Helping Small Businesses Grow, Millions in Postal Revenue Expected
WASHINGTON — In a move that is expected to help businesses grow — especially small businesses who currently don’t use the mail because they can’t afford it — and garner millions of dollars in new revenue for the U.S. Postal Service, the agency announced today that it is easing the rules on simplified addressing to allow businesses to begin using the format on city delivery routes.
Simplified addressing enables business mailers to use mail delivery route information, instead of names and exact addresses, to reach target customer groups in specific areas. It has long been an accepted addressing option on rural routes and for government mailings.
Effective Jan. 2, 2011, simplified addressing will be expanded for use on saturation flat-size mailpieces and irregular parcels delivered on city routes. (Saturation mail is mail that is delivered to every address within a geographic area, and flat-size mail includes large envelopes and fliers often used for advertising. Irregular parcels, such as rolls and tubes, are parcels that cannot be processed on automated equipment because of their unique shape.)
While the expansion of simplified addressing does not change existing prices or classification standards for Standard Mail flats, it can lower costs by reducing mail preparation time and eliminating the need to purchase address lists and on-press printing. (Standard Mail offers a lower price on postage in return for the commercial mailer doing extra preparation work, such as presorting the mailing.)
“Simplified addressing will help local small and midsize businesses as well as large businesses drive more traffic and attract new customers,” said Paul Vogel, president and chief marketing/sales officer. “This can help strengthen the U.S. economy as well as our organization, the U.S. Postal Service, which is doing everything it can to drive revenue growth.”
The simplified addressing option enables business mailers, in most instances, to conveniently address mailpieces to "Postal Customer” when complete coverage on any designated delivery route is intended.
”Simplified addressing will serve as the on-ramp for many small businesses trying to reach their audiences within a specific geographic range,” said Vogel. “It will allow them for the first time to take advantage of the most effective marketing channel there is — direct mail.”
Thursday, December 30, 2010
Tuesday, November 2, 2010
2011 Shipping Services Prices and Incentive Program
From the DMM Advisory: Today we submitted two filings to the Postal Regulatory Commission (PRC), one for price changes for our competitive products, and another for mailing standards changes that include new incentive programs.
The competitive products filing includes new Shipping Services prices which – following PRC review – will take effect on January 2, 2011.
Overall, Shipping Services prices will increase an average of 3.6 percent. This includes prices for Express Mail®, Priority Mail®, Parcel Select®, Parcel Return Service, Global Express Guaranteed®, Express Mail International®, and Priority Mail International®.
Innovations introduced in the competitive products filing include a new Padded Flat Rate Envelope for all Priority Mail categories and Legal Flat Rate Envelopes for Priority Mail and for Express Mail.
For commercial base and commercial plus Priority Mail customers, an economical new Regional Rate Box will be available in two sizes. Prices are based on box size and zone—Regional Rate Box A maximum weight limit is 15 pounds and Box B maximum weight limit is 20 pounds.
Critical Mail™ is another new product innovation for Priority Mail commercial plus customers. It is offered at flat rate prices for letters and flats and USPS-supplied packaging is required. Critical Mail travels in the First-Class Mail® stream and First-Class Mail service standards apply.
Included in proposed mailing standards changes filed at the PRC today were two incentive programs that were originally filed with the price changes proposed in July:
§ Reply Rides Free — encourages the inclusion of marketing messages in bill and statement mailings, and payment of bills using the mail. For qualifying customers, a 1.2-ounce piece is charged the 1-ounce price if a reply envelope or card is included in the mailing.
§ The Saturation Mail/High Density Incentive Program — provides rebates for volume growth over 5 percent for frequent mailers of Saturation or High Density Standard Mail letters and flats.
Proposed mailing standards changes also include a small increase in the threshold below which the Move Update assessment charge applies. If approved by the PRC, the measures outlined in the filing take effect January 2, 2011.
Note that the January 2, 2011, versions of postage statements must be used due to the numerous types of changes that were required to meet financial and data reporting requirements, including Sarbanes-Oxley.
The new 2011 prices are available online on the Postal Explorer® website at pe.usps.com. Federal Register notices for both filings will also be available soon on Postal Explorer. We will notify you through DMM Advisory.
The competitive products filing includes new Shipping Services prices which – following PRC review – will take effect on January 2, 2011.
Overall, Shipping Services prices will increase an average of 3.6 percent. This includes prices for Express Mail®, Priority Mail®, Parcel Select®, Parcel Return Service, Global Express Guaranteed®, Express Mail International®, and Priority Mail International®.
Innovations introduced in the competitive products filing include a new Padded Flat Rate Envelope for all Priority Mail categories and Legal Flat Rate Envelopes for Priority Mail and for Express Mail.
For commercial base and commercial plus Priority Mail customers, an economical new Regional Rate Box will be available in two sizes. Prices are based on box size and zone—Regional Rate Box A maximum weight limit is 15 pounds and Box B maximum weight limit is 20 pounds.
Critical Mail™ is another new product innovation for Priority Mail commercial plus customers. It is offered at flat rate prices for letters and flats and USPS-supplied packaging is required. Critical Mail travels in the First-Class Mail® stream and First-Class Mail service standards apply.
Included in proposed mailing standards changes filed at the PRC today were two incentive programs that were originally filed with the price changes proposed in July:
§ Reply Rides Free — encourages the inclusion of marketing messages in bill and statement mailings, and payment of bills using the mail. For qualifying customers, a 1.2-ounce piece is charged the 1-ounce price if a reply envelope or card is included in the mailing.
§ The Saturation Mail/High Density Incentive Program — provides rebates for volume growth over 5 percent for frequent mailers of Saturation or High Density Standard Mail letters and flats.
Proposed mailing standards changes also include a small increase in the threshold below which the Move Update assessment charge applies. If approved by the PRC, the measures outlined in the filing take effect January 2, 2011.
Note that the January 2, 2011, versions of postage statements must be used due to the numerous types of changes that were required to meet financial and data reporting requirements, including Sarbanes-Oxley.
