Thanks to U.S. laws banning more than two consecutive presidential terms, in November, there won’t be anyone outside the White House chanting: “Four more years!”. Instead, there is an exciting race for a new candidate to step into office, embodying hope and change.
For years, the USPS has held sovereign control over rate cases, without regulations in place, like the consecutive-term legislation, to protect public interest. “One of the big issues under the old laws was whether the then Postal Rate Commission (PRC) had the authority to look at the size of the piece of pie that the Postal Service was asking for and say, ‘You don’t need that size; you only need this much.’ But, basically, the Postal Service could get pretty much what it asked for,” said Ed Gleiman, consultant to the Direct Marketing Association (DMA) on postal issues, and former chairman of the PRC.
Due to the extremely high May 2007 rate increase, the introduction of shaped-based pricing, rises in production costs and a continued economic downturn in 2007 to 2008, the volume of mail sent dropped significantly, resulting in lower revenues for both mailers and the USPS. On top of this, another rate adjustment went into effect for May 12.
To protect both mailers’ and USPS’ interests, the new Postal Accountability and Enhancement Act (PAEA) has already taken effect and capped the May 2008 rate increases for mail services at or below the Consumer Price Index (CPI). The PAEA is the first major legislative change in USPS history in more than 30 years, and grants the former PRC—now the Postal Regulatory Commission—greater authority. Meanwhile, the USPS has also enacted its Strategic Transformation Plan, a series of internal reforms slated for a 2010 completion, which promote renewed efficiency, accountability, profitability and market compatibility in its system.
With this new legislation and framework built for change, one year after the worst rate case in U.S. postal history, it is again possible to see the goals of the post office and mailers converging.