Commissioner Goldway compares USPS finances to the banking industry
The Postal Regulatory Commission yesterday approved the Postal Service’s market dominant product price adjustments scheduled to take effect next month. The approval came despite concern about changes the USPS made in the method for setting workshare discounts, specifically “de-linking” the prices for single piece first class mail from those for presort First-Class Mail.
Commissioner Ruth Goldway dissented from the PRC opinion- here’s some of what she had to say:
It strikes me that there are close parallels between what is happening to the Postal Service financially, and what has been happening to the banking industry. The banking industry was given wide discretion to lend how and on what terms it chose. The assumption was that this was safe because the managers’ discretion would be bounded by certain basic principles (e.g., that investors would have knowledge of the kind of securities marketed, and the risks would be publicly known either through an SEC filing or prospectus) and accountability would be provided by a diligent board of directors.
It is now clear that these basic principles and institutional safeguards were allowed to become mere window dressing. I fear this to be the direction in which postal regulation is headed. Congress intended that there be a certain economic “rhyme and reason” to both class prices and product discounts; hence, provisions such as section 3622(c)(2) (attributable cost floor) and section 3622(e) (discounts match avoided costs).
Are these on the way to becoming window dressing? The uneconomic approach to rate setting can be a factor contributing to the Postal Service slide into financial distress. If the Postal Service is to be excused again for violating 39 U.S.C. § 3622(e), the reasons given must be carefully chosen so that the Postal Service, and the postal community, do not get the impression that there is not now, and never will be, any enforceable standard for workshare pricing.
March 17th, 2009 18:04
From the PRC – USPS Annual Tables FY2008:
Dollar value of labor compensation compared to FY2007
Increase of $112.1 million/Postmasters
Increase of $31.6 million/Supervisors
DECREASE of $527.3 million/clerks
Decrease of $91.7 million/mail handlers
Decrease of $171.6 million/ city carriers
Also of interest:
$13.3 million spent for Relocation
$11.2 million spent for Transfer of Household Effects
Fun Fact:
$6.3 million spent on rubber bands
March 17th, 2009 23:45
I am a carrier, and I have been alarmed at the prices I have seen on some of the presort flats. These discounts are beyond anything you can imagine. I am casing mail, and I see general public flats at first class paying 1.00 and 1.17 or more, then I see a presort flat with discount price at about .34 and .44. How is that? The only way a discount like that could be is if the mailer was DELIVERING the flats too! No amount of drop ship co mail high volume barcoded list updated mail is worth that! These guys are selling us down the river with discounts like that.
March 18th, 2009 11:30
From another blog:
The USPS is giving away the farm with discounts that exceed costs avoided:
Mail Type – Discount as % costs saved
First Class
AADC Letters – 128%
ADC Flats – 145%
Non-Auto Presort Letters – 188%
Non-Auto Cards – 187%
Standard
Mach ADC Flats – 221%
BMC Mach Parcels – 194%
ADC Non-Bar Parcels – 194%
ADC non-Bar Parcels – 194%
Mach Parcels – 204%
BMC Parcels – 117%
DCSF Parcels – 159%
DSCF NFMs – 175%
DDU Parcels – 198%
DDU NFMs – 224%
Non-mach ADC letters – 101%
The USPS is giving “a 6.2-cent discount to avoid 2.8-cents of costs” for ADC flats.
We are losing 3.4 cents on every flat. No wonder we can’t stay in business!
Those figures are taken directly from the regulatory board decision paper. Here is a link to the report
http://prc.gov/Docs/62/62705/Order_No_191.pdf
It is a PDF so it may take a while. The figures quoted are on pages 25 and 46-49.
October 29th, 2009 16:25
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