NNA members drive home their views at Postal Summit

Jan 4, 2012

As the U.S. Postal Service continues to build centralized automation facilities, postal officials assured the National Newspaper Association that they have not ruled out a continuation of permitting publishers to enter newspaper mail at local post offices. NNA has fought for this continuation as an essential element of timely delivery, but the Postal Service stopped well short of a commitment at NNA’s second Postal Summit here July 10-11.

Fifty industry leaders met for a series of meetings with USPS officials at the summit, including a face-to-face discussion with Deputy Postmaster General Patrick Donahoe, who told the association that Periodicals Mailers “get the best service standards of anybody,” with 65 percent of all Periodicals delivered within one day, and that in-county Periodicals are the only class of mail where volumes haven’t dropped year-to-year.

The USPS is required to provide Periodicals Class Mail customers with service comparable to First-Class Mail, a feat made easier by the fact that most newspapers and many large magazines drop their mail at a point close to or at the delivery post office. This work sharing by mailers ensures a high degree of one-day delivery locally.

Donahoe also laid out his plans for keeping the Postal Service solvent in an era when “revenue is worse than flat,” including reducing employee ranks, consolidating facilities and an increased reliance on automation, including the new Flats Sequencing System, which sorts flat mail in delivery point sequence, the order in which the letter carrier delivers the mail. Flat mail is mail that ranks in size between a letter and a parcel and fits within specified USPS dimensions.

NNA members emphasized to Donahoe that newspapers must have continued access to Destination Delivery Unit entry for service reasons, even as USPS embarks upon operational consolidation and new automation plans. The summit concluded with no firm commitment from USPS authorities.

As part of the Postal Summit, NNA members observed the USPS’s prototype FSS in action at the Dulles Processing and Distribution Center in northern Virginia. (See accompanying story for details.)

“FSS will reduce costs in delivery operations,” said Rosa Fulton, executive director of the FSS program. “We add more than 2 million delivery points every year, but they don’t necessarily add revenue. The average delivery point used to get about 13 pieces of mail a day; now it gets five or six. We have to figure out ways to reduce costs.” A delivery point is a house or business that receives mail.

Donahoe told members that continuing automation of sorting has helped the Postal Service shed about 15,000 employees over the past year. “We don’t see any major upturn in volume, so we will have to continue to reduce headcount.” He said the Postal Service currently employs about 660,000 people, down from its peak of 800,000 in 2000.

Postal Accountability Act

Donahoe also addressed areas most affected by the Postal Accountability and Enhancement Act of 2006 (PAEA), including the establishment of service standards and measurement. “Max [Heath] is an ardent proponent of using the First-Class Mail stream to move community newspapers,” he said. He said the First-Class Mail trucks tend to move in more direct lines than the more circuitous transports for Periodicals and Standard Mail. “We’ve found that, in some cases, it takes days to get mail from one area to another” because the newspapers were not taking the most direct route,” he said.

Newspapers heading from Louisville to Memphis, for example, were first being sent to Cincinnati, turning a 385-mile trip into a 595-mile trip that passed back through Louisville on its way from Cincinnati to Memphis, while newspapers from Salt Lake City, were taking nine days to reach Ely, NV, a city about 240 miles away.

“Ely is the hardest place to get to from Salt Lake City,” Donahoe said, noting that newspapers used to make that journey by traveling first east to Denver then west to Los Angeles before heading back east to Ely. “Now, I don’t have a truck that’s going from Salt Lake City to Ely, but I do have a truck that’s going from Salt Lake City to Las Vegas. Why not put the newspapers on that truck? Sixty-five to 70 percent of [Periodicals and Standard Mail] could run through First-Class transportation. We’re working to move away from a hub-and-spoke system” to sending mail directly from one office to another where possible, said Donahoe, who added that the Postal Service is working to empower local Postmasters to make time- and money-saving decisions.

Meeting with the Regulators

NNA members also voiced a variety of concerns to Dan Blair, chairman of the Postal Regulatory Commission, including the potential elimination of Saturday delivery. Last month, Rep. Jack Kingston, R-GA, was successful in attaching an amendment to the 2009 Financial Services and General Government appropriations measure, requiring the Postal Service to study the merits of a five-day delivery system.

The measure was approved by the House Appropriations Committee on June 25, but is not likely to become law if Congress does not pass general appropriations measures this year. Kingston, a long-time advocate of five-day delivery, is on record calling Saturday delivery “a perfect example of government waste that is driving up the price at the pump.”

Blair also reported on a series of field hearings the PRC has held, one of which was attended by Summit attendee Merle Baranczyk, publisher of the Mountain Mail in Salida, CO. “It was very beneficial to get the ‘outside Washington’ perspective,” said Blair. “People are concerned about the community service aspect of the Postal Service and about addressing and restraining future rate increases.”

Increasing costs were addressed by the PAEA, which limits rate hikes in each class of mail to the Consumer Price Index (2.9 percent in 2007), eliminating the need for costly annual rate case negotiations. But Kim Price, president and publisher of the Wetumpka (AL) Herald, asked Blair at what point the Postal Service would reach the limits of the PAEA and costs will begin to outpace revenues. “Price hikes can’t keep coming and coming,” Price said, “because we can’t keep raising our costs every year.”

While rate increases within a class are limited to the Consumer Price Index, the Postal Service can raise rates within each class by a rate higher or lower than the CPI, as long as the average increase is within the CPI limit. In-county mail, for example, is a part of the general Periodicals Class, so its rates could go up or down more than CPI so long as the total revenue expected from all Periodicals remains within the CPI cap.

“Postal management knows it’s at a crossroads,” said Blair. “The big conundrum is who’s going to pay those costs.”

NNA Director of Public Policy Tonda Rush noted that the PAEA lets the Postal Service seek higher rate increases in exigent circumstances, but that what makes an exigent circumstance remains undefined. Blair declined to spell out his view of “exigent,” saying he would wait for the case to be made by the Postal Service.

Labor unions and employee groups would choose a looser definition, while mailers would prefer a tighter definition, said Blair, who noted that “the words exceptional and extraordinary were very carefully chosen,” said Blair, “and do not have more or less meaning attached.”

Other upper-level Postal Service employees meeting with NNA members included Tim Gribben, manager of mail technology strategy and Becky Dobbins, manager of service management development, who discussed the differences between POSTNET and Intelligent Mail Barcodes. The use of IMBs, which create a unique ID for each piece of mail and are able to provide mailers with a wealth of information about their mailings, is currently optional, but will become a requirement for mailers seeking automation discounts as early as May 2010.

spoke system” to sending mail directly from one office to another where possible, said Donahoe, who added that the Postal Service is working to empower local Postmasters to make time- and money-saving decisions.

Meeting with the Regulators

The measure was approved by the House Appropriat-ions Committee on June 25, but is not likely to become law if Congress does not pass general appropriations measures this year. Kingston, a long-time advocate of five-day delivery, is on record calling Saturday delivery “a perfect example of government waste that is driving up the price at the pump.”

“Postal management knows it’s at a crossroads,” said Blair. “The big conundrum is who’s going to pay those costs.”

Labor unions and employee groups would choose a looser definition, while mailers would prefer a tighter definition, said Blair. “The words exceptional and extraordinary were very carefully chosen,” said Blair, “and do not have more or less meaning attached.”