The new 2011 prices are available online on the Postal Explorer® website at pe.usps.com. Federal Register notices for both filings will also be available soon on Postal Explorer. We will notify you through DMM Advisory.
Friday, October 22, 2010
POSTAL SERVICE APPEALS EXIGENT RATE CASE DECISION
On October 22, 2010, the Postal Service filed an appeal with the U.S. Court of Appeals for the D.C. Circuit regarding the September 30, 2010 ruling of the Postal Regulatory Commission (PRC) denying the Postal Service exigent price request.
The Postal Service is requesting a review of the PRC’s interpretation of the law that governs how prices can be set under “extraordinary and exceptional” circumstances – an exigent” price increase. The Postal Service is also requesting that the Court of Appeals confirm that the Postal Service has the right to the exigent price increase, as originally filed with the PRC.
The Postal Service disagrees with the PRC’s interpretation of the statutory language and believes that the PRC applied an incorrect standard in evaluating the request for an exigent price increase.
The Postal Service believes we need clarity regarding the exigent price increase rules under current law should the Postal Service find itself in a similar situation in the future.
The Court of Appeals will ask for briefs from both the Postal Service and the PRC. Oral arguments also may be scheduled by the court.
The Postal Service continues to evaluate other options to address the PRC’s ruling. The exigent price request would have generated about $2.3 billion in much needed revenue for the first nine months of calendar year 2011.
As laid out in the Postal Service’s March 2nd Action plan, requesting an exigent price increase was the one option the Postal Service could exercise under current law to help address its current dire financial situation.
Increasing revenue is only one part of the solution. The long-term financial viability of the Postal Service will remain questionable unless the actions recommended on March 2nd are implemented. These include:
· Addressing the statutory retiree health benefit pre-funding requirement,averaging $5.5 billion;
· Allowing the Postal Board of Governors to direct the Postal Service to move to five day delivery;
· Requiring an arbitrator to consider the financial health of the Postal Service when making a determination;
· Allowing the Postal Service greater freedom to close Post Offices;
· Permitting the Postal Service to offer new products and services; and
· Giving the Postal Service greater pricing flexibility.
The Postal Service is requesting a review of the PRC’s interpretation of the law that governs how prices can be set under “extraordinary and exceptional” circumstances – an exigent” price increase. The Postal Service is also requesting that the Court of Appeals confirm that the Postal Service has the right to the exigent price increase, as originally filed with the PRC.
The Postal Service disagrees with the PRC’s interpretation of the statutory language and believes that the PRC applied an incorrect standard in evaluating the request for an exigent price increase.
The Postal Service believes we need clarity regarding the exigent price increase rules under current law should the Postal Service find itself in a similar situation in the future.
The Court of Appeals will ask for briefs from both the Postal Service and the PRC. Oral arguments also may be scheduled by the court.
The Postal Service continues to evaluate other options to address the PRC’s ruling. The exigent price request would have generated about $2.3 billion in much needed revenue for the first nine months of calendar year 2011.
As laid out in the Postal Service’s March 2nd Action plan, requesting an exigent price increase was the one option the Postal Service could exercise under current law to help address its current dire financial situation.
Increasing revenue is only one part of the solution. The long-term financial viability of the Postal Service will remain questionable unless the actions recommended on March 2nd are implemented. These include:
· Addressing the statutory retiree health benefit pre-funding requirement,averaging $5.5 billion;
· Allowing the Postal Board of Governors to direct the Postal Service to move to five day delivery;
· Requiring an arbitrator to consider the financial health of the Postal Service when making a determination;
· Allowing the Postal Service greater freedom to close Post Offices;
· Permitting the Postal Service to offer new products and services; and
· Giving the Postal Service greater pricing flexibility.
Thursday, September 30, 2010
Statement by PMG Jack Potter on PRC Ruling
We are disappointed to learn that the Postal Regulatory Commission (PRC) has denied our price filing. But we are encouraged by their acknowledgment and understanding of the larger financial risk we face through the mandated prefunding of Retiree Health Benefits.
Clearly, the Postal Service is a viable business. Maintaining that status requires elimination of several legislatively-imposed constraints that hamper our ability to operate efficiently and profitably.
Specifically: 1) enable us to alter frequency of delivery consistent with use of the mail; 2) allow us to close unprofitable post offices; 3) restructure our obligation under a 2006 law to prefund retiree health benefits, an obligation not applicable to any other private or government entity; 4) permit us to create and offer products and services beyond mail; 5) assure that arbitrators consider the financial health of the Postal Service when agreement cannot be reached with our labor unions; and 6) resolve overfunding of our pension systems. Legislation has been introduced in Congress to address these issues.
We will need to take a much closer look at the ruling from the PRC in order to make an informed decision about what options we have and what may be the best course of action for our customers, our employees, our stakeholders and the American public.
The Postal Service ends the current fiscal year with approximately $2 billion cash and available credit, meeting all our end-of-year financial obligations, including a $5.5 billion payment to the Retiree Health Benefit Fund as required by law.
As we have stated repeatedly throughout the year, the Postal Service sought a deferral of this $5.5 billion payment to minimize the risk of defaulting on our financial obligations in Fiscal Year 2011. Unfortunately, no legislative action has been taken at this time.
The financial risk remains. We will carefully manage every dollar we spend in the upcoming fiscal year. Our current forecast shows that we will not have sufficient cash to make the $5.5 billion payment due on Sept. 30, 2011, and any major disruption, whether in volume loss or unforeseen circumstances, could cause us to default on financial obligations earlier in FY11.
In the midst of financial and regulatory challenges, the Postal Service achieved record productivity gains in 2010 and a reduction of over 100,000 career employees and cost savings of over $10 billion during the last three years.
As always, service to our customers remains our number one priority. No financial challenge or uncertainty will change that. We will continue to work with Congress and our stakeholders to implement necessary changes to ensure a viable Postal Service for decades to come.
John E. Potter
Postmaster General of the United States
CEO of the U.S. Postal Service
Clearly, the Postal Service is a viable business. Maintaining that status requires elimination of several legislatively-imposed constraints that hamper our ability to operate efficiently and profitably.
