PRC tells USPS Load Leveling not ready for prime time

March 29, 2014

Earlier this week the Postal Regulatory Commission issued its advisory opinion on Load Leveling, the plan to slow down delivery of some Standard mail to help redistribute the large volume on Monday.  The Commission has essentially told the Postal Service that its plan is not ready for implementation.  The advisory opinion says that it would be a good idea to do more testing in the field and to work more closely with the big mailers, the ones who will be most impacted by the changes.  The opinion is here, and the PRC press release is here.

As the Commission concludes, “The Postal Service’s Load Leveling Plan presents a potential means of leveling the daily delivery load of DSCF Standard Mail; however, the plan appears to need more development before being implemented on a nationwide basis.”

The advisory opinion recommends that the Postal Service do several things before proceeding with a national rollout: a cost-benefit analysis to ensure the plan is cost effective, additional field tests, some volume impact studies, and more extensive customer outreach.

Who knows what will happen now?  It has seemed for a while that the Postal Service intended to go ahead with the Load Leveling plan no matter what the PRC or anyone else said about it.  That’s how several of the big mailers felt anyway, and one of the biggest, Quad/Graphics, claimed that the Postmaster General told mailers in a webinar on January 10, 2014, that he planned to go ahead with the Load Leveling Plan regardless of the Commission’s opinion. 

That also seemed to be the tone of the Postal Service's Final Rule on Load Leveling, which was published in the Federal Register on March 5.  The Rule mentioned the advisory opinion only in a footnote and gave no indication that the Postal Service was waiting to hear from the Commission before proceeding. 

Instead, the Rule stated that the effective date of implementation would be April 10, 2014 — just a couple of weeks after the expected date of the advisory opinion.  The Postal Service thus left itself virtually no time to follow up on any recommendations the Commission might offer.

An article that appeared yesterday in Direct Marketing is entitled "USPS Delays Load-Leveling Plan," which seems to indicate that the Postal Service now plans to postpone implementation.  But the article offers no evidence for this.  In fact, it quotes Postal Service spokesperson Sue Brennan saying simply, "The Postal Service has received the PRC's Advisory Opinion and the recommendations are being reviewed."  Ms. Brennan says nothing about delaying implementation.

The advisory opinion does create a dilemma for the Postal Service.  Will it accept the Commission’s recommendations and do more work before deciding to move ahead, or will it tell the PRC, "Thanks for your advice, but management knows best and we're proceeding as planned"?  The answer to that question will say a lot about how the Postal Service views PRC advisory opinions.

Postal Service releases its February financial statement: First impressions of the rate increase?

March 24, 2014

One short month isn’t a significant amount of time to measure the impact of the rate increase that went into effect at the end of January, but the Postal Service's financial report for February came out today, and the numbers may provide an initial impression.   The report is here.

While it is way too soon to say how mailers will ultimately respond to the rate increase, it looks as though higher rates are not driving away vast amounts of mail, and overall, the Postal Service looks to be doing okay for fiscal year 2014.  

Year to date, five months into the fiscal year, the Postal Service has made a profit of $1.1 billion in controllable operating income.  During the same period last year, the Postal Service had a controllable operating loss of $102 million.

If you include the Retiree Health Benefit Fund prepayment (which isn’t even being made) and a workers’ comp adjustment, the Postal Service ended the period with a net operating loss of $1.7 billion.  That’s much better than last year at this time, when the net loss was $2.5 billion.

For the month of February, the Postal Service had a controllable operating profit of $166 million.  If you figure in the RHBF payment and a workers’ comp adjustment, the net loss was $369 million.  That too is much better than last February, when the operating loss was $825 million.

The improved numbers for February are due in part to the rate increase.  The average piece of First Class mail brought in 43 cents in February 2013; this February, the average was 45 cents.  For Standard mail, the average last February was 21 cents; this year, it was 22 cents.  Those pennies add up.

