Tag Archives: Postal Regulatory Commission

Postmaster General Abruptly Announces Retirement

Postmaster General Jack Potter, after serving nine years in that role, announced his retirement today, effective next month.  Patrick Donahoe, current Deputy Postmaster General, will take over as the new PMG.

I have had the pleasure of meeting Patrick Donahoe several times.  While I found him genuine and approachable, I do not envy his newfound responsibility.  He is taking control of a ship in the midst of a massive storm.

During his tenure, PMG Jack Potter has seen highs and lows.  US mail volume hit its all-time high in 2006, processing 212 billion mailpieces, only to see a steep decline three years later to 177 billion units; 2010 is forecasted for 150 billion units.

There is no shortage of excuses for the rapid decline.  The Great Recession coupled with the rapid shift to electronic communications certainly top the list.  Combine mail volume decline with the congressional requirements for healthcare pre-funding, and it is no wonder that the USPS lost about $6 billion for its 2010 fiscal year.

The USPS needs to make significant changes to correct its rapidly declining business.  The Washington Post’s profile of Donahoe leads one to question whether we will in fact see that change:

“Donahoe’s career path mirrored Potter’s for much of the last three decades. They both rose through the ranks from entry-level positions to mid-level managers to occupants of the best offices at the Postal Service’s L’Enfant Plaza headquarters. They graduated from the same management training program at the Massachusetts Institute of Technology… And much like Potter, Donahoe eagerly wants Congress to back off and let postal executives manage USPS in a more nimble way.”

Time will tell if Mr. Donahoe can bring about the level of change needed to correct the USPS path.  To paraphrase one high-level executive closely associated with the U.S. Post Office, this organization is the only one he can think of that has three products and 10,000 prices.

Donahoe, along with his 700,000 employees, have a formidable job ahead of them.

-Bob Makofsky at bmakofsky@conformerinc.com

USPS Appeals Postal Regulatory Commission’s Rejection of Price Increase

Late-breaking news learned here at the EMA annual meeting in Kansas City where the U.S. Postal Service is, is a hot topic for obvious reasons.

We told you here about how the USPS’s request to raise its prices more than the rate of inflation (“exigent rate case” a.k.a. an exception to the rule) was rejected by the Postal Regulatory Commission in the most beautifully crafted rejection letter you’ll ever read.

As of a few minutes ago, I’ve learned that the USPS is appealing this ruling. They really, really, really want to raise prices — “in a beaten-down economy” — above and beyond what they are legislatively mandated to do. Despite the fact that this regulatory body, and not to mention the business community and American public, believes that the USPS should not be solving their financial problems on the backs of their customers, the USPS seems to think an appeal is an easier path to pursue than cleaning up their own house.

You can just imagine the buzz here at the EMA conference. More news here as it unfolds…

-Sari McConnell at smcconnell@conformerinc.com

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First Class Mail Holds Steady

My quick analysis below shows that the Postal Regulatory Commission has held steady to their word of increasing postage rates in line with the Consumer Price IndexRates for 2009, implemented today show a 3% increase over 2008.

Interesting to note the rate of change vs. 2006 rates.  Due to the implementation of shape based postage in 2007, parcel rates have jumped 56%.

More than ever before, increasing postal rates mean companies should take a close look at their packaging choices.   Designing packaging to downgrade from parcels to flats saves money.  Starting today, a 4 ounce parcel costs $1.73.  Reconfigured as a flat the rate is $1.39, saving  $0.34.

Rate Comparison 2006 2007 2008 2009
First Class Mail
Parcel – 4 Ounces $ 1.11 $ 1.64 $ 1.68 $ 1.73
$ Increase from previous year na $ 0.53 $ 0.04 $ 0.05
% Increase from previous year na 48% 2% 3%
% Increase VS. 2006 Rate na 48% 51% 56%
Flat – 4 Ounces $ 1.11 $ 1.31 $ 1.34 $ 1.39
$ Increase from previous year na $ 0.20 $ 0.03 $ 0.05
% Increase from previous year na 18% 2% 4%
% Increase VS. 2006 Rate na 18% 21% 25%

The above table is an excerpt from a broad analysis of the rate increases.  For a full report, send me an email.

by Bob Makofsky bmakofsky@conformerinc.com