Specifically: 1) enable us to alter frequency of delivery consistent with use of the mail; 2) allow us to close unprofitable post offices; 3) restructure our obligation under a 2006 law to prefund retiree health benefits, an obligation not applicable to any other private or government entity; 4) permit us to create and offer products and services beyond mail; 5) assure that arbitrators consider the financial health of the Postal Service when agreement cannot be reached with our labor unions; and 6) resolve overfunding of our pension systems. Legislation has been introduced in Congress to address these issues.
We will need to take a much closer look at the ruling from the PRC in order to make an informed decision about what options we have and what may be the best course of action for our customers, our employees, our stakeholders and the American public.
The Postal Service ends the current fiscal year with approximately $2 billion cash and available credit, meeting all our end-of-year financial obligations, including a $5.5 billion payment to the Retiree Health Benefit Fund as required by law.
As we have stated repeatedly throughout the year, the Postal Service sought a deferral of this $5.5 billion payment to minimize the risk of defaulting on our financial obligations in Fiscal Year 2011. Unfortunately, no legislative action has been taken at this time.
The financial risk remains. We will carefully manage every dollar we spend in the upcoming fiscal year. Our current forecast shows that we will not have sufficient cash to make the $5.5 billion payment due on Sept. 30, 2011, and any major disruption, whether in volume loss or unforeseen circumstances, could cause us to default on financial obligations earlier in FY11.
In the midst of financial and regulatory challenges, the Postal Service achieved record productivity gains in 2010 and a reduction of over 100,000 career employees and cost savings of over $10 billion during the last three years.
As always, service to our customers remains our number one priority. No financial challenge or uncertainty will change that. We will continue to work with Congress and our stakeholders to implement necessary changes to ensure a viable Postal Service for decades to come.
John E. Potter
Postmaster General of the United States
CEO of the U.S. Postal Service
PRG Denies Postal Service Exigent Rate Request
Washington, DC - The Postal Regulatory Commission today issued Order No. 547 in Docket
R2010-4 denying a Postal Service request for an average 5.6 percent rate increase. The Commission found that the Postal Service failed to justiff rate increases in excess of its statutory CPI price cap.
"The Commission finds that the Postal Service has shown the recent recession to be an exigent circumstance but it has failed both to quantifo the impact of the recession on its finances and to show how its rate request relates to the resulting loss of mailvolume; therefore, we unanimously deny its exigent rate request," said Chairman Ruth Y. Goldway.
The law requires the Postal Service to demonstrate that any exigent rate adjustments are due to the identified exceptional circumstances. This prevents a bona fide extraordinary or exceptional circumstance from being used as a general rate increase mechanism that would circumvent the price cap system.
The Postal Service's recent volume losses and multi-billion dollar shortfalls are recognized. However, Commission analysis confirms that the Postal Service's cash flow problem is not a result of the recession and would have occurred whether or not the recession took place. lt is the result of other,unrelated structural problems and the proposed exigent rate adjustments would neither solve nor delay those problems.
The Postal Service may be unable to continue to meet a statutory 1O-year payment schedule -
averaging roughly $5.5 billion per year - to create a fund to pay future retiree health benefit premiums. lt has been unable to fund this obligation from operations, and has instead used up all of its retained earnings and drawn down from its $15 billion borrowing authority. Even with therequested increase, the Postal Service would be unable to meet this annual obligation either in 2011,or in succeeding years.
The Postal Service achieved over $6 billion in cost reductions in 2009. While volume declinesoutstripped cost reductions during the actual recession, Postal Service cost containment programsare producing results and work hours have declined faster than volumes in 2010.
The Postal Regulatory Comm¡ssion is an independent federal agency that provides regulatory oversight over the U.S. Postal Servtbe to ensure the transparcncy and accountability of the Postal Sevice and foster a vital and efficient universal mail system. The Commission is comprised of five Presidentially-appointed and Senate-confrrmed Commissioners, each serving terms of six years. The Chairman is designated by the Prcsident. ln addition to Chairman Goldway, the other Commissioners are Vice Chairman Tony Hammond, Dan Blair, Nanci Langley, and Maù Acton
R2010-4 denying a Postal Service request for an average 5.6 percent rate increase. The Commission found that the Postal Service failed to justiff rate increases in excess of its statutory CPI price cap.
"The Commission finds that the Postal Service has shown the recent recession to be an exigent circumstance but it has failed both to quantifo the impact of the recession on its finances and to show how its rate request relates to the resulting loss of mailvolume; therefore, we unanimously deny its exigent rate request," said Chairman Ruth Y. Goldway.
The law requires the Postal Service to demonstrate that any exigent rate adjustments are due to the identified exceptional circumstances. This prevents a bona fide extraordinary or exceptional circumstance from being used as a general rate increase mechanism that would circumvent the price cap system.
The Postal Service's recent volume losses and multi-billion dollar shortfalls are recognized. However, Commission analysis confirms that the Postal Service's cash flow problem is not a result of the recession and would have occurred whether or not the recession took place. lt is the result of other,unrelated structural problems and the proposed exigent rate adjustments would neither solve nor delay those problems.
The Postal Service may be unable to continue to meet a statutory 1O-year payment schedule -
averaging roughly $5.5 billion per year - to create a fund to pay future retiree health benefit premiums. lt has been unable to fund this obligation from operations, and has instead used up all of its retained earnings and drawn down from its $15 billion borrowing authority. Even with therequested increase, the Postal Service would be unable to meet this annual obligation either in 2011,or in succeeding years.
The Postal Service achieved over $6 billion in cost reductions in 2009. While volume declinesoutstripped cost reductions during the actual recession, Postal Service cost containment programsare producing results and work hours have declined faster than volumes in 2010.
