PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Comments to the Postal Regulatory Commission Regarding USPS’s Financial Condition and Related Issues

By at 31 January, 2019, 9:37 pm

Postal Regulatory Commission

901 New York Avenue, NW Suite 200

Washington, D.C. 20268

RE: Docket No. ACR2018

 

To the Attention of the Commission:

As an advocacy and research organization comprised of small business owners and entrepreneurs, the Small Business & Entrepreneurship Council (SBE Council) expresses its gratitude to the Postal Regulatory Commission for maintaining open channels of communication that provide us with an opportunity to voice our perspectives on the efficacy of policies adopted by the U.S. Postal Service (USPS).

The U.S. small business and entrepreneurial sector accounts for a strong and vital contingent of the broader national economy, and ensuring a level playing field, certainty, and opportunities for growth are vital to our continued success.

For the purposes of this docket (ACR2018), SBE Council recognizes that the financial position of the USPS remains dire. According to the USPS’ FY2019 Integrated Financial Plan, the organization’s total liabilities exceed its assets by more than $124 billion. Such debt is beset by a number of factors, including the widening losses in controllable income, which is projected to rise to $3.1 billion in 2019.

It is an alarming fact that USPS revenue from its lines of service regularly falls short of its costs of service.

The USPS has also acknowledged these trends when making the case for the largest stamp price increase by total cents in the history of the USPS. Due to such drastic pricing changes, and the cost impact for small businesses and the self-employed, SBE Council urges the Commission to monitor the effectiveness of this remedy that leverages the USPS’s monopoly power on letter mail.

The compliance report prepared by the USPS indicates that for FY2018, First-Class mail revenue covered cost by 205.24 percent. Profit margins of this magnitude must be instructive throughout this fiscal determination, and validate the success of the previous pricing regimes and price-cap mechanisms. Alternatively, understanding the factors, origins, and causes of the USPS’s negative controllable balance should be a priority.

With this in mind, SBE Council acknowledges the Commission’s proceedings regarding institutional cost contribution requirements for competitive products. As the Commission points out, there are sizable challenges in analyzing competitive conditions and fluctuating market forces, which make it appropriate for this matter to be regularly revisited to ensure accuracy. The highly-varied consumer market for competitive products, which translates to a burgeoning segment of USPS overall products, largely suggests that a rigid 8.8 percent appropriate share is insufficient.

SBE Council has also been engaged on concerns related to the USPS’s below-cost pricing on international inbound mailings. The filings made by the USPS reveal a loss of $81 million, and an overall negative balance in combination with outbound mailings.

In light of this long-standing inequity, our organization has previously called on the Commission to seek appropriate remedies. This includes, but is not limited to, imploring that the USPS work in close coordination with the Secretary of State to ensure a non-discriminatory pricing system that will provide domestic sellers a level playing field in reaching domestic consumers.

The small business community believes it is fundamentally unfair and irrational that foreign mailers continue to be charged far lower rates by the USPS to complete deliveries within the U.S. in comparison to the prices that American businesses face to send items from one domestic location to another.

Looking ahead, implementing sound financial policies within USPS operations requires strong leadership and ongoing analysis by the Commission.  Again, SBE Council appreciates this opportunity to share our perspective. Should opportunities arise to discuss these matters, our leadership would be pleased to engage directly with the Commission.

Sincerely,

Karen Kerrigan. President

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