Straight Talk: Postal Issues: What to Watch for in 2006
As a member of the Mailers Technical Advisory Committee to the Postal Service (MTAC) and vice president, postal affairs, for Bloomingdale, Ill.-based consultancy Diamond Marketing Solutions, Donald Harle knows a thing or two about postal issues. For the past 13 years, he's been actively involved in MTAC's Mailing and Fulfillment Services Association, one of 54 associations represented on the 40-year-old group's roster. And next month, he will be inducted as the organization's industry vice-chair.
Harle, who started his direct marketing career with Encyclopedia Britannica and Bankers Life and Casualty, and is a past president of the Chicago Direct Marketing Association, spoke with me recently about some of the current and upcoming postal issues that should be top-of-mind for mailers.
TG: What are some of the key issues for MTAC right now?
DH: How we are going to respond to postal reform when and if it happens [for] one. That's a key issue affecting all elements of postal activity these days. Some of the more immediate tasks we are working on [include] several programs with the Postal Service to reduce undeliverable mail. ... We are trying to partner with the industry with the information we can provide and compile before the address gets on a mail piece to reduce as much undeliverable mail as possible.
For the last 20 years, work-share discounts have been, to the great extent, [based on] how we bundle or present the mail to the Postal Service. In the future, a lot of the work-share programs are going to be information-based. If [we] can give the USPS a good, detailed record of what is in that mailing, where it's going to go, and when it's going to get to those destinations, that is a big help in staffing and coordinating the flow of the mail. Some of the future work-share programs are going to be tied more around information sharing than how we package or present mail.
TG: Looking forward, what are some of the things mailers need to be aware of?
DH: There will probably be a rate increase proposal coming from the Postal Service, and that will be a true, omnibus rate case, where the relationships of the various rate categories may change. The last two rate cases we've had were across-the-board, flat percentage increases. It's been several years since the Postal Service has adjusted the relationship between its rates, based on its changing cost experiences. So that's going to be a big issue over the next year. ... Under normal circumstances, the process takes about a year. And that should be the case here. The expectation is that the Postal Service will present its proposal to the rate commission sometime in the first half of 2006. And it would take about a year to move it through the system.
TG: How will postal reform really affect mailers if and when it happens?
DH: One key element that has been tied into postal reform in the last few years is the elimination of the CSRS [Civil Service Retirement System] escrow. Originally, mailers were hopeful that we were going to get this escrow payment eliminated. It looks now [like] the escrow will be converted to some long-term retiree health benefit obligations. So in other words, we probably won't see immediate rate relief from it. It's money the post office will have, but it's going to impact over a longer period of time than that.
Some other issues that are key in postal reform include rate caps and labor costs. What kind of rate caps will there be? Will there be a true cost-of-living rate cap? The House and the Senate versions of this legislation differ on that. Will the Postal Service get any help, if that's the right word, from the new legislation in how to control labor costs? Can it negotiate benefits? Right now, Congress dictates the benefits. What can the Postal Service do about employee assignments? It has made good progress in the last few years reducing the complement. But how will the legislation impact the Postal Service's ability to control its workforce?
Another key is the regulatory process for the post office. Right now, its only real regulatory process is the rate commission's review of rates. Under the proposed legislation, the rate commission would become more of a true regulatory commission. The Postal Service is concerned that this will add another layer of bureaucracy and will tie its hands ... with regard to holding costs down. However, some people in the mailing industry [feel] they need this protection if the USPS is going to have more freedom in pricing its products.
The mailing industry [does not want anything to] happen that would restrict some of the things we have done over the years in work-sharing and the ability to create more work-sharing opportunities. There are other issues, but for most people in the mailing industry, those are the key issues.