meant to buoy flagging postal
employment and union membership. Moreover, from a customer perspective, it’s not a given that
the public would be any more eager to deal with a postal clerk for its banking than it is now when
dealing with one to mail a package. The union’s indifference to the USPS’ business surroundings and
customers isn’t likely to change.
The remaining six objectives relate to the general theme of unions being unions and doing what
unions do, such as working together for unionism, promoting a legislative agenda reflective of their
interests, and synchronizing their measures against management.
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The fundamental flaw
It could be argued that the problem that overarches all of this is the traditional attitude of the postal
unions. They have an ingrained antagonism toward and distrust of management, a dislike for
commercial ratepayers, and – most consistently – an insatiable greed that advocates the exertion of
minimal effort while expecting maximum reward.
The basic union work ethic, as told to a young part-time worker decades ago, is “don’t kill the job.” In
other words, don’t do your best, just enough to stay out of trouble. Don’t do anything more than
you’re required to do. Don’t do in ten minutes what could be stretched to fifteen, and don’t ever
finish a job early. That was the code of the union worker, and woe to the newbie who didn’t toe the
line. Of course, the objective of that mantra, and of the unions’ core tenets today, is to “make work,”
i.e., to optimize member employment by maximizing the number of people and the time required to
do a job. They don’t present being a hard worker as a virtue.
There’s another relevant term: “discretionary effort,” i.e., how much a worker chooses to do beyond
the minimum required. The application of discretionary effort is the opposite of what the unions
urge because it leads to the use of fewer people over a shorter period of time to finish a task.
All of this carries over into not just how hard an employee works but into how well the employee
performs an assigned task. In a situation relevant to customers, that means how much a retail clerk
tries to be pleasant and helpful beyond reciting the required rote and giving the rudimentary service
they’re obliged to render. For commercial mailers, that means how much a DMU clerk tries to
provide helpful advice, good information, and quality, prompt work beyond an indifferent attitude
toward whether the mailer’s product is accepted into the mail in a timely manner or not.
The Postal Service’s unionized workers are insulated, by contract and federal law, from virtually all of
the threats to job security from which private sector workers are not, and often they act accordingly.
They don’t have to do a good job, they don’t have to go beyond the minimum, they don’t have to act
as if customers’ business is important, and they know it.
They have generous pay and benefits – because they’re federal workers or because the unions long
ago outmaneuvered ineffective postal negotiators. Short of perhaps a felony conviction, they can’t be
fired and have rigid work rules about job placement, seniority, and assignment. Nonetheless, they
still proclaim the need to defend “the rights of postal workers” and greedily demand higher pay and
more benefits, all while reinforcing the ideology that those workers’ only duty to their employer (and
to those whose postage pays their salaries) is to do the minimum.
Off to war
So, in declaring their war on the “privatizers,” their proxy for commercial mailers, and renewing
traditional anti-management and anti-mailer themes, the unions are hoping that their members get
motivated to embrace afresh the concepts of old-school unionism that translate into bi-weekly payroll
deductions for union dues.
Surely few would disagree that workers have legitimate rights, including freedom from management
knuckleheads (of which the USPS has its share), fair wages and benefits, and a safe work
environment. However, few would also disagree that, in exchange, there are obligations beyond
what’s in the black and white of contract language – such as doing the best job as efficiently as
possible, and providing the best possible service (like they really want all customers’ business).
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Unfortunately, that’s not how these unions’ ossified thinking works. They can’t see beyond their
customary short-sighted selfishness, and can’t grasp that, to achieve the best long-term outcome for
their members, they might want to help their employer survive. Of course, to do so might mean their
leaders could have to accept reasonable measures that help the USPS reduce costs, keep prices down,
preserve mail volume, and minimize job losses. And, in turn, that would require exceptional vision,
singular courage to tell members what they may not want to hear, and a radical departure from the
unions’ greed and doctrinaire, self-serving outlook. Conversely, the absence of such qualities might
mean that the unions’ worst enemy is really themselves.
This article is based on a commentary by the author published in a recent issue of Postal Points,
AMSP’s postal newsletter, published every three weeks.
