Informal Meeting (Dinner)—Monday February 13, 6:30
($60--Otello, 1320 Connecticut Ave. NW)
PSA General Membership and Board Meeting—Tuesday, February 14, 2012—83:00
(K&L Gates, 1600 K St NW)
(Complimentary Continental Breakfast and Lunch)
All Members Invited
PSA Members & Friends,
Attached is the Agenda for our February 14 meeting. We will be taking care of important housekeeping matters (elections and budget), hearing from postal community leaders including our MTAC reps and committee chairs on important issues, and discussing policy issues with key industry officials. Please note, we will be using the afternoon to discuss and formulate PSA policy positions on key questions we expect to face in 2012. This is very important so please plan to stay at least until 3 p.m.
PSA Committees
Attached is the latest PSA Committee Roster, together with charters for the various committees. We can use some more member participation. So please see if there is a committee that interests you where you can help out.
Peak Looks Pretty Good for Shippers and Mailers
While our reports are incomplete, it appears that the package business was good for the USPS, its competitors, and parcel shippers during the holidays. The package business remains the one bright spot for the USPS with Priority and Parcel Select (including Lightweight) volumes up by healthy margins. We should get the latest financials when we meet with the Postmaster General and his executive leadership team next week.
Important Note on Parcel Select Lightweight
You may have missed that the maximum length for Parcel Select Lightweight (formerly Standard Mail Parcels) shrunk from 34” to 27” effective with the rate changes earlier this month (January 22). Understanding that this could be an unfortunate surprise for some of you, we contacted USPS and have been advised that exceptions are available so you can continue to mail packages with lengths in 27-34” range as Parcel Select Lightweight for up to six months. This is intended to allow customers to either modify their pieces or switch to another product, perhaps First Class Mail Package Service. The appeals procedure is in DMM section 607. If you get caught in this situation, contact the Pricing and ClassificationServiceCenter.
On Capitol Hill
Work continues in both the House and the Senate on the “reform” bills approved last year by the respective postal committees. But, as of right now, neither the House nor the Senate bill would adequately address the problems facing the Postal Service, especially its financial difficulties. Also, in their present form, neither bill appears likely to garner enough votes to pass. This week, the Congressional Budget Office issued its report on the Senate bill S. 1789, concluding that if enacted it would increase the Federal budget deficit by $6.3 billion over ten years. This makes it very unattractive to a Congress focused on deficit reduction. I have attached the CBO estimate. It is technical but provides a pretty good overview of the key aspects of the Senate bill, and gives you an idea about what congressional budget “scoring” looks like.
We remain very “plugged in” to the “Hill” activity. Postal legislation is incredibly challenging for members of Congress, particularly now that its consideration has held over into an election year. Every Congressman and Senator has postal operations in their district or state, so it’s local politics for each member of Congress. (See for example the Network Optimization update below). Even though most members are aware of the need to impose cuts and change the business model, most feel they must fight if a local postal facility is proposed to be closed. Consolidate plants? Ok, but do it somewhere else!
Network Optimization
So, in addition to regulatory requirements that must be met, the USPS ran into interference in the Senate to its plans to close and consolidate up to 300 processing plants. In response to objections from more than 20 Senators, last month USPS announced a moratorium on closing any facility. The moratorium will extend until May 15. USPS said it hoped pending legislation would address the problem by then. That is unlikely.
Meanwhile, on January 18 the Postal Service asked the Postal Regulatory Commission to expedite consideration of its plan to change (lower) its service standards. USPS is required to submit any plan for nation-wide to service change to the PRC for its advice. The PRC is required to solicit public opinion on the change(s). PSA has intervened in this case, and attended the initial “prehearing conference.” The USPS request for expedition came just days after PRC posted a procedural schedule, including public hearings and briefs, that would extend at least until July 10, 2012.
At out November meeting David Williams, VP for Network Operations Management, briefed members on the upstream plans. This week, I met with Dean Granholm, VP for Delivery and Post Office Operations, to get a sense of what this could mean for DDUs. We know the plan will include DDU consolidation and closing (thousands of them) but we hadn’t seen numbers. It turns out the target is to reduce the number of DDUs from 17,800 today to somewhere between 10 and 12 thousand in 2015. We will have more details at the February meeting, and
VP Granholm is trying to clear his schedule so he can join us.
