PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Comments to the Postal Regulatory Commission: USPS Financial Condition, Cost Structures and Postal Rates

By at 30 January, 2020, 2:57 pm

Postal Regulatory Commission

901 New York Avenue, NW Suite 200

Washington, D.C. 20268

 

RE: Docket No. ACR2019

Chairman Taub, Vice Chairman Kubayanda, Commissioner Acton, Commissioner Fisher, and Commissioner Poling;

The Small Business & Entrepreneurship Council (SBE Council), an advocacy, education and education organization with a membership of more than 100,000 small business supporters nationwide, appreciates the continued opportunities to share the perspectives of small business owners and entrepreneurs across the country and engage the Commission on the many important matters that impact the nation’s postal system and its long-term viability.

Our organization, which works to support small business owners and entrepreneurs, has observed the continued financial gains garnered by the Postal Service through market dominant mail services. The successes exist despite an overall USPS net loss of $8.8 billion for FY2019, and many losses of similar magnitude in prior years, which signals that the intertwined nature of the agency’s full base of products leave much to be analyzed and reformed.

We encourage the Commission to seek out fiscal evaluations of USPS’s broad array of service lines independently, which would reveal compelling evidence for revising the greatly insufficient 8.8 percent appropriate share requirement. There needs to be a comprehensive understanding of USPS’ cost structures before any actions can be taken regarding revenue-focused remedies.

Accordingly, SBE Council urges the Commission to thoroughly reconsider its proposal that would enable the Postal Service to significantly increase mail prices on services that are already financially effective. SBE Council is submitting further comments in the RM2017-3 docket, and these DRAFT comments are included in this filing below.

Should the opportunity arise to discuss USPS’ fiscal challenges, its declining delivery performance nationwide, and the proposed costly rate hikes, we would be pleased to engage directly with the Commission.

Karen Kerrigan, President & CEO

Contact: (703)-242-5840; kkerrigan@sbecouncil.org

 

 

DRAFT:  January 30, 2020

Postal Regulatory Commission

901 New York Avenue, NW Suite 200

Washington, D.C. 20268

 

RE: Docket No. RM2017-3

To the Attention of the Commission:

As an advocacy, research and education organization for small business owners and entrepreneurs, the Small Business and Entrepreneurship Council (SBE Council) expresses its gratitude to the Commission for maintaining an ongoing dialogue on key postal issues.

On behalf of our more than 100,000 members across the country, I am pleased to submit comments regarding the Commission’s revised rate proposal for U.S. Postal Service’s (USPS) market dominant products. We have long been alarmed about what has contributed to the USPS’ ongoing fiscal problems and uncertainty, and have concerns regarding the continuation rate increases that have negatively impacted our members and small businesses nationwide.

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.

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 $4 billion in 2020.

SBE Council believes rather than moving to increase monopoly mail rates, which would pose harmful costs for small businesses and the self-employed, the Postal Regulatory Commission can instead require the USPS to focus on addressing the inefficiencies and failures in achieving proposed cost savings that have caused the USPS to withstand recurring financial losses for the last decade.

While the profits of First-Class Mail ($12.3 billion in 2019) have contributed greatly to the Postal Service’s balance sheet, it is curious how the USPS’ fiscal difficulty persists. In addition to ceasing implementation of the proposed rate increases that greatly burden USPS customers, such as small businesses, who use the mail, the Commission must also encourage the USPS to fully analyze its offerings and withdraw its services that do not add substantively towards repairing its fiscal position.

A recent USPS IG audit states, “the Postal Service’s strategic initiatives to reduce costs and optimize the processing network have not achieved planned cost savings.”

Over the period of 2014 to 2018, mail volume decreased by 31 billion pieces, approximately nine percent, while mail processing costs increased by $301.3 million, roughly four percent. Additionally, USPS only received 5.6 percent of the projected savings that it was supposed to get from substantial reductions in delivery time goals. Such challenges make it clear that the USPS has routinely failed to address the core problems that have been wreaking havoc on the agency’s financials.

The responsibility and charter of the USPS – to deliver letters in a reliable manner at a flat low rate – has regrettably withered substantially in recent years. Steady increases in rates on postage, along with the agency’s largest postal price hike to date at the start of 2019 demonstrates the degree to which further prospective rate increase remedies have become obsolete and ineffective. The current path has been especially been burdensome for the small business community, which does not generally have the financial flexibility to seek other mailing options, and was forced to shell out an additional 10 percent in costs for their mailings in 2019.

The RM2017-3 proposal (revised December 5, 2019) adds unnecessary complexity, and in turn, reduces predictability for small businesses and entrepreneurs across the nation. The potential new framework largely lacks transparency and will likely only contribute to USPS’ continued financial mismanagement. Rather than piling on added costs for mail users, the PRC should seek corrective action for the USPS’ internal inefficiencies and for its inattention to past directives from the Commission.

Further concerning aspects of mail service includes the Postal Service’s inability to meet on-time delivery targets for every single product segment within its “First-Class Mail” umbrella of services in 2019. This unfortunate reality affects overall economic competitiveness and hinders the ability of companies to effectively communicate with customers, promote products, market their businesses, fulfill orders, complete billing, invoicing and much more.

SBE Council has long been an advocate for commonsense adjustments that would put the USPS on firmer fiscal footing, with practical suggestions like balance sheet transparency, clarity, and logical product segmentation.

SBE Council believes that rather than implementing a detrimental series of rate hikes, the USPS should act on these recommendations in order to provide small businesses, and all customers, with the affordable service they expect and deserve both now and in the future.

Sincerely,

Karen Kerrigan, President & CEO

  

Protecting Small Business, Promoting Entrepreneurship

 

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