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Volume VII, No. 1 January-February 2000 Newsletter

Double Digit Increases To Priority Mail Rates Requested By Postal Service

On January 12, 2000, the Postal Service filed a new omnibus rate case, Docket No. R2000-1. Under the rate-setting process, in which rates are requested by the Postal Service, recommended by the Postal Rate Commission, and then approved by the Postal Service's Board of Governors, the new rates cannot be implemented before January 2001. With respect to Priority Mail, highlights of the Postal Service's proposals are as follows:

The Postal Service admits that these rate increases will cause Priority Mail volume to drop 105 million below what the volume would have been at current rates.

It is no comfort for Priority Mail users to know that even these rate jumps are likely to be exceeded by rate proposed by the United Parcel Service. At this point, unlike past omnibus rate cases, APMU is currently the only intervenor actively working to protect the interests of Priority Mail users before the Commission.

The Association of Priority Mail Users has established a rate case litigation fund to permit a challenge to the requested Priority Mail rates in this docket. APMU is analyzing a variety of possible avenues for challenge to the Postal Service's requested rates:

Deadlines are fast approaching (for example, the deadline for discovery (i.e., formal requests for answers given under oath in response to written questions) of the Postal Service regarding the data and analyses underlying its rate proposals is March 23.

APMU has developed several documents for current and prospective members which discuss the rates setting process and the Postal Service's proposals in greater detail:

To learn more about APMU membership, and about how you can help with APMU's participation in Docket No. R2000-1, please call APMU at (703) 356-6913.

APMU Breakfast & Briefing at National Postal Forum in Nashville

On Tuesday, March 21, 2000, at 7:30 a.m., APMU will hold its next Breakfast & Briefing at the National Postal Forum in Nashville, Tennessee. The featured speaker will be Jack Potter, Senior Vice President, Operations. To RSVP, call APMU at (703) 356-6913.

Priority Mail Processing Center Contractor May Sue Postal Service

Published reports state that CNF Transportation, the parent company of Emery Worldwide (which operates Priority Mail Processing Centers under contract with the Postal Service) is threatening to sue the Postal Service over disputes on pricing and operational issues. An official for CNF states that the company is negotiating with Postal Service officials on a daily basis.

In other news, CNF's year-end financial statement reported that the company broke even on the Priority Mail Processing Center contract during the fourth quarter of 1999.

According to data filed with the Postal Service's omnibus rate proposal in Docket No. R2000-1, payments to CNF under the Priority Mail Processing Center contract were expected to increase 72 percent between Postal Fiscal Year 1998 and Postal Fiscal Year 2001, while Priority Mail volume was only expected to increase 11 percent from PFY 1998 to PFY 2001.

First Quarter Data Shows Priority Mail Is Strongest Postal Product

At the February 8, 2000, meeting of the U.S. Postal Service Board of Governors, postal management announced that net income for the first quarter of Postal Fiscal Year 2000 (which ended December 3) was $816 million, about $140 million below the postal service's plan. Revenue was $306 million less than planned. Revenue growth was soft in nearly all categories except Priority Mail, with volumes and revenue of First Class and Standard A Mail cited as areas of "particular concern."

Postal Service Announced $400 Million in Spending Cuts

John Ward, Postal Service Controller, announced $400 million in spending cuts at the MTAC meeting on Wednesday, February 2. The cuts will affect payroll, the implementation of new programs, and other expenses.

These spending cuts follow $1.1 billion in spending cuts that are already being implemented, including delays in the implementation of the Postal Service's Point-of-Sale retail terminal network (Ward stated "[w]e've said 'That's a nice program. That's a useful thing to have if we had the cash. But we don't.'") and reductions in the corporate call center program. Over 10,000 job vacancies have not been filled.

Year 2000 Calendar

APMU Meetings (tentative) March 21 -- Nashville, TN
(NPF Breakfast and Briefing)
April 24 -- Washington, DC
July 10 -- Washington, DC
September 12 -- Anaheim, CA
(NPF Breakfast and Briefing)
October 9 -- Washington, DC
National Postal Forum
March 19-22 -- Nashville, TN
September 10-13 -- Anaheim, CA
MTAC Meetings
February 1-3 -- Washington, D.C.
April 25-27 -- Washington, D.C.
July 11-13 -- Washington, D.C.
October 10-12 -- Washington, D.C.
MailCom 2000
April 30-May 5 -- Atlantic City, NJ
Dates to be determined -- Las Vegas, NV

The Association of Priority Mail Users, Inc. is a nonprofit organization of Priority Mail users and suppliers to Priority Mail users which seeks to ensure that proper business and financial decisions are made by the United States Postal Service to promote and protect the cost efficiency and quality of service of Priority Mail. For information on APMU programs and membership information, please call 703-356-6913.
Association of Priority Mail Users, Inc. 8180 Greensboro Drive, Suite 1070 McLean, Virginia 22102-3823 (703) 356-6913 (phone) (703) 356-5085 (fax) (URL) (e-mail)