PRC Tells the Postal Service to Account for Decline in Flats Service

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Cost coverage of flats receded and 24 workshare discounts exceeded norms, according to the 2015 Annual Compliance Determination.

Directives issued to the Postal Service last year to improve service for flat mail instead resulted in a further declines in handling performance for flat mail, a classification that includes catalogs. That was one of the key findings of the PRC's Annual Compliance Determination (ACD), released yesterday. The mandated report analyzes USPS's ability meet financial and service targets specific operations in 2015.

Covering the costs of delivering Standard Mail Flats has been a nagging problem for the Postal Service since 2009, when its coverage level slid to about 82% from 94% the previous year. Cost coverage held at about 83% in 2014, but slipped precipitously to 80% last year.

The Postal Service told the PRC that the decrease in cost coverage resulted from three cost methodology changes that increased unit costs by a penny, or 2.1%. It also reported that an increase in flats volume last year contributed to an increase in the aggregate contribution shortfall. The PRC has asked the Postal Service to provide it with a more detailed assessment of flats issues within the next 120 days.

The ACD also reported that 24 workshare discounts were not up to statute because the work performed by mailers could have been done more cheaply by the Postal Service itself. Four of those workshare discounts were excepted by the PRC, however, because the removal of the exigent surcharge in April will align them with avoided costs.

USPS offers workshare discounts for letters, flats, parcels, carrier route, high density, and saturation letters.

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