POTOMAC, MD – The chairman of the Postal Regulatory Commission is asking mailers for their input as it begins developing and implementing a modern system of rate regulation now that the postal reform bill has been signed into law.
The PRC issued an Advance Notice of Proposed Rulemaking in late February, asking for written comments by April 6. The comments will be published on the PRC’s Web site at www.prc.gov in order to get additional industry opinion. However, Dan G. Blair, the new PRC chairman, said that the PRC has not received any feedback as of March 13.
“I hope our conversation today will generate innovative thinking on a system of rate regulation that will best serve the needs of the postal service, the mailing community and the entire nation,” he told delegates at a U.S. Postal Service/PRC summit called “Meeting Customer Needs in a Changing Regulatory Environment.”
The new regulatory environment offers more flexibility for pricing competitive products such as bulk Parcel Post, Priority Mail, Express Mail and bulk International mail. The USPS now can create new products and services within the market-dominant basket.
Predictability and flexibility
Predictability and flexibility – and what those terms mean in the context of the new postal regulatory environment – were key issues discussed at the summit.
“From my perspective, the flexibility in the bill allows the postal service to do many new things,” said Bookspan CEO Markus Wilhelm, who spoke on a panel called “Meeting Customer Needs in the Market Dominant Category.”
Mr. Wilhelm said the flexibility might mean that the USPS could offer seasonal rates or incentives for mailing on different days of the week.
In addition, he suggested offering discounts for mailers that use the Direct Marketing Association’s Mail Preference Service. This service is designed to help consumers decrease the amount of the national nonprofit or commercial mail they receive at home.
“A lot of this is possible,” Mr. Wilhelm said. “A lot of us are direct marketers, so we are used to testing things. But most of all, we really should work together to understand our needs and requirements better.”
Louis Milani, senior director of business affairs and publishing operations for the Consumers Union of U.S. Inc., said he hopes the new legislation will allow for more predictable rate increases so that his company can plan better.
He said 40 percent, or 55 million pieces, of the company’s Standard mail is considered flat mail.
“The effect of the new PRC rates on these programs is profound, and we can’t react quickly enough when the rates are likely to go into effect,” Mr. Milani said. “We can’t change our programs in six weeks … we do not have room to maneuver in that time frame.”
He hoped the USPS will give mailers six months to prepare for increases.
Panel members as well as attendees at the summit discussed the challenge in the USPS being both predictable and flexible. One issue raised was the feasibility of predictable rate setting since the CPI-limited increases are applied to the mail classes as a whole, but not to individual products or subclasses. As a result, some prices can go up and some can go down.
Competitive products
The summit also examined the effect of the new regulatory environment on competitive products.
In general, mailers said they hope that the USPS would offer competitive pricing as well as discounts for large shippers. Mailers of market-dominant and competitive products said they hope that service standards will be on par with competitors’ standards.
“There is an opportunity to improve service in the competitive products category,” said James West, director of postal and government affairs at Williams-Sonoma Inc., who spoke on a panel called “Meeting Customer Needs in the Competitive Product Category. “Tracking and tracing is extremely important.”
Mr. West said his company currently uses USPS to deliver its catalogs, while its merchandise generally is shipped via USPS’ competitors.
The PRC’s Mr. Blair said that this summer the USPS would consult the PRC to develop and establish new service standards. In preparation, the agency has invited the PRC to observe Mailer Technical Advisory Committee meetings where the issue will be discussed.
“All this will guide us in our thinking as we proceed to engage the community in developing the … process,” Mr. Blair said.