The Postal Regulatory Comm¡ssion is an independent federal agency that provides regulatory oversight over the U.S. Postal Servtbe to ensure the transparcncy and accountability of the Postal Sevice and foster a vital and efficient universal mail system. The Commission is comprised of five Presidentially-appointed and Senate-confrrmed Commissioners, each serving terms of six years. The Chairman is designated by the Prcsident. ln addition to Chairman Goldway, the other Commissioners are Vice Chairman Tony Hammond, Dan Blair, Nanci Langley, and Maù Acton
Wednesday, September 15, 2010
Mailpiece Design Consultant (MDC) Certification Oct. 8th
San Diego Postal & Shipping Equipment to host a
Mail Systems Management Association - San Diego Chapter Event
Gordon Glazer, CMDSM, CMDSS, MDC will be leading a one day MDC Certification Training workshop on behalf of Mail Systems Management Association.
Every company and mailer should employ an expert to make sure that mailpieces qualify for Automation and Workshare discounts. Learn the information you need to pass the MDC test and become certified.
Who Should Attend:
Mail Industry front-line to mid-level Managers
Designers
Mailers
Marketing Professionals
Printers
Suppliers to the mailing industry
Learn how to:
Avoid the costs of bad address quality.
Comply with USPS regulations to minimize postage costs.
Identify mailpiece design problems and save money.
The MDC exam consists of 100 multiple choice questions and requires a passing grade of 90%.
Pass the exam and receive your certification immediately! Proudly proclaim your achievement by adding your MDC certification to your title.
If you require a retest, you may take the exam one additional time at no extra charge. (at the end of the exam, you will be notified of the questions you missed, along with the actual response you gave).
Friday, October 8, 2010
9:00 am to 2:00pm
at San Diego Postal & Shipping Equipment classroom
12255 Crosthwaite Circle
Poway CA 92064
$65 for MSMA members
$75 for non-members
- Includes Registration, Course Study Program, Lunch and meeting refreshments
- Study only (Actual Test will not be taken onsite).
- Limited to 40 maximum participants
Make sure you're included. REGISTER TODAY
Mail Systems Management Association - San Diego Chapter Event
Gordon Glazer, CMDSM, CMDSS, MDC will be leading a one day MDC Certification Training workshop on behalf of Mail Systems Management Association.
Every company and mailer should employ an expert to make sure that mailpieces qualify for Automation and Workshare discounts. Learn the information you need to pass the MDC test and become certified.
Who Should Attend:
Mail Industry front-line to mid-level Managers
Designers
Mailers
Marketing Professionals
Printers
Suppliers to the mailing industry
Learn how to:
Avoid the costs of bad address quality.
Comply with USPS regulations to minimize postage costs.
Identify mailpiece design problems and save money.
The MDC exam consists of 100 multiple choice questions and requires a passing grade of 90%.
Pass the exam and receive your certification immediately! Proudly proclaim your achievement by adding your MDC certification to your title.
If you require a retest, you may take the exam one additional time at no extra charge. (at the end of the exam, you will be notified of the questions you missed, along with the actual response you gave).
Friday, October 8, 2010
9:00 am to 2:00pm
at San Diego Postal & Shipping Equipment classroom
12255 Crosthwaite Circle
Poway CA 92064
$65 for MSMA members
$75 for non-members
- Includes Registration, Course Study Program, Lunch and meeting refreshments
- Study only (Actual Test will not be taken onsite).
- Limited to 40 maximum participants
Make sure you're included. REGISTER TODAY
Tuesday, March 2, 2010
Postal Service Outlines 10-Year Plan
Postal Service Outlines 10-Year Plan to Address Declining Revenue, Volume
Seeks Flexibility on Operations, Delivery; Possible 2011 Price Increase
WASHINGTON — Facing unprecedented volume declines and a projected, cumulative $238 billion shortfall during the next decade, Postmaster General John E. Potter today outlined an aggressive plan of cost cutting, increased productivity, and an array of legislative and regulatory changes necessary to maintain a viable United States Postal Service.
“The crisis we’re facing gives us an historic opportunity to make changes that will lay the foundation for a leaner, more market responsive Postal Service that can thrive far into the future,” Potter said, stressing that there is no one single answer or quick fix to the crisis.
The Postal Service examined revenue, volume and consumer trends; analyzed revenue and product opportunities employed by foreign posts; and examined more than 50 possible actions to realistically address volume declines that will not return, increasing health care and delivery costs, and dramatic changes to consumer behavior.
“The future depends on a suite of solutions that takes a balanced and reasonable approach, one that cuts across every aspect of our industry but one that, in the end, does the greatest possible good for our stakeholders and the American public,” Potter said.
Mail volume is projected to fall from 177 billion in 2009 to 150 billion in 2020. That represents a 37 percent decline in First-Class Mail alone. Revenue contributed by First-Class Mail will plummet from 51 percent today to about 35 percent in 2020.
“Ensuring a Viable Postal Service for America,” the Postal Service business plan, addresses these challenges, and describes a flexible, agile Postal Service that can adapt to America’s changing mailing habits and preferences.
If the Postal Service takes no action, it will face a cumulative shortfall of $238 billion by 2020. But Potter outlined a number of actions that could amount to as much as $123 billion in savings during that same time period. These actions build on the Postal Service’s record of saving more than $1 billion every year since 2001 and include continuing to aggressively control costs and eliminating hundreds of millions of work hours.
Despite these efforts, an estimated $115 billion shortfall will remain. The business plan identifies actions to close that gap:
Restructure retiree health benefits payments to be consistent with what is used by the rest of the federal government and the majority of the private sector and address overpayments to the Postal Service Civil Service Retirement System pension fund.
Adjust delivery days to better reflect current mail volumes and customer habits.
Continue to modernize customer access by providing services at locations that are more convenient to customers, such as grocery stores, pharmacies, retail centers, and office supply stores. Increase and enhance customer access through partnerships, self-service kiosks and a world-class Website.
Establish a more flexible workforce that is better positioned to respond to changing demand patterns, as more than 300,000 employees become eligible to retire in the coming decade.
Ensure that prices of Market Dominant mailing products are based on demand for each individual product and its costs, rather than capping prices for every class at the rate of inflation.
A modest exigent price increase will be proposed, effective in 2011.
Permit the Postal Service to evaluate and introduce more new products consistent with its mission, allowing it to better respond to changing customer needs and compete more effectively in the marketplace.
