Vol. VIII, No. 1
Confirmation Now Available for Priority Mail
The Postal Service’s new Signature
Confirmation service debuted on February 4, and is now available for
Priority Mail and all other Package Services.
For shippers who send and receive information electronically, the
fee for this additional service is $1.25 per piece, in addition to
postage. This new service provides customers with a copy of the
recipient’s signature and name, in addition to the delivery date and
Presort Discounts Being Proposed for Priority Mail
The Board of Governors unanimously approved the
filing of a new experimental docket involving Priority Mail at their
meeting in San Antonio on February 5-6.
We have learned that:
The Postal Service will offer varying discounts for Priority Mail
that is presorted to 5-digit, 3-digit and ADC (Area Distribution
The new presort discounts will be proposed as experimental
rates, to last for three years.
The case is expected to be filed with the Postal Rate Commission
by the end of February.
The exact amount of the discount will not be
disclosed until the case is filed.
A qualifying mailing must contain at least 300 presorted
pieces, or 500 pounds. Flats
and parcels will have to be packaged separately.
The Postal Service cannot offer volume discounts,
but presort discounts can serve as a proxy for those mailers who have
sufficient volume and density to qualify.
For such mailers, the proposed presort discounts may help
ameliorate the large increase in rates that took effect in January.
Participation in the experiment will be limited
to a small number of participants (around 10), and the Postal Service
plans to work closely with each participating mailer to learn about
problems and determine how the program can be improved.
APMU members who think they may be interested can contact APMU at
703-356-6913 for more details.
Opinion and Recommended Decision Upon Reconsideration
Friday, February 9, the Postal Rate Commission issued its Opinion and
Recommended Decision Upon Reconsideration in Docket No. R2000-1.
The Opinion is on the PRC website, www.prc.gov.
In brief, the Commission:
Denied the Postal Service’s request to increase the provision
for contingencies by an additional $1 billion, and left other rates
unchanged, except for two; and
Due to errors that had been discovered, recommended increased
rates for Certified Mail and Bound Printed Matter (BPM),
which would provide the Postal Service with an additional $83 million in
revenue per year.
With respect to the contingency provision,
the Commission based its opinion on the evidence in the record, and
reaffirmed that the Postal Service’s cursory testimony on the subject
was unconvincing and lacked substantive facts to support the request. The Commission acknowledged the Postal Service references to
various non-record items such as press reports about recent economic
events that portend a slowing economy.
It also noted, however, that the Postal Service admitted that (i)
the evidentiary record did not need to be reopened, and (ii) the
Commission should not rely on extra-record material during its
The Commission left the door ajar for further
reconsideration of the case. It
stated that if the Postal Service now possesses new “information that
would in its view, justify a larger contingency amount,” it would be
willing to reopen the record and act expeditiously to review such
evidence and issue a further opinion.
The matter is now back in the Governors’ lap.
If they want more revenue from this case, they can:
(i) ask the Commission to reopen the record, or (ii) reject
the latest decision and again send the case back to the Commission.
If the Commission again fails to increase rates, the Governors
could use what some call “the anarchy clause,” make a finding
of revenue insufficiency under the Commission’s recommended rates, and
acting unanimously, unilaterally override the Postal Rate Commission and
impose higher rates. This
could happen as soon as two or three months from now.
Although it may appear that the near-term commencement of another
rate case would make the use of the anarchy clause unlikely, rates from
a new rate case are at least 15 months away.
(See next article re new rate case.)
Start Planning for Next Rate Case
The Board of Governors, at their February meeting,
determined that the Postal Service must begin preparing a new rate case
as soon as possible. The
decision came after receiving a report on the Postal Service’s current
financial condition and outlook. The
current betting is that the case could be filed as early as June, or
as late as August, assuming a newly-enshrined PMG did not have his
own ideas about postal rates.
In what appears to be a somewhat short-sighted
response to the Postal Service’s predicament of shrinking margins
(specifically, costs increasing faster than revenues) the Board of
Governors also directed management to (i) reduce the capital
commitment budget in fiscal 2001 from $3.6 billion to $2.6 billion;
(ii) postpone making future financial commitments; and (iii) match
future capital commitments to cash flow.