EYE ON IT: USPS reaches out on patent issues
Sharing of Mailing Industry Information about Abusive Patent Litigation. Like many businesses in
America today, the Postal Service is very concerned about the burgeoning costs of patent litigation.
The defense of a patent litigation matter can be extremely expensive, regardless of whether the case
has any merit. Particularly troubling in this regard is the litigation brought by so-called “patent
trolls.” Patent trolls are typically companies that obtain vague or loosely described patents without
any intent to manufacture, utilize, or sell the underlying invention. Instead, they are in the business
of making money by extorting licensing fees from alleged infringers of their patents by threatening
litigation which their targets know will be time-consuming and expensive to defeat. Due to the costs
of fighting such suits, companies often settle and pay a nuisance licensing fee even when a company
could mount a meritorious defense to the infringement claim. This conduct subverts the patent
system and retards technological progress and innovation. Recently, a wide range of companies in
the mailing industry, who are customers of the Postal Service, have asserted to us that they have
been targeted by a non-practicing entity, a type of patent troll, with patent infringement lawsuits
pertaining to the functionality of a barcode on their mail. The Postal Service is very interesting in
knowing how the practice of patent litigation, or threatened litigation, is impacting your business.
To help us understand the extent of the problem, we are requesting business mailers let us know
the following:
•
Are you currently in any patent infringement lawsuits pertaining to the functionality of a
barcode on your mail or similar allegations?
•
Have you been threatened with such litigation?
•
Please send your information to [email protected].
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What can you expect in 2015: Pricing Update
By Jessica Lowrance Executive Vice President, Association for Postal Commerce
The Postal Service has said in various venues and filings that there might not be a price increase for
2015 for market dominant products. Market dominant consists of all First-Class Mail, Standard Mail,
Periodicals, Package Services (i.e.: Bound Printed Matter and Media/Library Mail), and Extra
Services (i.e.: Delivery Confirmation).
The USPS’ sudden desire to not have a price increase has more to do with the exigent surcharge that
is currently in place. In December 2013, the Postal Regulatory Commission approved a exigent
surcharge of 4.3 percent to go into effect in January 2014, on top of the annual CPI increase of 1.6
percent the USPS had requested. This surcharge will be in place until the USPS earns $3.2 billion in
revenue or $2.8 billion in contribution.
In Order 1926, the Commission directed the Postal Service to provide monthly updates on the exigent
amount it has earned. It also directed the Postal Service to submit a roll back plan for industry
planning purposes. In its first report, the USPS reported that it has collected $347 million in
contribution towards its exigent surcharge limit.
In a separate filing, the Postal Service submitted its roll back plan. The USPS laid out some options:
Regardless of when the $3.2 billion revenue target is reached, there are multiple ways in
which to remove the exigent surcharge, if it becomes necessary to do so. The most obvious
method would be to simply file a notice with the Commission rescinding the surcharge shortly
before the point at which the Postal Service believes it has generated the $3.2 billion in revenue
allowed under the Commission’s order.
Another possible approach would require altering the schedule of regular rate changes. That is,
the Postal Service could delay the next rate adjustment so as to coincide with the rescission of the
exigent surcharge. If the available percentage of rate authority attributable to inflation were 4.3
percent or greater, then the surcharge could simply be absorbed as part of the scheduled rate
change. Even if inflation were less than 4.3 percent, the Postal Service could, notwithstanding,
use available pricing authority to fold in the exigent surcharge into the basic rate structure of
some products, while adjusting the prices of other products so as to come out at the cap.
According to the USPS, “. . . the Governors have a number of options available to them in planning
for the rescission of the exigent surcharge, so that the exigent surcharge can be timely rescinded if it
becomes necessary to do so.” It explained that, “As decisions are made, the Postal Service will report
to the Commission as to how they influence the development of the final plan for eliminating the
surcharge. Further, if and when that plan is finalized, the Postal Service will convey its details
sufficiently in advance so as to allow any necessary discussion to occur.”
