Mailers to Congress: End Postal Status Quo, Implement Reform

Congress needs to initiate immediate, sweeping reforms to encourage volume growth and sustain the U.S. Postal Service into the future, members of the mailing community told lawmakers yesterday.

At a hearing in Washington yesterday, mailers called on members of a special House panel on postal reform to support changes that will stabilize rates, encourage worksharing and grant the USPS flexibility to manage technology and facilities. Postal management needs these changes to preserve universal service and keep rates down, mailers said.

Reforms must be dramatic and be done now, mailers said. Nigel Morris, vice chairman and co-founder of Capital One Financial, warned lawmakers against attempting reform in a “one-off, piecemeal” fashion.

“We today face some very grave threats to the USPS business model,” Morris said. “The USPS’ success is critical to our success.”

Mailers also called on Congress to release savings from last year’s Civil Service Retirement System Funding Reform Act that are currently scheduled to be set aside in an escrow fund beginning in 2006 and relieve the USPS of the cost of military service time benefits for USPS retirees. They universally mentioned those two issues as the first problems Congress should tackle.

Those who testified at the hearing — heads of postal-using companies and organizations along with the chief executives of Pitney Bowes and FedEx — mentioned different priorities for long-term changes to the postal service. Ann Moore, chairwoman/CEO of Time Inc., said rates should be pegged to inflation to create a stable model for postal rates.

Rate stability would remove the uncertainty mailers face when launching new projects and encourage volume growth, Moore said.

The USPS should retain its public nature but should be run more like a business, mailers said. They supported a new governance model, increased focus on the postal service’s core business of universal service, more open accounting of USPS finances, more flexibility for management and greater implementation of new technology to reduce costs.

Facility decisions should be based on economics, not politics, said William Davis, president/CEO of R.R. Donnelley & Sons. Closing post offices is hard but necessary to ensure a strong postal service in the future.

“Closing facilities is one of the hardest things I have to do,” Davis said. “It’s not fun. But I can also tell you that because we have done these things we have become a stronger and better company.”

The barriers to worksharing between the USPS and the mail industry should be removed, mailer said. Morris described the process of obtaining worksharing agreements as “onerous” and Davis pointed out that it took 18 months for mailers to work out a three-year trial of a co-palletization arrangement with the USPS.

“Doing the same deal with a private sector partner would take six to eight weeks,” Davis said. “And if it didn’t work, we’d undo it.”

The hearing yesterday was the last in a series over the past two weeks on postal reform before members of the House Government Reform Committee and the Senate Governmental Affairs Committee.

One hearing in the series was delayed due to the discovery of a substance containing the toxin ricin at a Senate office building.

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