Arbitrarily postponing and restricting modernization of the
infrastructure seems likely to accelerate, rather than retard,
subsequent rate cases (see next article on nearly stagnant
Postal Service Total Factor Productivity
(“TFP”) during the fiscal year 2001 (ended September 30) grew by
an impressive 2.4 percent. However,
this follows two dismal years during which TFP declined by 1.2
and 0.3 percent, respectively. Since
Postal Reorganization in 1971, the Postal Service has experienced a
cumulative growth in TFP of only 11.1 percent, while productivity
in the whole economy has grown by 53.4 percent, according to the
Bureau of Labor Statistics. The
Postal Service’s lagging productivity, probably more than any other
factor, helps explain why it has continuing financial problems that
require frequent and large rate hikes.
Vogel To Speak at APMU Forum Breakfast
APMU will host a Breakfast and Briefing at the
National Postal Forum in Orlando on Tuesday, March 27.
Paul Vogel, USPS Vice President for Network Operations
Management, who was at the heart of the decision to end the Emery
contract and sign the FedEx contract,
will be the featured speaker.
Please mark your calendar now.
and UPS Sue DHL
FedEx and UPS have filed suit in federal court to
ground the Deutsche Post subsidiary, DHL, alleging that it is a
foreign owned airline, in contravention to the U.S. law.
This is a new front in a war that, until now, had been restricted
to Europe, where UPS has long claimed that Deutsche Post uses profits
from it monopoly letter service to subsidize parcel delivery. Deutsche Post, which recently was partially privatized
through a stock offering to the public, is gearing up to be a global
player in the delivery market, especially the market for expedited
packages. A significant
presence in the U.S. market would be critical to establishing a
1-lb. Rate Available for Priority Mail
As most Priority Mail users are
aware, Priority Mail now features a new 1-pound rate (for $3.50).
Although sharply higher than the old 2-pound rate ($3.20), it is
somewhat less than the new 2-pound rate ($3.95).
Priority Mailers should be aware that when using the 1-pound rate
they cannot use the flat rate envelope.
Other packaging is available from the Postal Service.
Abolishes Postal Service Subcommittee
The House Committee on Government Reform,
chaired by Dan Burton (R-IN) has abolished the Subcommittee on the
Postal Service, formerly chaired by John McHugh (R-NY).
Responsibilities of the subcommittee will be assumed by the full
committee. In the last
session, Representative McHugh sponsored H.R. 22.
Because of a Republican-sponsored initiative, House rules now limit
chairmanships to six years, and McHugh was no longer eligible to chair the
subcommittee. Abolishing the
subcommittee ends speculation about who might become the chair during the
Reform: An Issue That Won’t
As noted elsewhere in this newsletter, productivity
in the Postal Service continues to lag far behind that of the whole
economy, while rates move relentlessly upward.
Automation and modernization of the Postal Service’s
infrastructure, rather than being accelerated, are being slowed down and
postponed. The Postal Service
seemingly is unable or unable to fix itself.
Elsewhere, especially in Europe, the trend towards
privatization of postal administrations and a reduction in the scope of
their local monopoly. For
example, Sweden and Finland have abolished the postal
monopoly altogether, and shares in the Dutch and German post
offices have been sold to private investors.
In the face of trends such as those mentioned here,
the subject of postal reform will not go away, even though the House
Subcommittee on the Postal Service has been abolished.
The introduction of new reform legislation and a new round of
Congressional hearings appear inevitable.
Whether such legislation will provide the Postal Service with the
freedom and a mandate to make necessary changes remains to be seen.
APMU Officer – Glenda Franklin of HSN
Ms. Glenda Franklin, Senior Manager of Logistics
Planning for Home Shopping Network, Inc., was elected APMU secretary at
the APMU quarterly meeting on January 31 in Washington, D.C.
See the APMU Calendar of events at http://www.apmu.org/calendar.html.
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
of Priority Mail Users, Inc. • 8180 Greensboro Drive, Suite 1070
Virginia 22102-3860 • (703) 356-6913 (phone) • (703) 356-5085 (fax)
http://www.apmu.org • email@example.com