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JULY 2010

FRONT PAGE WHAT'S UP INSIDE SCOOP
KEEPING POSTED SPOTLIGHT ON SUCCESS INFO@USPS

FRONT PAGE

DELIVERING THE FUTURE

U.S. POSTAL SERVICE UPDATE

On March 2, when the Postal Service announced an ambitious action plan to ensure a viable Postal Service for the coming years, one message was crystal clear - there is no one answer to deliver the Postal Service from its current crisis. It has been four months and much has transpired. The Postal Service has published Update from the U.S. Postal Service on usps.com in Delivering the Future. Below is the Update which answers questions and comments about our plans for a revitalized USPS.

It’s being said that the current financial crisis the Postal Service is facing is a result of poor planning, and postal management should have seen this day coming long ago.

The Postal Service has achieved cost savings of $1 billion per year every year since 2001; in 2009 the cost savings reached $6.1 billion by reducing its workforce by the equivalent of 65,000 full time employees. In fact, it was able to reduce its career workforce from an all time high of 802,970 in 1999 to today’s 588,561, while focusing on improving service and growing postal products. The current economic crisis is historic and unprecedented, resulting in a 20 percent loss in mail volume in three years. We have been adjusting our operations and workforce to reflect declining volume loss.

Some are asserting that the current price increases the Postal Service has proposed are somehow illegal.

On March 2, the Postal Service unveiled its ambitious action plan for the future, a plan designed to ensure a viable Postal Service for the country well into the future. One element of that plan was a modest price change to become effective in early 2011. On average, the proposal calls for a 5.6 percent increase, clearly permissible under the “extraordinary or exceptional circumstances” clause of the law. This “exigent” rate case would have some classes of mail see somewhat larger increases than the average and this is intended to move those classes closer to covering their costs as is required by law. Clearly, over the long run, no organization can continue to sell a product at a loss and the Postal Service is no exception.

It’s also being suggested that we wouldn’t be in this fix if management had dealt with a bloated, overpaid postal workforce.

In 1999, there were 802,970 career Postal employees, compared to today’s workforce of 588,561 — a reduction of more than 215,000 employees. Salaries are set through collective bargaining agreements. In the absence of an agreement, the law requires that the two sides submit to binding arbitration. The Postal Service has been and will continue to address the cost of employee benefits through the collective bargaining process. For example, the Postal Service has reduced the employer contributions to health benefits by 1 percent per year for the life of the last collective bargaining agreement. Unfortunately, to date, we have been unable to effect a change in the law requiring that the financial state of the Postal Service be taken into account in interest arbitration awards. In the meantime, the Postal Service will continue to work with its unions to reach the best possible agreements for both parties.

Some are saying the Postal Service is not doing enough to structure its mail services to meet today’s changing needs.

Our action plan calls for continuing to modernize customer access by providing online services 24/7 and providing services at places more convenient to customers — grocery stores, pharmacies, retail centers, office supply stores, including Office Depot stores. Increasing and enhancing customer access through partnerships, self-service kiosks, and a world-class website, usps.com, while reducing costs also are underway. The necessary legislative and regulatory changes must be made to create the flexibility to introduce new non-postal products that reflect changing customer needs, generate needed revenue, and allow the Postal Service to compete more aggressively and fairly in the marketplace. Still, working within the confines of the existing law, we have been able to expand our partnership with eBay to include eBay China and we’ve offered volume incentives for Standard Mail and First-Class Mail to encourage new business and reward our long-standing customers. The Postal Service of the future will look different, but it will continue to drive commerce, serve communities and deliver value.

While acknowledging the action plan released on March 2, some think nothing’s happened.

