Mailers, USPS Competitors Canvass HR22

The Mailers Coalition for Postal Reform supports basic tenants of the proposed Postal Modernization Act, but is not fully satisfied and wants to see changes.

HR22 — discussed at a hearing held in Washington this month by Rep. John McHugh (R-NY), chairman of the subcommittee for the U.S. Postal Service — separates classes of mail into competitive and noncompetitive categories. The hearing marks the last time the four-year-old bill will be discussed, and the House is expected to vote on the matter soon, according to sources.

Jerry Cerasale, senior vice president of government affairs for the Direct Marketing Association, New York, spoke on behalf of the Mailers Coalition — whose members include the Advertising Mail Marketing Association, American Express, the DMA, the Mail Order Association of America and the Parcel Shippers Association. He offered some changes to the bill that he said would protect mailers from sudden and drastic rate increases.

“The [postal] service should not have the carte blanche discretion to set rates that HR22 affords competitive classes, if, in fact, the postal service has a monopoly over that class of mail,” said Cerasale, adding that the HR22 provision that increases the minimum mark up for competitive classes of mail to equal the average mark up for all postal products is too restrictive.

“This provision is counterproductive to the goal of giving the postal service the tools to survive in the 21st Century,” he said, and he proposed that the commission calculate a minimum contribution for competitive classes of mail using revenue-weighted standards.

“This would maintain the level playing field,” Cerasale said.

The coalition also proposed opening up the provision that allows the USPS to enter into negotiated service agreements with customers tied to guaranteed mail volume. It should also handle complaints from other parties who can meet the terms of the NSA but are denied a similar arrangement. In these cases, he said, the PRC must render a decision on the complaint within 90 days, subject to judicial review.

Witness Robert Kamerschen, chairman of Advo Inc., Windsor, CT, a large direct mail company, agreed that the HR22 provision on NSAs should be reworked to increase its strength.

Speaking on behalf of the Saturation Mailers Coalition, a trade group representing more than 40 companies, he suggested a framework where NSAs would be self-financing and would require customers to earn their reduced rates by bringing in additional revenues.

This way, NSAs would be available to any mailer who qualifies, regardless of size, and all USPS contracts would be a matter of public record.

“We’re not trying to get a bigger piece of the postal pie,” said Kamerschen. “On the contrary, our goal is to sustain and grow the whole pie.”

The hearing, which also included witnesses from the Department of Justice, other mailer groups and USPS competitors United Parcel Service and FedEx, offered few surprises.

James P. Kelly, president/CEO of UPS, said that USPS legislative reform should focus on creating greater accountability and oversight of the agency to ensure a level playing field for competitors and greater protection for consumers.

“It’s time to have this government agency refocus on its primary mission of providing superior universal letter-mail delivery,” said Kelly. “[To do so], Congress should, at a minimum, strengthen the Postal Rate Commission to increase the postal service’s accountability to consumers and taxpayers.”

Kelly urged Congress to give the PRC the authority to make binding decisions on all postal rates — including jurisdiction over international rates and service — and authority over the postal service’s revenue requirement to ensure that it is covering the costs of each product.

Kelly also noted that PRC oversight is more critical in light of a recent announcement that the USPS will partner with DHL to provide two-day delivery to Europe at below-market rates.

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