Pending Postal Labor Negotiations at Impasse
Impasse was declared in the contract talks between the USPS and two unions—the NALC (city carriers) and the NPMHU (the Mailhandlers). Last year USPS and APWU (postal clerks) reached an agreement that was hailed as great by USPS and decried by many mailers and congressmen. Talks with the fourth union NRLCA (rural carriers) came to impasse last year and the contract is in arbitration. Under current law that applies to postal labor negotiations, if both sides agree, the parties may first engage in mediation and, if unsuccessful, go to interest arbitration. We understand the NALC, the largest postal unions which represents about 196,000 employees, is seeking mediation before heading to binding arbitration. This permits continued talks to reach agreement. The NPMHU represents about 46,000 employees who work in mail processing plants and post offices. Wages and benefits for NALC employees exceeded $15.7 billion last year, and $3.5 billion went to NPMHU-represented employees.
In addition to economic concessions, the Postal Service is pressing hard to negotiate its own employee health insurance program, separate from the Federal Government-wide program it is under now. It believes savings from leaving the Federal plan would be significant, and has placed this initiative at the head of its cost reduction wish list (along with 5-day delivery). Our sources suggest only one of the four unions has expressed interest in this.
“Appropriate Share”
Last for today, the PRC has initiated a proceeding to review “the appropriate contribution of competitive products to institutional costs.” (Docket No. RM2012-3) Under the law, competitive products such as Parcel Select, Priority, Express, and international, are required to pay their “appropriate share” of institutional (overhead) costs of the Postal Service. This is intended to prevent the USPS from using revenues from monopoly products to unfairly subsidize those services for which it faces competition. . The PRC determines what that “appropriate share” is. This has been controversial in the past, with competitors arguing for a larger share and the Postal Service generally a smaller share. In 2007, the PRC established the rule that competitive products are responsible for at least 5.5 percent of all institutional costs. This determination involves questions of economics, competition policy, cost measurement, and fairness. It can be quite complicated. In the past, PSA carried the water for the industry on this trying to ensure a fair result for shippers. And, we were successful. We expect to do that again, and want to discuss this with the membership at our next meeting.
Welcome to OSM Worldwide
And finally, a warm welcome to PSA’s newest member, OSM Worldwide. It’s CEO, Gaston Curk, and some colleagues will be at our February meeting. Be sure to say hello.
That’s it for now.
Pierce
Pierce Myers
Executive Vice President & Counsel
Parcel Shippers Association
1420 King Street STE 620
Alexandria, VA 22314
[TENTATIVE-10/26/2018]
Parcel Shippers Association
GENERAL MEMBERSHIP & BOARD OF DIRECTORS MEETING
February 14, 2012
K&L Gates, 1601 K St. NW, Washington, DC
AGENDA
8:30 A.M. Continental Breakfast
9:00 A.M. General Membership & Board Meeting Call to Order – Chairman, Steve Zwieg
Introduction of New Representatives, Members and Guests
Anti-Trust Policy-Michael Scanlon, K&L Gates
9:10 A.M.Minutes of last General Membership meeting (2/15/11) – Chairman Zwieg
Minutes of last Board Meeting (11/29/11) – Chairman Zwieg
9:20 A.M. EVP Report – Executive Vice President & Counsel Pierce Myers
Meeting Overview
Discussion of 2012 Budget & Contracts for Board Approval (votes under new business)
9:30 A.M.MTAC Report—John Medeiros, DHL Global Mail, Wendy Smith, Publishers Clearing House
10:00 A.M. Election of Directors and MTAC Representatives – Chairman Zwieg
Nominations Comm. Report – Chairman Zwieg
[Recess for Board of Directors Meeting]
10:15 A.M.Board of Directors Meeting: Election of Officers – Chairman Zwieg
Nominations Comm. Report – Chairman Zwieg
Approval of 2012 Budget and Contracts—Chairman Zwieg
[Adjourn Board of Directors Meeting]
[Continue General Membership Meeting, PSA President]
10:30 A.M.Committee Reports—PSA President
11:00 A.M.IMpb and Visibility Update—Jim Cochrane, VP, Prod. Vis. and Operational Performance, USPS
11:30 A.M.The Honorable Nanci E. Langley, Vice Chairman, Postal Regulatory Commission
LunchGuest Speaker: Frederick V. Rolando, President, National Association of Letter Carriers (Invited)
1:15 P.M.Dean Granholm, Vice President, Delivery and Post Office Operations, USPS (invited)
1:45 P.M.Legislative and Regulatory Report—Pierce Myers; Larry Buc & Sander Glick, SLSConsulting
Policy Issues for Discussion
--Summary of Legislative issues
--Exigent Rate Case
--Network Optimization—DDU Outlook
--Door Delivery
--Overhead Allocation for Competitive Products (Appropriate Share)
--Underwater products (e.g Periodicals, Standard Regular flats)
--Transfer of products to competitive (e.g. Bound Printed Matter, Media, Catalogues)
--Nonprofit Rates
3:00 P.M.Adjourn General Membership Meeting