So what can you expect? The Postal Service has said in MTAC workgroup telecons that there will
be a 2015 price change that will go into effect on January 30. It is important to note other timeframes
concerning a USPS price change. The Postal Service has to give a 90-day notice for all market
dominant price changes. That sets a deadline of October 30 for a market dominate price change
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announcement. For competitive products (Priority Mail, Parcel Select, etc), the USPS only has to give
45 days notice. The Postal Service has said that it is exploring its pricing options and one such option
could be to file a competitive price change to keep with its annual time frame and not a market
dominant price change.
Another thing to keep in the back of your mind is the exigent appeal case before the US Court of
Appeals, District of Columbia Circuit. The Postal Service has filed the appeal asking for a remand
around the limitation of the exigent surcharge. The USPS believes it should be baked into the CPI
base, therefore making it permanent. The industry objects to the permanence of the exigent
surcharge, as well as the limit of the surcharge and have filed their own appeal. A decision in this
case is believed to be out by November 2014, well past the October 30 market dominant time frame
to meet a January 30 implementation.
What can the Court decide? If the Court believes there is merit to the USPS’ case on the length of
exigency, it will remand the decision back to the Commission with instructions on how to better
consider the case. If the exigent amount does become a part of the base, the Postal Service would
continue to have annual price changes as usual with a larger base.
If the exigent surcharge remains as a surcharge that needs to be roll backed, the USPS could decide to
bank the annual CPI amounts over the next two years so that when it does reach its surcharge limit, it
could maintain the existing prices or slightly change them based on what banked authority they have.
2 + 1 system updates. Another factor to consider when looking at 2015 and 2016, is the two major
plus one minor system update it performs annually. One of the major updates the USPS executes is
around the annual price change every January. The roll back would most likely have to fall in line
with a major system update which only happens twice a year. So keeping the roll back in accordance
with an annual price change would be easiest for the Postal Service when considering the cost of price
changes as well as the resources needed for a price change.
2015 Planning. Imagine having to explain this to your senior management when they ask for your
2015 budget. Is it easier to ask for forgiveness for over forecasting or go back for more money if you
fall short?
Right now the USPS has a pricing authority of 1.471 percent available to them. With the economy as
it is, a good estimate would be 1.6 percent for 2015 since the Postal Service would have to file by
October, meaning a September CPI figure.
What about potential legislation? There is talk of a compromise of CPI + 1. How confident are you
that legislation will happen after reading the legislative update in this PostCom Quarterly?
Regardless of your legislative tea-leaves reading, you could potentially take the 1.6 percent and add
the plus one for 2.6 percent for planning purposes.
OR . . . you could use a number of these options and mix and mingle them and put your best spin on
it to pull some figure out of the air. Kind-of like I just did. Here’s to 2015 postal forecasting!
!
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Priority Mail Open and Distribute (PMOD):
Drop Ship the Priority Way
!
By Jeffery Peoples CEO & Founder, Window Book, Inc.
Have you ever wanted to drop ship your mail to additional entry points, but just didn’t have enough
volume to fill a truck or even enough to send to a consolidator? Did you ever wonder what to do with
those last few residual sacks or trays from a larger mailing that you are drop shipping using your
normal methods? Do you have pesky mail delivery complaints in certain areas of the country? How
about wanting to improve the delivery time for your Standard Mail®, but not being able to afford
bumping it up to First-Class Mail®? If you have ever pondered any of these questions, Priority Mail
Open and Distribute (PMOD) just might be the answer you’re looking for.
What is PMOD?
Priority Mail® Open and Distribute is a USPS® service offering that provides an alternate method of
transporting drop-shipped mail. Rather than using traditional transport methods (truck, rail,
airfreight, etc.) for drop shipping, this service allows mailers to use the expedited delivery service
offered by Priority Express or Priority Mail to transport the smaller volume mail to additional postal
entry points. Mailers can place their prepared mail sacks or trays into special PMOD sacks or tray
boxes, and tag these sacks or tray boxes with special PMOD tags. These tags indicate to the USPS
that the mail inside the sacks or tray boxes is drop ship mail, and that it needs to be opened and then
distributed as it would normally be processed, hence the name “open and distribute.”
