Task Force Report Released–Alliance Reaction is Negative
December 6, 2018
This week, the Administration released the long-awaited postal task force report. It is titled “United States Postal Service: A Sustainable Path Forward Report from the Task Force on the United States Postal System.”
Many stakeholders, including unions, package shippers and mailers already have reacted negatively to the report.
The Alliance Board met yesterday and discussed the work of the task force in detail. Our general reaction also is quite negative.
A primary concern is that the new “business model” proposed by the writers is to divide postal mail into “essential” and “non-essential” categories. The task force proposes that the essential types of mail would continue to be protected by price caps, while the non-essential group would be priced “at a market rate.” The writers believe the the old, outdated business model enables dense, urban areas to subsidize rural regions; and the new one should create a subsidy of essential mail by non-essential mail. But under the old model, everyone pays uniform rates. The proposal would make “non-essential” mailers pay much higher rates based on someone’s judgment of what is “essential.”
We do not believe that a system based on the definition of “essential” is workable, legally, politically or practically.
We also do not think a laundry list of potential administrative actions and those requiring legislation will lead to a balanced, logical solution. It is well documented that postal legislation is exceedingly difficult to achieve. That means that the administrative items on the list, such as urging the Postal Regulatory Commission to bust the price cap, would be much more likely to happen. Meanwhile, many of the cost control reforms that are needed would require legislation and likely not happen.
Whether you divide mailers and shippers into “essential” winners and “non-essential” losers, or raise prices above inflation without addressing the cost side, you will drive away the mail and package volume currently supporting a profitable operation.
The task force reported that the USPS has generated operating profits in each of the latest six fiscal years. It showed that only the miscalculated retiree health benefits charges have dragged the reported results into the red.