“Lifestyles and ways of doing business have changed dramatically in the last 40 years, but some of the laws that govern the Postal Service have not. These laws need to be modernized to reflect today’s economic and business challenges and the dramatic impact the Internet has had on American life,” Potter said.
The business plan is a path to the future, the Postmaster General said, a future where the Postal Service remains a vital driver of the American economy, an integral part of every American community and continues to deliver the greatest value of any comparable post in the world.
“If given the flexibility to respond to an evolving marketplace, the Postal service will continue to be an integral part of the fabric of American life,” Potter said.
For more information, fact sheets, soundbites and graphics, please visit www.usps.com/strategicplanning/futurepostalservice.
Seeks Flexibility on Operations, Delivery; Possible 2011 Price Increase
WASHINGTON — Facing unprecedented volume declines and a projected, cumulative $238 billion shortfall during the next decade, Postmaster General John E. Potter today outlined an aggressive plan of cost cutting, increased productivity, and an array of legislative and regulatory changes necessary to maintain a viable United States Postal Service.
“The crisis we’re facing gives us an historic opportunity to make changes that will lay the foundation for a leaner, more market responsive Postal Service that can thrive far into the future,” Potter said, stressing that there is no one single answer or quick fix to the crisis.
The Postal Service examined revenue, volume and consumer trends; analyzed revenue and product opportunities employed by foreign posts; and examined more than 50 possible actions to realistically address volume declines that will not return, increasing health care and delivery costs, and dramatic changes to consumer behavior.
“The future depends on a suite of solutions that takes a balanced and reasonable approach, one that cuts across every aspect of our industry but one that, in the end, does the greatest possible good for our stakeholders and the American public,” Potter said.
Mail volume is projected to fall from 177 billion in 2009 to 150 billion in 2020. That represents a 37 percent decline in First-Class Mail alone. Revenue contributed by First-Class Mail will plummet from 51 percent today to about 35 percent in 2020.
“Ensuring a Viable Postal Service for America,” the Postal Service business plan, addresses these challenges, and describes a flexible, agile Postal Service that can adapt to America’s changing mailing habits and preferences.
If the Postal Service takes no action, it will face a cumulative shortfall of $238 billion by 2020. But Potter outlined a number of actions that could amount to as much as $123 billion in savings during that same time period. These actions build on the Postal Service’s record of saving more than $1 billion every year since 2001 and include continuing to aggressively control costs and eliminating hundreds of millions of work hours.
Despite these efforts, an estimated $115 billion shortfall will remain. The business plan identifies actions to close that gap:
Restructure retiree health benefits payments to be consistent with what is used by the rest of the federal government and the majority of the private sector and address overpayments to the Postal Service Civil Service Retirement System pension fund.
Adjust delivery days to better reflect current mail volumes and customer habits.
Continue to modernize customer access by providing services at locations that are more convenient to customers, such as grocery stores, pharmacies, retail centers, and office supply stores. Increase and enhance customer access through partnerships, self-service kiosks and a world-class Website.
Establish a more flexible workforce that is better positioned to respond to changing demand patterns, as more than 300,000 employees become eligible to retire in the coming decade.
Ensure that prices of Market Dominant mailing products are based on demand for each individual product and its costs, rather than capping prices for every class at the rate of inflation.
A modest exigent price increase will be proposed, effective in 2011.
Permit the Postal Service to evaluate and introduce more new products consistent with its mission, allowing it to better respond to changing customer needs and compete more effectively in the marketplace.
“Lifestyles and ways of doing business have changed dramatically in the last 40 years, but some of the laws that govern the Postal Service have not. These laws need to be modernized to reflect today’s economic and business challenges and the dramatic impact the Internet has had on American life,” Potter said.
The business plan is a path to the future, the Postmaster General said, a future where the Postal Service remains a vital driver of the American economy, an integral part of every American community and continues to deliver the greatest value of any comparable post in the world.
“If given the flexibility to respond to an evolving marketplace, the Postal service will continue to be an integral part of the fabric of American life,” Potter said.
For more information, fact sheets, soundbites and graphics, please visit www.usps.com/strategicplanning/futurepostalservice.
Thursday, January 21, 2010
USPS Has Been Overcharged 75 Billion, per OIG Study
January 20, 2010
New OIG Study Estimates USPS Has Been Overcharged for the
CSRS Pension Fund by $75 Billion
A study just released by the U.S. Postal Service’s Office of Inspector General (OIG)
shows that the current system of funding the Postal Service’s Civil Service Retirement
System pension responsibility is inequitable and has resulted in the Postal Service
overpaying $75 billion to the pension fund. The OIG estimates that if the overcharge
was used to prepay the Postal Service’s health benefits fund, it would fully meet all of
the Postal Service’s accrued retiree health care liabilities and eliminate the need for the
required annual payments of more than $5 billion. Also, the health benefits fund could
immediately start meeting its intended purpose -- paying the annual payment for
current retirees, which was $2 billion in 2009.
This marks the third time the Postal Service has been overcharged. In 2002 it was
determined the Postal Service would overfund CSRS by $78 billion. Legislation in 2003
corrected this overfunding. Then it was determined the Postal Service was overcharged
$27 billion for CSRS military service credits. In 2006 these funds were returned to the
Postal Service by Congress, and the surplus was used to fund retiree health care
liabilities.
This study, The Postal Service’s Share of CSRS Pension Responsibility, undertaken in
conjunction with the Hay Group, is the third paper sponsored by the OIG that delves
into the financial entanglements between the Postal Service and the federal
government -- generally at the expense of the Postal Service. The latest study describes
the inequitable allocation of CSRS costs between the federal government and the Postal
Service. The other two reports focus on the Postal Service’s congressionally-mandated
retiree health care prefunding payments (Estimates of Postal Service Liability for Retiree
Health Care Benefits), and the Postal Service’s interaction with the federal budget
(Federal Budget Treatment of the Postal Service).
