Predictability, flexibility key issues at USPS/PRC regulatory summit

POTOMAC, MD – Predictability and flexibility – and what those terms mean in the context of the new postal regulatory environment – were key issues discussed at a U.S. Postal Service/Postal Regulatory Summit here called “Meeting Customer Needs in a Changing Regulatory Environment.”

The new regulatory environment stems from the Postal Accountability and Enhancement Act that was signed into law last year. The act culminates a 12-year effort by Congress to secure changes to the laws governing the USPS. It gives the USPS more predictability by linking future rate increases to the Consumer Price Index and also gives the USPS more flexibility for pricing competitive products.

“From my perspective, the flexibility in the bill allows the postal service to do many new things,” said Bookspan CEO Markus Wilhelm, who spoke at the Bolger Center on a panel called “Meeting Customers Needs in the Market Dominant Category” for First Class Mail, Standard Mail and Periodical Mail.

Mr. Wilhelm said the flexibility might mean that the USPS can offer seasonal rates.

“We all know that we all mail heavily at the end of the year and in January,” he said. “So, if everybody wants to mail in January, does it make sense to have the same prices that you have during the rest of the year, or do you offer incentives to get companies to mail other times of the year?”

This concept could work for offering incentives to mail different days of the week.

“From my own experience, Tuesday is the busiest day of the week for the postal service,” Mr. Wilhelm said. “But we could enable the postal service to become more efficient and adjust their prices to allow us to deliver on different days of the week. It is totally irrelevant to me if we mail on a Friday or a Monday or Tuesday.”

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.

“This could help us deal with the do-not-mail threat we are facing now,” Mr. Wilhelm said.

The USPS may also be able to offer guaranteed day of delivery. That would be really easy to do, Mr. Wilhelm said.

“A lot of this is possible,” he 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.”

Also speaking on the panel was Louis Milani, senior director of business affairs and publishing operations for the Consumers Union of U.S. Inc. He said that he hopes the new legislation will allow for more predictable rate increases so that his company can plan for them better.

Mr. Milani said postage is the Consumers Union’s second largest expense. Each year, the company spends $38 million on postage on 219 million pieces of mail – 12 million pieces of First Class mail, 70 million on Periodicals and 137 million on pieces of Standard Mail.

He said 40 percent of the company’s Standard Mail is considered flat mail, which equals 55 million pieces.

“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.”

Steve Laserson, vice president of business intelligence/research and development at American Greetings Corp., was another panelist. He was representing citizen mailers, and he suggested that predictable, yearly rate increases would be devastating to his business.

“We are convinced that successive annual increases will negatively affect consumers’ use of the mail,” Mr. Laserson said.

He said USPS should not increase rates in the fall, one of the most popular times of the year to send mail.

Jody Berneblatt, senior vice president of postal strategy at Bank of America, also spoke.

Other panels at the seminar included “Meeting Customer Needs in the Competitive Product Category”; “Designing Flexible, Customer-Responsive, Pricing and Product Regulation”; and “Service Standards and Measurement for Market Dominant Products.”

William M. Takis, a partner at IBM Global Services, moderated the summit.

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