Why use PMOD?
Drop shipping mail can result in some nice postage discounts, or it can be an effective way to better
control the in-home delivery date of mailings. But some mailings just don’t lend themselves to the
more traditional methods of transporting drop-shipped mail from the original entry point to the
destination entry post offices. Drop shipping traditionally involves the use of over-the-road or rail
transportation to get the mail closer to the destination point. It works very well for many types of
mailings, but smaller mailings make it tougher to take advantage of drop shipping benefits without
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paying high minimum charges to logistics providers. Since Priority Express has next day delivery
service and Priority Mail has 2- to 3-day delivery service, PMOD can be a very quick way to transport
the mail to the additional entry points. This is ideal for time-sensitive mail or for delivery trouble
spots.
Uses for PMOD
Some typical users of PMOD are small volume mailers, who just do not consistently have enough
mail volume to meet the minimum shipment requirements of most logistics providers. Another
common use is a mailer sending time-sensitive mailings that just doesn’t have the budget for FirstClass Mail prices. This type of mail can be prepared and paid for at Standard Mail prices, but using
PMOD drop shipping can closely approximate the delivery service of First-Class Mail at a much lower
price. Mailers who experience repetitive delivery delays to more remote areas, such as Alaska or
Hawaii, often use PMOD for this mail to help improve delivery times. The same is true for
Periodicals mail that encounters subscriber delivery complaints to certain geographic areas. Using
PMOD for these cities can help eliminate those subscriber complaints. Even large mailings that use
traditional drop ship methods use PMOD to handle those remaining few sacks or trays that would
normally get entered at the origin.
PMOD made easy
In the past, mailers shied away from PMOD because it involved a lot of manual labor – mail had to be
physically separated and tagged with PMOD tags. Then a postage statement had to be generated by
hand. Now, there are software solutions that allow these procedures to be automated, making PMOD
much more time and cost-effective to use.
Robust shipping software will let you automatically import Mail.dat® files, analyze which trays are
best sent PMOD, print PMOD labels and the appropriate sack labels while also generating the
required manifest reports and postal statements – AND provide valuable tracking services, e-mail
notification and delivery information. In addition, it will eliminate the work of having to generate a
meter strip for each tray or sack by generating a manifest for PMOD sacks and trays. This will
account for each piece so a mailer can track the progress of the delivery of each container. Ideally,
the shipping software should also be able to maintain a central database to keep track of it all.
PMOD postage
The PMOD postage essentially replaces the shipping costs that freight carriers normally charge when
more traditional drop shipping methods are used. Presorted bulk mailings are then drop shipped to
a facility closer to where the mail is to be delivered. Mail is transported within one to three days and
is delivered faster at a reasonable cost.
Mailers who drop ship smaller volumes of mail and pay high shipping costs and experience long
delivery times owe it to themselves to give PMOD a try!
Resources. The USPS provides many resources for PMOD information, including both Priority Mail
Express and Priority Mail options.
!
Mail.dat is a registered trademark of the International Digital Enterprise Alliance (IDEAlliance).
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POSTCOM QUARTERLY
VOLUME X, JUNE 2014
Kathy’s Korner
Mid-Year Outlook on Operations Issues
By Kathy Siviter President, Postal Consulting Inc. PostCom Consultant
Since June marks our halfway point through 2014, it’s a good time to consider where we are on postal
issues and where we are headed for the rest of 2014.
Delayed, Postponed, Pushed Back . . .
No matter which phrase you use, these are ones that the mailing industry has heard quite a bit in the
first half of 2014. And whether that’s a good thing or a bad thing could depend on who you ask.
Between January 2014 and now, the USPS has delayed/postponed/pushed back a number of changes
that it previously had announced would take place, including:
• The USPS delayed Phase 2 of its Network Rationalization and service standard changes, initially
planned for February 2014 implementation.
• IMb Full-Service electronic verification non-compliance assessments have been delayed from July
2014 to January 2015.
• eInduction non-compliance assessments also were pushed back from October 2014 to some time in
2015 not yet determined.