We’ve been very busy. In the four months since announcing the action plan we are on track to eliminate $3.5 billion in costs and have identified necessary steps to erase $123 billion in expenses over the next 10 years. Efforts to expand access to postal products and services include a partnership with Office Depot for package services and with the U.S. Department of Commerce to streamline processes for small businesses to ship internationally. Revenue generating initiatives include two mail volume incentives to encourage growth in highly profitable saturation and standard mail. And the Postal Service filed a formal proposal with the Postal Regulatory Commission to move to a five-day delivery schedule and successfully moved a percentage of Post Office boxes into the competitive side of our business, allowing us to compete head on with UPS and private sector companies while providing new opportunities for customers. We’ve also created new opportunities for mailers to improve response rates on direct mail pieces by implementing standards for attachments. We added new options to increase the number of ways mailers can design booklets that are more appealing to recipients. Most recently, after working with the periodicals community, we expanded the content eligibility so that magazines could include supplements that reach an even broader customer base.

It’s been suggested that Postal Service should be broadening its customer base rather that increasing its prices.

The following initiatives have been announced or expanded since the beginning of March, when the Postal Service announced its action plan: an export agreement for shipping services with eBay China, pharmaceutical recycling through the mail with the U.S. Department of Veterans Affairs, expansion of the number of Post Offices accepting passport applications, launch of partnership with U.S. Department of Commerce targeting small- and medium-sized businesses to help them expand to international markets, “Reply Rides Free” incentive for marketers and advertisers who use First-Class Mail, expansion of the Saturation Mail incentive program to include High Density advertisers, as well as the Summer Sale for Standard Mail. RFPs are being sought today to help small- and medium-sized businesses more easily use and benefit from direct mail.

Some are saying that if the Congress would only fix the Retiree Health Benefit Fund prepayment, the Postal Service’s troubles would be over.

When on March 2, the Postal Service announced its action plan for the future, there was one message that was crystal clear: there is no one answer that would deliver the Postal Service from its current crisis. The Postmaster General was emphatic: it would take a suite of solutions to right the ship and position the Postal Service for future. A restructuring of retiree health benefit payments was one element but there was more: adjust delivery days to better reflect mail volumes and customer habits, permit the Postal Service to evaluate and introduce new products so that we can respond to changing customer needs, allow prices for mailing services to be based on demand for individual products, and yes, as discussed on March 2, a modest exigent price increase to be effective in 2011. A one- or two-year deferral of RHB is still insufficient to close the financial gap. Five-day delivery and the exigent case would still be necessary to stay within the borrowing limits.

The Postal Service shouldn’t think they’re prevented by Congress from closing money losing Post Offices; they should just close them and that goes for other redundant facilities as well.

In fact, the Postal Service is absolutely prohibited by Congress from closing Post Offices based solely on economic circumstances. Put simply: we cannot close Post Offices that don’t generate enough revenue to cover their expenses. There are 26,000 Post Offices with expenses that exceed revenue. The Postal Service is asking for legislative and regulatory change that would give us the authority to close these Post Offices. Until then, we will continue to modernize and expand customer access by providing services more convenient to customers — grocery stores, pharmacies, retail centers, office supply stores — and increase and enhance customer access through partnerships, self-service kiosks and a world-class website, usps.com, while reducing costs. In those instances where the Postal Service is given control over closing facilities, we have done just that. In 2009 alone, we closed nine Airmail Centers, transferring those operations to other facilities and completed the streamlined National Distribution Center delivery system. Almost 40 consolidations of Area Mail Processing plants have been completed and 22 more are in process.

POSTAL SERVICE EXPANDS PARTNERSHIP

GATEWAY TO GLOBAL TRADE SIMPLIFIED

Commerce Secretary Gary Locke and PMG Jack Potter.
Commerce Secretary Gary Locke and PMG John Potter.

The Postal Service recently expanded its partnership with the U.S. Department of Commerce to help support the government’s newly established National Export Initiative (NEI). The initiative, unveiled earlier this year by President Obama, calls for a doubling of exports over the next five years. This will be achieved by providing foreign-market expertise to businesses interested in expanding their exports. The USPS Global Business team will work with the Commerce Department’s International Trade Administration and U.S. Commercial Service to provide free resources and tools to interested businesses. The first phase of this initiative will target businesses currently shipping to one foreign market through USPS.

