It’s Time for Postal Unions to Find New Owners for the USPS

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In a column in the April 29, 2012 Washington Post, Steven Pearlstein discusses how American Airline unions may have turned the tables on American Airline management’s plans to restructure the airline. American management’s plan focused on cutting costs, and in particular labor costs. Right now it appears that management is unlikely to implement their plan as American’s three largest unions have come to an agreement with US Airways that will involve fewer cost cuts and will focus instead on marketing synergies between the networks of US Airways and American Airlines in a way that will expand the merged airline’s ability to compete for business customers with United and Delta Airlines, [...] Read more »

Barnes and Noble Agreement With Microsoft Could Speed Decline of Printed Flats; Increase Parcel Shipping

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Microsoft (MSFT) and Barnes and Noble (BKS)announced today that Microsoft will invest $300 million and take a 17.6% equity stake of the spin-off of the digital and college businesses of Barnes & Noble.  The investment along with the placement of a Nook Application in Windows 8 creates three major platforms for the distribution of digital content.    This provides Windows 8 tablets and smart phone an application that makes them competitive more competitive with those from Amazon and Apple.  At the same time, this action raises question about the future of the Android operating system unless equipment manufacturers tie themselves to the digital marketplaces offered by Apple, Amazon, or Barnes & Noble/Microsoft. With this [...] Read more »

S.1789 Is Unlikely To Save Overnight First Class Mail As We Know It

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Section 201 of S.1789, The 21st Century Postal Reform Act, purports to save overnight delivery.  However, a closer look at the language of this section of the bill shows that an overnight delivery commitment will truly be available to fewer customers than most members of the Senate think.  In particular, First Class single-piece mailers will see little benefit from the delivery standard provisions in S.1789 that were designed to ensure overnight service as they are unlikely to tender their mail to the Postal Service before the critical entry time required to ensure delivery overnight. The Geographic Reach of Overnight Service is Now Significantly Less The current S.1789 limits next day service to [...] Read more »

Postal Reform by Idiots

Mother Jones has a brief assessment of S.1789 in Kevin Drum’s Blog.   The posts reviews the key sections of the legislation like most stories do but he goes further.    He asks a fairly innocuous question.  Why won’t Congress allow the Postal Service charge a single piece First Class rate more in line with what other posts charge?   His answer: ”We are ruled by idiots.” Here are the last two paragraphs of his post: Oh yeah: there’s nothing in there [the list of changes that S.1789 makes] about allowing the postal service to increase postal rates. This is crazy. Take a look at countries around the world that have smaller volumes of mail than us: they all charge higher postage rates. [...] Read more »

Moodys Downgrades Pitney Bowes Debt Due to Challenge of Adjusting to Declining Mail Volume

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On Monday, April 23,2012, Moody’s downgraded Pitney  Bowes Inc. (“Pitney Bowes”) debt ratings, including the senior  unsecured rating to Baa1 from A2 and its short-term rating to Prime-2  from Prime-1.  After the downgrade, Pitney Bowes debt remains investment grade. Moody’s Vice President Gregory Fraser rationale for the downgrade highlights the difficulty that Pitney Bowes, and for that matter all firms in the postal market, have in adjusting to the reality of lower mail volumes. The revised ratings reflect our expectation that Pitney Bowes’  business and credit profile will be challenged over the intermediate term  due to the ongoing secular decline in traditional mail delivery,  as well as our expectation for worsening [...] Read more »

eBay Reminds Sellers USPS First Class Parcels is Not an Expedited Service

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Today, eBay reminded its sellers that beginning the first of May it will reclassify USPS First Class Mail delivery as a standard service in all listings that state that First Class mail is the delivery method. eBay first announced this move in February and described the change as a way to set “the right buyer expectation regarding USPS First-Class service.” The timing eBay’s move corresponds with the Postal Service’s expected implementation of new slower service standards for First Class Parcels. Why eBay Says it’s Making the Change Ebay identified two reasons for making this change 1) In general, buyers do not perceive USPS First-Class as an expedited service. Packages don’t [...] Read more »

Overestimating USPS Savings From Going To 5-Day Delivery

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The New York Times editorial on postal reform uses the $3 billion a year savings figure for eliminating Saturday delivery.  Neither the Government Accountability Office or the Postal Regulatory Commission believe that savings are likely to be that high. Both are also concerned that the Postal Services’s estimates of cost reductions are too high and lost revenues are too low. The Postal Service’s savings estimate, as well as lower estimates from the GAO and PRC, also assumes that the Postal Service does not make other changes reducing hourly labor costs relating to health and retiree benefits, does not offer retiree incentives to lower the average age and years of service [...] Read more »

Senders Must Drive USPS Service Decisions and Policy Discussions that Affect Service

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For almost a decade now, I have been writing that a customer focused Postal Service has to focus on the needs of those that pay the bills, the individuals, corporations, non-profits and governments that send mail. Policy has to be focused on ensuring that senders of mail can get the service they want at a price that makes economic sense for them to use the Postal Service while still ensuring that that the Postal Service has a competitive compensation structure and earns sufficient revenue to be self-sufficient. Focusing on senders of mail would seem obvious but with few exceptions pollsters, editorial writers, and policy makers never seem to comprehend this. [...] Read more »

How Big is Print? Big Enough to Show Why Saving the USPS is Important to the Economy

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Keen has put together an infographics and website to illustrate how big print is to the United States economy.   Given all the doom and gloom about mail, these statistics are staggering and illustrates that the postal market is just part of an enormous $640 billion industry that drives $3.8 billion in related services. Where this infographics may fall short is in its etimate of the impact of mail on the economy.   The Envelope Manufacturer’s Association Foundation Study of the economic impact of the mail market etimated that the firms in the industry generated over $1 billion in sales and employeed over 8.6 million people.  Even this figure underestimates the impact [...] Read more »

S.1789 Ends Use of Postage to Subsidize Federal Health Benefits

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The Hill has reported that Federal Employees will likely see an increase in their health insurance premiums if Postal Service employees and retirees are removed from the Federal Employee Health Benefit Program. The increase in premiums for Federal Employees suggests that current law effectively transfers funds from the Postal Service, and its ratepayers, to the Office of Personnel management to cover costs of health benefits for federal employees. While the size of the total subsidy is unknown, the information that the Hill article presents suggests that at a minimum, the Postal Service’s participation in FEHBP reduces every Federal employee’s premium by at least 2%. Ending this subsidy would seem to [...] Read more »