USPS Asks PRC to Reject AMA’s Request

The U.S. Postal Service wants the Postal Regulatory Commission to reject a motion by the Affordable Mail Alliance to dismiss the Postal Service’s exigent rate hike proposal filed on July 6.

USPS officials said the AMA made “manifestly misleading comparisons” and advanced a “strained and fatally flawed interpretation” of existing law. The AMA filed its motion on July 26, claiming the exigent rate hike – an average of 10 times the rate of inflation – violates the cost controls Congress implemented to protect customers.

In a statement released Aug. 2 the USPS listed a “number of mistakes, misrepresentations and misinformation” contained in the AMA’s request, including:

The Postal Service has proven extraordinary circumstances: Precipitous, unprecedented and unforeseen drops in mail volume are inarguable and meet the definition and spirit of the law. The worst recession since the Great Depression meets this criteria, according to the USPS.

The AMA knows that the Postal Service has very specific legislative and regulatory restraints in labor and workforce issues: The USPS has no discretion under the law to suspend any benefits, payments, including matching contributions to workers’ Thrift Savings Plans. More than 93% of private sector companies and 88% of public sector companies do not have union representation. Those that do are not forced to rely on an interest arbitrator to resolve contract negotiations.

The AMA erroneously and purposefully compares the Postal Service to its private-sector competitors: The Postal Service is not a private sector company and faces unique constraints. Many of the cost-cutting efforts by other shipping companies are not an option for the Postal Service. The USPS argues that its rivals raised rates, increased surcharges, adjusted service levels and stopped payments into 401 (k) plans — these are either not options or require regulatory approval for the Postal Service.

The Postal Service clearly and indisputably demonstrated honest, efficient and economical management: The USPS 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 through attrition by the equivalent of 65,000 full-time employees. The Postal Service also halted construction of new postal facilities; negotiated an agreement with the National Association of Letter Carriers that adjusts letter carrier routes to reflect diminished volume; and consolidated mail processing facilities.

The estimated price cap is 0.6% while the average exigent price increase is 5.6%. Standard mail flats or catalog rates would go up 5.1% if the rate case is passed and increases are implemented Jan. 2, 2011. The PRC has until Oct. 4 to render a decision in the proposed exigent rate case.

Jerry Cerasale, senior vice president of government affairs for the Direct Marketing Association and member of the Affordable Mail Alliance, is encouraged that “the USPS did not contest the Alliance’s assertion that postal costs are too high and were not adequately reduced during the recession. Rather than hitting its customers with 10 times inflation price hikes, it should be working with customers to remove the obstacles USPS cites that prevent it from efficient costs.” Cerasale says the USPS has taken the wrong road. “Raising prices will hurt mail volume when more mail is what is needed.”