In this newly released paper, the OIG and Hay Group’s analysis demonstrates that the
method used to determine how CSRS pension costs for postal employees with service
before 1971 are split between the Postal Service and the federal government is
inequitable. As a result, the Postal Service was overcharged by $75 billion for payments
to CSRS retirees from 1972 to 2009. The OIG suggests that this amount be returned to
the Postal Service’s CSRS pension fund. Any excess above what is needed to fund CSRS
liabilities could then be transferred to the Postal Service’s retiree health care fund,
which would fully fund its health care liability and eliminate the need for further
congressionally-required payments to the fund. All of the Postal Service’s current
pension and health care obligations to its employees would then be fully funded.
The report further illustrates the inequity in the methodology used to determine the
Postal Service’s contribution to the CSRS fund. Key findings from the report:
• Hay Group demonstrates that the method of splitting CSRS pension costs for postal
employees with service before 1971 between the Postal Service and the federal
government is inequitable, because the Postal Service is made responsible for all
salary increases after 1971.
• In effect, OPM calculates the federal government’s share for these employees as if
they retired in 1971 at their much lower 1971 salaries. An allocation methodology
that burdens the Postal Service with all post-1971 pay increases is not reasonable.
• As an example, Hay Group shows that the Postal Service could be charged
70 percent instead of 50 percent of the pension costs for employees who worked
half their careers with the Post Office Department and half with the Postal Service.
• Because of the inequitable split, the Postal Service was overcharged $75 billion from
1972 to 2009.
The report also offers solutions:
• Fixing the split by using a more equitable years-of-service approach would leave the
Postal Service with $75 billion more in assets as of the end of 2009. The CSRS
pension fund is currently underfunded by $10 billion, so the resulting pension
surplus would equal $65 billion.
• The $65 billion pension surplus could be added to $35 billion already set aside in the
retiree health benefits fund for a total retiree health fund balance of $100 billion.
• A fund balance of $100 billion is more than enough to fully fund accrued retiree
health benefit liabilities of $87 billion. No further payments to the fund would be
needed to cover this liability.
• The current annual payments of more than $5 billion mandated by the Postal
Accountability and Enhancement Act (PAEA) could end.
• Payments for the premiums of current retirees could start to come from the fund
immediately.
• The annual evaluation of the Postal Service’s retiree health benefit assets and
liabilities would continue, and the Postal Service could be assessed if there were
any unfunded liability.
This report takes on increasing significance as the Postal Service faces a challenging
future. When the Postal Service was established, it was intended to be self-sufficient.
Clearly delineating and separating the Postal Service’s responsibilities from those of the
federal government will help in determining the true costs of funding postal operations.
Citizens and businesses should pay no less and no more than what is required to fund
the Postal Service’s operations.
Here is the link to the OIG: http://www.uspsoig.gov/ (it is on their front page)
Full report: http://www.uspsoig.gov/foia_files/RARC-WP-10-001.pdf
New OIG Study Estimates USPS Has Been Overcharged for the
CSRS Pension Fund by $75 Billion
A study just released by the U.S. Postal Service’s Office of Inspector General (OIG)
shows that the current system of funding the Postal Service’s Civil Service Retirement
System pension responsibility is inequitable and has resulted in the Postal Service
overpaying $75 billion to the pension fund. The OIG estimates that if the overcharge
was used to prepay the Postal Service’s health benefits fund, it would fully meet all of
the Postal Service’s accrued retiree health care liabilities and eliminate the need for the
required annual payments of more than $5 billion. Also, the health benefits fund could
immediately start meeting its intended purpose -- paying the annual payment for
current retirees, which was $2 billion in 2009.
This marks the third time the Postal Service has been overcharged. In 2002 it was
determined the Postal Service would overfund CSRS by $78 billion. Legislation in 2003
corrected this overfunding. Then it was determined the Postal Service was overcharged
$27 billion for CSRS military service credits. In 2006 these funds were returned to the
Postal Service by Congress, and the surplus was used to fund retiree health care
liabilities.
This study, The Postal Service’s Share of CSRS Pension Responsibility, undertaken in
conjunction with the Hay Group, is the third paper sponsored by the OIG that delves
into the financial entanglements between the Postal Service and the federal
government -- generally at the expense of the Postal Service. The latest study describes
the inequitable allocation of CSRS costs between the federal government and the Postal
Service. The other two reports focus on the Postal Service’s congressionally-mandated
retiree health care prefunding payments (Estimates of Postal Service Liability for Retiree
Health Care Benefits), and the Postal Service’s interaction with the federal budget
(Federal Budget Treatment of the Postal Service).
In this newly released paper, the OIG and Hay Group’s analysis demonstrates that the
method used to determine how CSRS pension costs for postal employees with service
before 1971 are split between the Postal Service and the federal government is
inequitable. As a result, the Postal Service was overcharged by $75 billion for payments
to CSRS retirees from 1972 to 2009. The OIG suggests that this amount be returned to
the Postal Service’s CSRS pension fund. Any excess above what is needed to fund CSRS
liabilities could then be transferred to the Postal Service’s retiree health care fund,
which would fully fund its health care liability and eliminate the need for further
congressionally-required payments to the fund. All of the Postal Service’s current
pension and health care obligations to its employees would then be fully funded.
The report further illustrates the inequity in the methodology used to determine the
Postal Service’s contribution to the CSRS fund. Key findings from the report:
• Hay Group demonstrates that the method of splitting CSRS pension costs for postal
employees with service before 1971 between the Postal Service and the federal
government is inequitable, because the Postal Service is made responsible for all
salary increases after 1971.
• In effect, OPM calculates the federal government’s share for these employees as if
they retired in 1971 at their much lower 1971 salaries. An allocation methodology
that burdens the Postal Service with all post-1971 pay increases is not reasonable.
• As an example, Hay Group shows that the Postal Service could be charged
70 percent instead of 50 percent of the pension costs for employees who worked
half their careers with the Post Office Department and half with the Postal Service.
• Because of the inequitable split, the Postal Service was overcharged $75 billion from
1972 to 2009.