“By bringing together the global market know-how of the International Trade Administration with the capacity of the Postal Service to move goods and merchandise worldwide, we’ve created a simplified on-ramp for businesses of all sizes to engage in global commerce,” said Postmaster General John Potter.

Business customers interested in learning more about exporting and the partnership can visit export.gov. To learn more about international shipping, customers can go to usps.com/international.

A WORLD OF SHIPPING OPPORTUNITIES

THINKING GLOBALLY CAN GROW YOUR BUSINESS

Publication 613 brochure cover.

With online shopping a worldwide activity, more U.S. businesses are shipping globally. The Postal Service has products and resources that can help companies take advantage of growth opportunities in the international marketplace.

A new global shipping guide, Publication 613, Shipping International Packages, now is online at usps.com/cpim/ftp/pubs/pub613.pdf. It’s also available at Post Offices across the country, or ask your sales representative for a copy.

“This guide is a great tool,” says Jo Ann Miller, director of International Marketing. “It takes the guesswork out of international shipping.” Pub 613 is a step-by-step guide to shipping around the world using Global Express Guaranteed, Express Mail International, Priority Mail International and First-Class Mail International. It includes information on packaging options as well as labels and customs forms required for mailing to international destinations.

When shipping internationally, a way to save money is by understanding duty and fees regulations and shipping products that fall under the minimum value amount for a country. For more information, refer to the export.gov website at URL; http://www.export.gov/logistics/eg_main_018142.asp.

You also can save money by using a postal-qualified wholesaler to ship your materials overseas. A wholesaler combines mailings from other companies to get volume discounts and passes the savings on to its customers. In turn you can pass the savings on to your customers to help secure additional business.

Want more information on international shipping? E-mail globalbusiness-sales@usps.comand USPS will help point you in the right direction.

KEEPING THE PUBLIC’S TRUST

USPS RANKS FIRST AMONG FEDERAL AGENCIES

For the sixth consecutive year, the Postal Service has been named the “Most Trusted Government Agency” by the premier privacy trust study in America. According to the Ponemon Institute, more than 87 percent of the 9,000 Americans surveyed ranked USPS first among 75 federal agencies.

“We have a 230-year tradition of securing the mail and protecting our customers’ personal information,” said Delores Killette, vice president and Consumer Advocate. “This survey clearly demonstrates that Americans continue to trust and depend on the Postal Service to protect their privacy.”

The average score among federal agencies included in the 2010 survey was 38 percent, down from 50 percent last year.

WHAT’S UP

MAKE IT EVENTFUL

The mailing industry’s next big event, National PCC Day, is Sept. 15 and will feature a keynote address by Postmaster General John Potter and appearances by other postal executives. The remarks will be timely, as the new fiscal year begins Oct. 1.

“The network of PCCs around the country is an important venue for sharing information and exchanging ideas about Postal Service products, programs and procedures that affect business mailers,” says Steve Kearney, senior vice president, Customer Relations. “Working together, we keep mail a strong and effective channel for communications and commerce.”

Many local PCC events are planned. For more information, go to the national PCC website at usps.com/pcc.

PRC REPORT RECOMMENDS REIMBURSEMENT

The Postal Regulatory Commission (PRC) has released a report that concludes the Postal Service contributed more funds than necessary to the Civil Service Retirement System (CSRS). The independent actuarial report recommends the government reimburse $50 billion to $55 billion to USPS. This follows a finding by the Office of Inspector General that USPS had overpaid CSRS by $75 billion.

The PRC’s report does not necessarily mean the Postal Service will receive a refund. But by law, the Office of Personnel Management, which is responsible for fixing the Postal Service’s CSRS pension liability, now must reconsider its calculation of USPS pension assets in light of this report and submit the results of its reconsideration to the PRC, Postal Service and Congress. To read the report, go to prc.gov.