• At industry’s request, the USPS agreed to push back on its planned July implementation of moving
to monthly updates in Labeling Lists and Mail Direction File, which now is slated to begin in
September.
• Implementation of the Hub facility concept has been postponed again as the USPS works with
industry on a variety of issues. Currently the USPS is expected to begin a pilot test in November
with broader implementation in January/February 2015.
• The scheduled July 2014 PostalOne software release was postponed until August 2014 with an
implementation date of September 7.
For more information on the above, check out PostCom’s Post Ops Updates!
Quietly Implemented
The USPS has moved forward with implementing several initiatives and changes in the first half of
this year, some with little fanfare or detail until after implementation.
• The USPS has just published a new, shorter version of the Domestic Mail Manual (DMM) that
eliminates redundant language and consolidates several sections. More changes may come!
• More scheme labeling list changes have been published by the USPS, this round impacting flats
using L007. The changes mean benefits both for the USPS and mailers.
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• The USPS increased the Periodicals weigh limit for comail pieces.
Not so Quietly Implemented . . .
Other changes implemented by the USPS in the first half of 2014 were not so quiet – for instance, the
USPS implemented its Load Leveling service standard changes for Standard Mail amidst much
industry concern. The USPS also implemented FSS preparation changes as part of its January 2014
pricing change, and so far has resisted revising the 250 lb. FSS scheme pallet weight requirement
that is causing mail service providers much angst and additional cost.
Looking Ahead . . .
So what’s in store in terms of postal operations changes for the remainder of 2014? Quite a bit...not
the least of which is the busy fall and holiday mailing season! What can mailers expect to see from
the USPS in the next six months? Here are just some of the things likely to come:
• The USPS will be pushing mailers more aggressively to use IMb Full-Service on at least 75% of their
mail, and will be more aggressively trying to move mailers into Seamless Acceptance.
• The USPS will implement functionality to provide mailers with new mail quality information to
understand their compliance with IMb Full-Service and other requirements.
• The USPS will move ahead with testing the Hub facility concept (as noted above)
• The USPS is working on a new process and compliance threshold for Move Update verification of
IMb Full-Service mail.
• Package visibility metrics will increase again in January 2015.
• The USPS will finalize and propose to the PRC its list of 2015 promotions and incentives.
• USPS will pilot test a bundle scanning concept to improve visibility of flats.
And what about the next price change? At the time of writing this article, things could not be murkier
in terms of when the next price change will occur, though reportedly the USPS steadfastly advises
mailers to plan on January 2015. And that is the safest thing to do, of course.
It seems fairly certain that the USPS will move ahead with a pricing change in January 2015 for its
Competitive Services products, but what kind of pricing change might happen at that time
(tentatively January 25, 2015) for Market Dominant products is less clear. There are several things in
play that could influence what happens.
First, there is always the possibility that between now and then some type of postal reform legislation
could be enacted. What that would include and when it would be implemented are totally unknown
and anything could happen, but there are elements that have been included in both House and
Senate bills that touch on the exigency price increase implemented in 2014 and how long those
increases could last. Second, the USPS has appealed the Postal Regulatory Commission (PRC)
decision on the exigency increase and the matter currently is being considered in court. The outcome
of that appeal could result in the decision being remanded back to the PRC for further consideration,
or it could go in the USPS’ favor. Either outcome is likely to impact how the USPS proceeds on the
timing and amount of its next pricing change for market dominant products.
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Third, the longer the USPS waits to implement the next price change for market dominant products,
the more room it has within the CPI-cap to work on adjusting prices and the rate structure in a
variety of ways – some of which would benefit mailers. For instance, the USPS has said it will be
exploring a more robust FSS pricing structure, but it might not be able to do that if it is limited to a
very small percentage increase in prices overall. As time goes on, the USPS accrues more unused
CPI-cap authority, which gives it more room to work on adjusting prices.
The USPS at this point is time is proceeding toward a January 2015 pricing change for both Market
Dominant and Competitive Services products, but things could change so this is definitely an area
mailers need to keep on top of!
!
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membership reservation today and see all the ways PostCom can benefit
you and your organization.
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