POStPlan implementation: 9,000 post offices downgraded, 4,000 to go, RIF's coming

March 23, 2014

The Postal Service is continuing to implement POStPlan, its initiative to reduce hours at 13,000 post offices and replace their postmasters with part-time workers.  At this point, POStPlan has been implemented, or will be implemented soon, at almost 9,000 post offices.  Hours at the remaining 4,000 will be reduced over the coming months.  By October, the institution of the small-town career postmaster will become a thing of the past at almost half the country's post offices.

As best as we can figure it using USPS lists, about 8,800 post offices have had their hours reduced over the past year and a half (including those where implementation is scheduled over the next few weeks).  For another 300 offices, a public meeting was held recently or it's scheduled soon, but no implementation date has been announced.  

That leaves around 3,900 post offices where no meeting has yet been scheduled and implementation has yet to occur.   At many of these offices, there's currently a postmaster vacancy; at others, a vacancy will open up over the coming months if the postmaster can find a new position.  If implementation continues at the current rate (about a hundred a month), some 600 of these post offices will have their hours reduced during the spring and summer.  

In the end, there will be something like 3,300 post offices where the postmaster will still be on the job as of September 30, 2014.  On that date, these postmasters will lose their full-time jobs as part of a Reduction in Force — i.e., they will be RIF’d.

Using some lists that the Postal Service has made available, we've put together the following lists of POStPlan post offices:

  • List and map of approximately 8,850 post offices where implementation has already occurred or been scheduled;
  • List and map of 290 meetings scheduled for February - April, 2014;
  • List and map of 3,920 offices where POStPlan has yet to be implemented or a meeting scheduled.

Note that these lists are based on USPS reports, but some errors inevitably occurred while processing the data.  The official lists of meetings are here; the implementation reports are here.

The masquerade continues: Playing politics with the Postal Service's unfunded liabilities

March 17, 2014


The House subcommittee on Federal Workforce, US Postal Service, & the Census held a hearing on Thursday, March 13to receive testimony on the Postal Service’s $100 billion “unfunded liability.”  Initially the hearing was billed as another Darrell Issa special.  Issa is chairman of the Oversight and Government Reform Committee, under which this subcommittee serves, and the hearings he has scheduled to look into controversies and scandal  — real, imagined, or manufactured — have become notorious for showcasing Issa’s brand of political theater and for their pure entertainment value.

Thursday’s hearing was not chaired by Issa, though, and he was nowhere to be seen.  The subcommittee is chaired by Blake Farenthold, a Tea Party favorite from Texas, and his hearing turned out to be rather anticlimactic.  (The video is here.)

Billed as an inquiry into the Postal Service's large and troubling unfunded liabilities, the hearing featured Frank Todisco, the chief actuary from GAO and a regular at postal related hearings.  Jeffrey Williamson, the Chief Human Resources Officer and Executive Vice-President of the Postal Service, was also on hand, as were two actuaries from the Department of Defense (don’t ask why).  Their written statements can be found here.

The centerpiece of the Postal Service’s ongoing financial crisis has been the idea that the agency has accumulated large unfunded liabilities that threaten its very existence.  We are given to believe that the ratepayers, postal employees and retirees, and, God forbid, the taxpayers may be on the hook for billions of dollars of liabilities.  In order to justify their agenda, the downsizers and dismantlers make these liabilities sound as dangerous and threatening as possible, even though the obligations represent decades of costs – in some cases as much as 75 years.

The fact is that the Postal Service is in the situation it’s in today largely because Congress created funding schedules and funding levels for pension and retiree healthcare obligations that exceeded standard accounting practice.  Only the most naïve or ideologically predisposed observer would believe that the way these obligations have been presented and accounted for represents anything other than an attempt to put the Postal Service in the most damaging financial straits possible.

The history of these obligations is long and well known.  We’ve discussed the nature of these liabilities here at STPO many times, including in this recent post that detailed the latest attempts to gin up hysteria through the use of emotionally charged words like “bailout”, “bankruptcy,” and “default.” Rather than repeat the same story again, perhaps it would be useful to take a step back and look at what these obligations represent and what dangers they really present.

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