Ruth Goldway, chairman of the Postal Regulatory Commission, speaks with Direct Marketing News’ news editor Frank Washkuch about how the US Postal Service can improve its financial situation as well as consumers’ response to possible five-day home delivery.
Direct Marketing News (DMN): What does the US Postal Service need to do to right its financial ship?
Ruth Goldway: The US Postal Service needs to work actively and collegially with the postal community to address the issue of the healthcare retiree benefits fund prepayment. I think these are issues that the whole mailing community agrees upon and that will need action from Congress. If you read the analysis of the Postal Service’s financial condition, which was in the decision that the Postal Regulatory Commission made on the exigent rate request, you can clearly see that we identify the healthcare retiree payment requirement as the most serious financial burden that the Postal Service has.
DMN: What are the next steps for the USPS to address that?
Goldway: I think they have to work very hard with the mail community to get legislative relief. They also have to work with the administration on reinterpretation of the (Civil Service Retirement System) pension fund allocation, which might be able to give them some assistance as well.
DMN: What were the main reasons the PRC turned down the USPS’ request for an exigent price increase?
Goldway: We looked at the law very carefully and broke down the requirements spelled out in the (Postal Accountability and Enhancement Act) for a decision on an exigency rate requirement. We found that the USPS didn’t meet the specific requirements of the law. The law says they have to demonstrate that there is an extraordinary, exceptional requirement [for the increase], and then they have to make a request that is due to that extraordinary and exceptional circumstance. While they did demonstrate that there was an extraordinary and exceptional circumstance in the depth and the severity of the recession, their request for a rate increase was not correlated with the recession at all. Their explanation for their financial difficulties rested entirely in the problems that they are having in making the retiree healthcare benefit payments. We simply couldn’t – we would not have been following the law if we had accepted the Postal Service’s request as it was presented to us.
DMN: Can you explain the process for making a decision on five-day home delivery?
Goldway: The Postal Service filed a request for us to give them an advisory opinion on changing delivery from six to five days, and no time deadline with regard to that. We have made a commitment to move the process as quickly as possible under the Administrative Procedure Act’s requirements. We have held hearings and field hearings and have given the public an opportunity to comment.
The deadline for the parties involved to make their final presentations to us [was] October 25, and then we take the matter under advisement and try to review all the information we have to make a decision in November. We reserve making a decision until we have all the information in front of us – a complete analysis of the potential cost savings and the potential service changes – before making a recommendation. Hopefully we can make a recommendation sometime in early to mid-November.
DMN: You’ve been credited for advocating for the “Forever Stamp.” What other innovations must the USPS come up with to improve its financial situation?
Goldway: I think there are many innovations that the USPS can focus on. Unfortunately, they’ve spent much of their resources in the past half-dozen years focusing on cost savings, much of that necessary because of the burden of the PAEA on payments. But they do need to put resources into really innovating.
They need to develop a product in their First Class Mail category where they can provide additional service, from which they can request additional payment, and they need to find a higher value with a lower volume. I think that’s the basic formula. They will introduce shortly a product called Critical Mail, which is a step down from Priority Mail in their competitive products line, and that looks like a very interesting option for the Postal Service to gain some revenue.
They do need to take a better look at their entire competitive product line to see if they can gain more revenue than they have so far. They make money on those products, but they haven’t provided any great new products in that area. I think that there are ways to the Postal Service needs to work more closely with the social networking phenomenon to see how mail and hard copy mail could be intergraded into this new communications medium that has taken young people by storm. I am convinced that young people would like to have an easy way, through their texting and Facebook, to actually send some hard copy mail as well, and I think that is something that needs to be explored.