The report also offers solutions:
• Fixing the split by using a more equitable years-of-service approach would leave the
Postal Service with $75 billion more in assets as of the end of 2009. The CSRS
pension fund is currently underfunded by $10 billion, so the resulting pension
surplus would equal $65 billion.
• The $65 billion pension surplus could be added to $35 billion already set aside in the
retiree health benefits fund for a total retiree health fund balance of $100 billion.
• A fund balance of $100 billion is more than enough to fully fund accrued retiree
health benefit liabilities of $87 billion. No further payments to the fund would be
needed to cover this liability.
• The current annual payments of more than $5 billion mandated by the Postal
Accountability and Enhancement Act (PAEA) could end.
• Payments for the premiums of current retirees could start to come from the fund
immediately.
• The annual evaluation of the Postal Service’s retiree health benefit assets and
liabilities would continue, and the Postal Service could be assessed if there were
any unfunded liability.
This report takes on increasing significance as the Postal Service faces a challenging
future. When the Postal Service was established, it was intended to be self-sufficient.
Clearly delineating and separating the Postal Service’s responsibilities from those of the
federal government will help in determining the true costs of funding postal operations.
Citizens and businesses should pay no less and no more than what is required to fund
the Postal Service’s operations.
Here is the link to the OIG: http://www.uspsoig.gov/ (it is on their front page)
Full report: http://www.uspsoig.gov/foia_files/RARC-WP-10-001.pdf
Tuesday, January 19, 2010
Confusion and Fear re: Move Update Compliance
Still confused about the Move Update requirement? Wondering what the consequences for not complying might be? This article will attempt to remove the confusion and fear that is gripping many over the Move Update requirement.
Move Update:
Think of it like your Mom or Dad telling you to eat your vegetables, you may not want to eat them, but you now realize that they are good for you. It’s the same thing here!
Move Update is the requirement that forces mailers of Automation Standard and Commercial First Class Mail™ to do something to make sure that your address lists are up to date when you mail.
Why?• Costs the USPS 2 Billion /Yr to Return/Dispose of Undeliverable mail
• 17% of Consumers and Businesses move every year – 45 Million!
• 24% of all mail have some kind of address problem
• 2.72% of mail is never delivered
• 17% of all mail is delayed
Or, to put this into hard numbers:
• 10 Billion Pieces are affected each year.
• 1.6 Billion are Returned
• 1.985 billion are Forwarded
• 6.0 Billion are Discarded
OK – So how do I comply?
You need to comply with a Pre-Mailing method within 95 days of your mailing and then you can keep your list current by utilizing a Post-Mailing method.
For most of us, the easiest way is to use an NCOA-Link product that will satisfy it quickly and easily. Most Mail management software packages have a NCOA-link solution.
For our Satori Bulk Mailer customers, when they run their lists thru this process, it actually does 5 things to improve the deliverability, all without the hassle of exporting and re-importing the data. Satori is a full service NCOA Provider and will update registered move data up to 48 months old.
Satori’s “Move Update” features:
CASS – 1st step to break the address down to its component parts, Standardizes and corrects the Physical part of the address to USPS specifications
DPV – Delivery Point Validation – Further corrects the address to the actual delivery point and reports back if the secondary address info (Suite #, Unit #, Apt #) is accurate, missing or wrong.
LACS-Link – Changes old Rural Routes into physical delivery address –Helps emergency service providers locate rural addresses.
Suite-Link – Adds or changes Secondary address information for Businesses – (Suite #, Unit #)
Move Update – Fixes the Personal portion of the address by changing the addresses based upon moves registered with the USPS.
Are there other ways I can satisfy the Move Update requirement?
Yes, there are “Post-Mailing” methods such as using Ancillary Service Endorsements, ACS, or One Code ACS (IMB). All of these Post Mailing methods require that the list has gone thru some other “Pre-Mailing” method within 95 days of the mailing, and then you can use these “Post-Mailing” methods to keep the list current.
Pre-Mailing Methods:
NCOA or NCOAlink
Directly Acquired addresses
First-Class Mail used with approved Ancillary Service Endorsement
Fast-Forward
Post-Mailing Methods:
Ancillary Service Endorsements – Correct your data after the fact
ACS
One-Code ACS (IMB)
Exceptions:
Using Alternative Address Formats like “Current Resident/Occupant” are exempt, but not very personal. If the data came directly to you within 95 days of the mailing, like thru your call center, BRM or web site, those addresses would be OK. There are also exceptions if you can prove that your lists are 99% accurate or that you have a "Legal Restriction" prohibiting you from updating the address without authorization.
If you are using a Presort service, they offer a service called Fast-Forward that can apply the DPBC and forwarding address while co-mingling your mail allowing you some presort savings. The drawback is that the information is applied after your mail piece has been created so the corrected information doesn’t directly update your records.
Is there a way for me to take advantage of Better Address Quality without big changes to our I.T. processes?
Yes Document Control Software, can capture your Print Image Files and manipulate them prior to printing. It is mind boggling to see all of the things DCS can be designed to do. Not only can DCS improve address quality but it can merge multiple print streams, change background overlays, add OMR marks for automation processing by a Folder Inserter, add the postage Indicia into the address block and can even include Mail Piece Verification to ensure that every piece makes it into the mailstream.
What are the consequences for not complying with Move Update?
The key thing to realize is that the penalty will be applied to the entire mailing, not just those addresses that fail Move Update. When you sign the 3602 Mailing statement acknowledges that … “who omits information requested on this form may be subject to criminal and/or civil penalties, including fines and imprisonment.” The calculations for failure to comply are a little confusing. It is based upon the percentage of your mail that exceeds the minimum 30%compliance threshold. This percentage is applied to the entire mailing at $.07 per piece.
For example: 5000 piece mailing with 500 COAs (change of address on file with the USPS NCOA system) only 20% (100) were up to date, leaving 400 (80%) un-corrected. In order to comply with Move Update no more than 30% of COAs (150) can have un-corrected addresses. Penalty rate is calculated by subtracting USPS threshold 30% from the 80% not corrected to arrive at percent of mailing subject to a penalty, in this case its 50%.
