Latest News and Highlights  

PRC issues ruling in Appropriate Share Docket RM2017-1. The Postal Regulatory Commission issued a ruling in RM2017-1, Institutional Cost Contribution Requirement for Competitive Products. The Commission's order would replace the current 5.5% minimum requirement with a formula based approached that would update the requirement annually based on information provided in the PRC's Annual Compliance Determination. The proposed approach uses two components to annually capture changes in the market and the Postal Service’s position in that market: the Postal Service Lerner Index and the Competitive Market Output. The Lerner Index purports to measure a firm’s market power by comparing its prices with its unit costs. 

U.S. Postal Service Reports First Quarter 2018 Results. The U.S. Postal Service released its first quarter 2018 finances (October 1, 2017 - December 31, 2017) showing a controllable income of $353 million, down from $522 million for the same period last year. Total revenue for the quarter was $19.2 billion, essentially unchanged compared to the same quarter last year. Revenue from First-Class Mail and Marketing Mail decreased $309 million and $248 million, respectively, due largely to lower volumes. Revenue from the Shipping and Packages business increased $505 million, or 9.3 percent, during the quarter. 

PRC Issues 2017 Annual Report to the President and Congress. The Postal Regulatory Commission (Commission) released its Annual Report to the President and Congress summarizing the activities undertaken by the Commission during Fiscal Year (FY) 2017. Each year, the Commission is required to address in its report information concerning the operations of the Commission, including the extent to which regulations are achieving the rate-setting objectives of the Postal Accountability and Enhancement Act (PAEA). 

STOP Act Update - Permanent Subcommittee on Investigations issue Report and hold Hearing. U.S. Senators Rob Portman (R-OH) and Tom Carper (D-DE), the Chairman and Ranking Member of the Permanent Subcommittee on Investigations (PSI), published a report detailing the Subcommittee’s findings from its nearly year-long investigation into how drug traffickers exploit vulnerabilities in our international mail system to easily ship synthetic drugs like fentanyl from China into the United States.  A hearing followed. 

Industry Associations Release 2018-2020 Mail Supply Chain Strategic Plan. A coalition of mailing industry non-profit trade associations today released its 2018-2020 Mail Supply Chain Strategic Planoutlining key strategic goals and actions “to work towards the long-term vitality of mail and ensuring that the mail industry remains at the very center of communication and commerce in the United States and around the globe.” The plan is the result of a year-long collaborative effort by members of coalition partners, Association for Postal Commerce (PostCom), Idealliance, and National Association of Presort Mailers (NAPM), together representing mail industry stakeholders who generate more than 100 billion pieces of mail annually.

U.S. Postal Service Files Annual Compliance Report Postal Accountability and Enhancement Act, today the Postal Service filed its Annual Compliance Report (ACR) with the Postal Regulatory Commission (PRC). The ACR is used to determine that the Postal Service is in compliance with the relevant statutory and regulatory requirements that govern USPS pricing and costing. It includes detailed information on product volumes, revenues, and attributable costs as well as the cost avoidance estimates used to develop workshare passthroughs. Given the proposed changes to the PRC’s system of regulating USPS rates, these estimates take on particular importance.  Accompanying the report itself is an extensive set of USPS workpapers and technical appendices which can be found here.

Postal Regulatory Commission (PRC) issues ruling in Ten-Year Regulatory Review On December 1, 2017, the Postal Regulatory Commission (PRC) issued the long awaited ruling in R2017-3: Statutory Review of the System for Regulating Rates and Classes for Market Dominant Products. The Postal Accountability and Enhancement Act (PAEA) stipulated that after ten years, the PRC was required to conduct a review of the ratemaking system established under PAEA to determine if the goals of the legislation were being met. According to the PRC the current system is not meeting the objectives of PAEA. As a result, the PRC is initiating a notice of proposed rulemaking (NOPR) that includes the following: Retention of a price cap based system;  USPS gains additional 2% pricing authority above CPI for next 5 years after which the PRC will evaluate the financial health of USPS; USPS may gain additional 1% pricing authority if service and operational targets are met; Products that are not covering attributable costs must have price increases at least 2% more than the average for their class; For periodicals all workshare passthroughs must be between 75% and 125%; For all other products passthroughs must be between 85% and 115% and Non-compliant workshare discounts will be subject to a three year grace period.   Op-Ed Written by Michael Plunkett, PostCom President & CEO   PostCom's Summary of the Decision 

U.S. Postal Service Issues 2018 Financial Plan The Postal Service has released its 2018 Integrated Financial Plan. For Fiscal Year 2018 – which began on October 1, 2017, USPS is projecting an operating loss of $1.4 billion and a net loss – after accounting for USPS funding of retiree obligations - of $5.2 billion. FY 2017 ended with an operating loss of $800 million and a net loss of $2.7 billion. For 2018, USPS is predicting that volume will decline from 149.5 billion pieces to 144.9 billion. While package volumes are expected to increase by 400 million pieces, USPS is projecting that First-Class Mail will decline by 2.5 billion pieces and that marketing mail will fall from 78.3 billion pieces to 76.1 billion. Despite the 4.6 billion piece decline in volume, USPS is projecting that compensation and benefits expenses will increase from $50.5 billion to $50.7 billion.