GREATER FLEXIBILITY

PO Box image.

The PRC has approved the Postal Service’s request to change the designation of some PO Boxes from market dominant to competitive. The ruling affects about 32,000 PO Boxes in 49 locations. USPS can test consumer interest in enhancements to the current PO Box offering and will help shape future PO Box service and access strategies.

“Today’s marketplace is fast paced,” says Stephen Kearney, senior vice president, Customer Relations. “Moving some PO Boxes into the competitive product category gives the Postal Service greater flexibility to innovate and to respond more quickly to the changing requirements of our customers.”

This is just one action in a plan announced March 2 that includes process improvements, increased productivity and an array of legislative and regulatory changes necessary to maintain a viable Postal Service for decades to come. The plan also stressed that USPS will make use of opportunities under current law to increase revenue and enhance customer service.

NEW OFFICERS ANNOUNCED

From left, Vice President Area Operations, Capital Metro Area, Timothy Haney; Vice President Area Operations, Northeast Area, Jordan Small; Vice President, Network Operations, David Williams; and Vice President, Engineering, Kelly Sigmon.
From left, Vice President Area Operations, Capital Metro Area, Timothy Haney; Vice President Area Operations, Northeast Area, Jordan Small; Vice President, Network Operations, David Williams; and Vice President, Engineering, Kelly Sigmon.

As part of ongoing efforts to increase service levels, improve flexibility and speed, and meet the ever-changing dynamics of the marketplace, Postmaster General John Potter announced four new officer assignments within Operations. Timothy Haney has been named vice president of Area Operations for the Capital Metro Area. The new vice president of Area Operations for the Northeast Area is Jordan Small. David Williams is now vice president of Network Operations and Kelly Sigmon is vice president of Engineering.

FYI

Want to be a workshop presenter at the 2011 National Postal Forum in San Diego? The call for papers is now under way. Submit your proposal online at npf.org through the “NPF Call for Paper” link. Deadline is Aug. 20.

Inside Scoop graphic: With employees in every country, national postal services are one of the world's largest employers.

KEEPING POSTED

2010

  • National PCC Day, Sept. 15

2011

  • National Postal Forum, May 1-4, San Diego, CA

INFO@USPS

YOUR LINKS TO MAILING RESOURCES

U.S. Postal Service: usps.com
National PCC Network: usps.com/pcc
RIBBS: ribbs.usps.gov
Questions? Comments? Send an e-mail to pccinsider@usps.gov
Sign up for PCC Insider at usps.com/pcc, select “PCC Insider Registration”
Back issues: PCC Insider online archive
Back issues: PCC Management Insights articles online archive

SPOTLIGHT ON SUCCESS

SMOOTHER SAILING THROUGH AN UNCERTAIN ECONOMY WITH MAIL

National PCC logo

In today’s economy, the value of mail is more important than ever. With a theme of “Sail With Mail — Learn Its Value,” the Long Island PCC’s annual mailing conference focused on helping businesses learn how to use mail to connect with customers and increase profits.

“The conference is the premier event of the Long Island PCC,” says Jeff Ehrlich, industry co-chair and president of Fulfillment Plus based on Holtsville, NY. “For the tenth year in a row our organization brought more than 200 people together.”

The focus of the mailing conference was to assist customers with every aspect of using today’s mail to improve response rates, retain and grow business, and save money while increasing profits. The daylong event June 21 featured educational sessions, exhibitors and an opportunity to earn a professional certificate. At the sessions, customers could focus on three areas — direct mail, Intelligent Mail service or mailing concepts. Keynote speaker was then Vice President, Northeast Area, Timothy Haney, who gave an overview of the Postal Service’s plans for the future and an update on Northeast Area service. Haney has returned to the Capital Metro Area as vice president of Area Operations.

“This event also drives membership in the Long Island PCC as it provides first-time attendees the chance to experience the value of the PCC through networking with the exhibitors, speakers and other mailers,” says Ehrlich.
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