“Hurry up and wait” has been the theme for those of us engaged with the U.S. Postal Service this summer. While we have moved forward on a few fronts, we continue to wait for resolution on others. Let’s dig into our 2019 postal updates and all the latest news you need to know.
Can’t Tell the Players Without a Scorecard
Our Fall 2019 postal update kicks off with the good news that the Senate has confirmed three new members to the USPS Board of Governors, to bring that body back up to a quorum. John Barger, Ron Bloom, and Roman Martinez IV are now sworn in and will attend their first board meeting in early October.
The Senate also confirmed two new commissioners to the Postal Regulatory Commission (PRC), keeping that body at its full complement of five members. Ann Fisher and Ashley Poling have strong postal experience and should hit the ground running as commissioners.
Postmaster General Megan Brennan has announced additional changes to her executive team. The former position of VP Network Operations has been split into two positions: VP Logistics and VP Processing and Maintenance, to reflect the growing importance of efficient logistics planning to the Postal Service’s financial health. Robert Cintron is taking on the logistics role, while Dr. Joshua Colin will be responsible for the processing network. In addition, Luke Grossman has been named Senior VP Finance and Strategy. He will lead a newly created Advanced Strategic Research group, as well as focusing on research, development, and implementation of strategy as the Postal Service prepares to release its 10-year strategic plan.
2020 Postage Rates—What We Know
The mailing industry expects the Postal Service to announce its 2020 price adjustment sometime between now and mid-November, with the adjustment taking effect in late January. We expect an average increase of about 2%. The Postal Service has signaled that it will continue to narrow the discount for SCF-entered Marketing Mail letters, which could push many of the rate tiers most often used by advertising mailers slightly above that average.
2020 Postage Rates—What We Don’t Know
Several items with the potential to influence rates later in 2020 still need to be resolved. The PRC is expected to issue a ruling on its “ten-year” review of postage rate setting under the Postal Accountability and Enhancement Act (PAEA). The PRC began its review on the tenth anniversary of passage of PAEA in December 2016. The commission issued its findings in December 2017 and proposed rules that would modify how the current rate cap functions. After a public comment period in early 2018, a final rulemaking was postponed pending the release of the report of the President’s Task Force on the U.S. Postal System. With the release of the task force report in December 2018 and the confirmation of two new commissioners, the PRC is expected to release its final ruling on whether the CPI-based rate cap should be changed later this fall.
In addition, Congress continues to consider comprehensive postal reform legislation. The current bills include a one-time rate increase of 2.15%; however, these bills are unlikely to pass as stand-alone measures at this time, and the mailing industry is encouraging Congress to incorporate language requiring the PRC to account for any one-time increase in its rate making ruling.
One postal measure that may be tucked into a final FY2020 appropriations bill is the USPS Fairness Act, which would relieve the agency of the requirement to pre-fund retiree healthcare benefits decades in advance, solving one of the most pressing financial challenges facing the Postal Service. Our thanks to Rep. Brian Fitzpatrick (R-PA) who represents our Warminster facility for cosponsoring this legislation.
A 2019 Postal Update We’re All Waiting For: The USPS 10-Year Plan
We are also awaiting the release of the USPS 10-year strategic plan. The plan, originally promised to Congress in July of this year, has been delayed due to the confirmation of new governors for the Postal Service. Once the new governors have had an opportunity to review the plan, we anticipate its release before the end of the calendar year. One element that we expect to be part of the plan is a request by the Postal Service for greater “flexibility” in setting rates as it struggles to align mail processing costs with ongoing declines in mail volume.
As we start to see resolution to any of these pressing postal issues, we’ll share updates through SpeakingDIRECT. If you have questions on any of these 2019 postal updates or other postal topics, be sure to reach out.
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