PRC report criticizes USPS pricing, service measurement deficiencies

Washington, DC – The Postal Regulatory Commission today issued its Annual Compliance Determination (ACD) assessing the financial and service performance of the Postal Service in fiscal year (FY) 2010.

The Postal Service’s financial situation continued to deteriorate in 2010, despite major reductions in costs. “Postal management and employees have done a commendable job in effectively adjusting to sudden volume declines due to the recent recession, but the Postal Service is at risk of insolvency and projects in its Integrated Financial Plan for FY 2011 that it could end the year with a negative cash balance of $2.7 billion,” said Commission Chairman Ruth Y. Goldway.

Volume and Revenue Declines. First-Class Mail volume and revenue continue to decline, falling by 5.5 billion pieces and more than $1.8 billion, respectively.

Structural Obstacles. The Postal Service’s liquidity crisis is related to an overly ambitious requirement for the Postal Service to prefund its future retiree health benefit premiums. Over the past four years, the Postal Service has paid $21.9 billion to prefund these benefits, while the Postal Service’s cumulative losses were just $20 billion. The Postal Service is mandated to make another $5.5 billion payment this year.

Pricing Imbalances. Part of the Postal Service’s financial problem lies in pricing imbalances. The Commission identifies 10 market dominant products and services with revenue that did not cover attributable costs in FY2010, including flats, periodicals, and non-profit mail, totaling $1.7 billion in losses.

For the first time ever, the Commission finds rates not in compliance with the statute, and directs the Postal Service to take action to end the intra-class cross subsidy for Standard Mail Flats as soon as practicable. “The Postal Service has repeatedly failed to use its pricing flexibility, allowing the subsidy to increase over time,” according to Chairman Goldway.

Service Measurement. The Commission reviewed the Postal Service’s service measurement systems based on the Intelligent Mail barcode (IMb) and found persistent data errors, insufficient customer IMb usage, and a lack of product specific documentation. “The Postal Service must address these problems to assure customers of the continuing value of the mail,” said Chairman Goldway.

This is the fourth annual ACD issued since the enactment of the PAEA. It reviews the prior fiscal year’s activities and measures the Postal Service’s progress in meeting its statutory obligations including financial independence and fair and efficient service to the Nation.

PRC Annual Compliance Determination 2010

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  • Hartford Employee

    No Kidding…Losing mail on third class? Insufficient use of IMb data?!?! We charge for 3rd class maill the cheapest mail available and then we treat it as first class mail DUH. I can imagine how many plants do that. Once it comes in we handle it separately and get it sorted by next day!! THAT is not what they paid for. If they wanted it handled like ifrst class they should pay for it. THEN there are those stupid scanners we use. The only one that made mondye fromt hat deal was Motorola. They sometimes don’t even function right., slow and battery life sucks. Never mind that the data collected is then WRITTEN DOWN AFTERWORDS!!!! Management doesn;’t even know how to pull the info from it!!! PRC needs to do undercover boss in some plants!!!

  • uspsgal

    Well I for one am glad that this committee has individuals with commonsense. As a carrier with over twenty years the biggest problem with the postal service is that the only people paying first class prices are you and me. All these bulk, not-for-profit, political, advertiser’s are pratically getting it for free. Out of the thousands of pieces of mail I deliver each day only a handful is first class, the rest is just taking up space in peoples trash cans and breaking my back. Charge them their fair share. Please PRC get in there with both hands and eyes so we can get this America tradition back on it’s feet.

  • uspsgal

    Well I for one am glad that this committee has individuals with commonsense. As a carrier with over twenty years, the biggest problem with the postal service is that the only people paying first class prices are you and me. All these bulk, not-for-profit, political, advertiser’s are pratically getting it for free. Out of the thousands of pieces of mail I deliver each day only a handful is first class, the rest is just taking up space in peoples trash cans and breaking my back. Management realizes this, because when we are given our counts each day to determine our office and street time, they don’t count 90% of our volume because of it’s class. Charge them their fair share. Please PRC get in there with both hands and eyes so we can get this America tradition back on it’s feet.

  • working harder for less

    Of course we are getting paid only a percentage of what we mail counted for —- L routes get 1.82 and Non-L routes get 2.00. So a loss of .18, do the math on your daily volume and see how much less you are paid than a NON-L route. NO fairness in this model. And if you think about it, we buy stamps up front, so 20 letters are paid for, even before putting the first stamp on the first letter. A lot of people are buying rolls, thats profit before payment!!!