Apply 50% penalty rate to entire 5000 piece mailing to determine number of pieces subject to .07 penalty in this case 2500 or $175.00
What are the chances of getting caught?
It is getting easier all the time for the USPS to catch this as their focus is absolutely on reducing costs. UAA (Undeliverable as Addressed) and FOE (Forwarding Order has Expired) mail are the biggest areas they have identified to save money. The mail today is becoming “Intelligent” with mailer identification embedded in the IMB (intelligent Mail Barcode) and IBIP (Information Based Indicia Program) meter indicia (All Phase 6 meters) it won’t be hard to find or account for as computers will do the hard work.
So stay compliant with Move Update and your mailing performance will improve, just like a healthy body that eats right and exercises should. Hopefully this has diminished your fears and confusion regarding Move Update requirement, so eat your vegetables, they’re good for you!
Move Update:
Think of it like your Mom or Dad telling you to eat your vegetables, you may not want to eat them, but you now realize that they are good for you. It’s the same thing here!
Move Update is the requirement that forces mailers of Automation Standard and Commercial First Class Mail™ to do something to make sure that your address lists are up to date when you mail.
Why?• Costs the USPS 2 Billion /Yr to Return/Dispose of Undeliverable mail
• 17% of Consumers and Businesses move every year – 45 Million!
• 24% of all mail have some kind of address problem
• 2.72% of mail is never delivered
• 17% of all mail is delayed
Or, to put this into hard numbers:
• 10 Billion Pieces are affected each year.
• 1.6 Billion are Returned
• 1.985 billion are Forwarded
• 6.0 Billion are Discarded
OK – So how do I comply?
You need to comply with a Pre-Mailing method within 95 days of your mailing and then you can keep your list current by utilizing a Post-Mailing method.
For most of us, the easiest way is to use an NCOA-Link product that will satisfy it quickly and easily. Most Mail management software packages have a NCOA-link solution.
For our Satori Bulk Mailer customers, when they run their lists thru this process, it actually does 5 things to improve the deliverability, all without the hassle of exporting and re-importing the data. Satori is a full service NCOA Provider and will update registered move data up to 48 months old.
Satori’s “Move Update” features:
CASS – 1st step to break the address down to its component parts, Standardizes and corrects the Physical part of the address to USPS specifications
DPV – Delivery Point Validation – Further corrects the address to the actual delivery point and reports back if the secondary address info (Suite #, Unit #, Apt #) is accurate, missing or wrong.
LACS-Link – Changes old Rural Routes into physical delivery address –Helps emergency service providers locate rural addresses.
Suite-Link – Adds or changes Secondary address information for Businesses – (Suite #, Unit #)
Move Update – Fixes the Personal portion of the address by changing the addresses based upon moves registered with the USPS.
Are there other ways I can satisfy the Move Update requirement?
Yes, there are “Post-Mailing” methods such as using Ancillary Service Endorsements, ACS, or One Code ACS (IMB). All of these Post Mailing methods require that the list has gone thru some other “Pre-Mailing” method within 95 days of the mailing, and then you can use these “Post-Mailing” methods to keep the list current.
Pre-Mailing Methods:
NCOA or NCOAlink
Directly Acquired addresses
First-Class Mail used with approved Ancillary Service Endorsement
Fast-Forward
Post-Mailing Methods:
Ancillary Service Endorsements – Correct your data after the fact
ACS
One-Code ACS (IMB)
Exceptions:
Using Alternative Address Formats like “Current Resident/Occupant” are exempt, but not very personal. If the data came directly to you within 95 days of the mailing, like thru your call center, BRM or web site, those addresses would be OK. There are also exceptions if you can prove that your lists are 99% accurate or that you have a "Legal Restriction" prohibiting you from updating the address without authorization.
If you are using a Presort service, they offer a service called Fast-Forward that can apply the DPBC and forwarding address while co-mingling your mail allowing you some presort savings. The drawback is that the information is applied after your mail piece has been created so the corrected information doesn’t directly update your records.
Is there a way for me to take advantage of Better Address Quality without big changes to our I.T. processes?
Yes Document Control Software, can capture your Print Image Files and manipulate them prior to printing. It is mind boggling to see all of the things DCS can be designed to do. Not only can DCS improve address quality but it can merge multiple print streams, change background overlays, add OMR marks for automation processing by a Folder Inserter, add the postage Indicia into the address block and can even include Mail Piece Verification to ensure that every piece makes it into the mailstream.
What are the consequences for not complying with Move Update?
The key thing to realize is that the penalty will be applied to the entire mailing, not just those addresses that fail Move Update. When you sign the 3602 Mailing statement acknowledges that … “who omits information requested on this form may be subject to criminal and/or civil penalties, including fines and imprisonment.” The calculations for failure to comply are a little confusing. It is based upon the percentage of your mail that exceeds the minimum 30%compliance threshold. This percentage is applied to the entire mailing at $.07 per piece.
For example: 5000 piece mailing with 500 COAs (change of address on file with the USPS NCOA system) only 20% (100) were up to date, leaving 400 (80%) un-corrected. In order to comply with Move Update no more than 30% of COAs (150) can have un-corrected addresses. Penalty rate is calculated by subtracting USPS threshold 30% from the 80% not corrected to arrive at percent of mailing subject to a penalty, in this case its 50%.
Apply 50% penalty rate to entire 5000 piece mailing to determine number of pieces subject to .07 penalty in this case 2500 or $175.00
What are the chances of getting caught?
It is getting easier all the time for the USPS to catch this as their focus is absolutely on reducing costs. UAA (Undeliverable as Addressed) and FOE (Forwarding Order has Expired) mail are the biggest areas they have identified to save money. The mail today is becoming “Intelligent” with mailer identification embedded in the IMB (intelligent Mail Barcode) and IBIP (Information Based Indicia Program) meter indicia (All Phase 6 meters) it won’t be hard to find or account for as computers will do the hard work.
So stay compliant with Move Update and your mailing performance will improve, just like a healthy body that eats right and exercises should. Hopefully this has diminished your fears and confusion regarding Move Update requirement, so eat your vegetables, they’re good for you!
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