Mailing Systems Technology - May/June 2008 - (Page 37)

riod gives mailers the predictability they need to better project mail volumes and costs. It also provides the Postal Service with the tools to balance its near-term needs with future goals. The bottom line is the predictability and transparency of the data behind cost adjustments will bring more value to the mail. (Editor’s note: The PRC updates the price cap based on monthly CPI changes, www.prc.gov.) they know how they would like it to work better. Helping the Postal Service understand their business models could result in the Postal Service being more responsive to their needs. The law also calls for new service standards and performance goals. Is the PRC involved in this effort? Absolutely. The PAEA requires the Postal Service to have new standards for each class of mail by December 2007 and performance goals for these standards by June 2008. The law also requires consultation with the Commission on this eﬀort. I’ve been pleased with the series of meetings we’ve had with senior postal oﬃcials which are ongoing. We continue to solicit the input of mailers on service standards because we know that realistic delivery standards and attainable goals are critical to the viability of the Postal Service. How important do you believe pricing and product innovations will be to the future of the Postal Service? After cost containment and maintaining as well as improving service quality, this is very important. Innovations can help stem or oﬀset lost proﬁt from volume declines and may help draw in new business. In the past, pricing innovation through work sharing discounts had a phenomenal impact. The innovative set of discounts dramatically boosted volume in all classes, created private companies to market mail and reduced the costs of mailing. Can you provide us with examples of innovations that have been introduced into the pricing of parcels? A key innovation that dates back to the 1990s was the introduction of discounts on parcel rates for those mailers who drop ship parcels to the local delivery unit or regional sorting facility with barcodes and presorting. This work sharing activity signiﬁcantly eliminated costs in the Postal Service, reduced the postage paid to the Postal Service and allowed mailers to use other, less costly and more customer-friendly means to get parcels closer to the point of delivery. UPS, FedEx and DHL now use these discounts to hand over to the Postal Service large volumes of parcels for the “last mile” of delivery, which, for example, reduces logistics costs to rural areas. This resulted in a dramatic and immediate turnaround in a decades-old decline in the number of parcels delivered by the Postal Service. A major development in the last rate case was the Postal Service’s emphasis on shape-based pricing, which had many positive eﬀects, including rationalizing the diﬀerence in pricing between letters and ﬂats based on diﬀerences in costs. For parcels, the Commission agreed with mailers that the full eﬀect of cost diﬀerences between ﬂats and parcels should not be reﬂected immediately in price diﬀerences. So, only 40% of the cost diﬀerence is reﬂected in rate diﬀerences. What role do customers have in driving pricing innovations? Postal customers have a very important role to play. They know better than anyone how they use the mail for their business, and What do you see for the future of Negotiated Service Agreements (NSAs)? The PAEA clearly provides new opportunities for NSAs. That is why our new ratemaking regulations sought to ensure that NSAs could move forward expeditiously. Our criteria when reviewing Postal Service requests for NSAs is to see if the proposed agreement would have either a positive eﬀect on net income or provide operational improvements, as long as no competitor is harmed. Our regulations and the law provide the Postal Service with signiﬁcant ﬂexibility to develop quickly a broad range of NSAs. The Commission, as part of its decision approving an NSA for BankOne, presented a technique for quickly conﬁrming the economic worth of any NSA with discounts contingent on increased volume. This model could provide the means for expeditious review of NSAs by the Commission. However, it is yet to be used to produce a steady stream of deals. I hope that will change. A RATE ADJUSTMENT for competitive and marketdominant products using the new regulations we issued in October.” “We also anticipate the Postal Service seeking There are a number of requirements under the PAEA affecting the Commission. What’s next for the PRC? This year will be even busier than last year. Our attention right now is on ﬁnishing — by March 27 — our ﬁrst annual Compliance Report that is required by the PAEA 90 days after the Postal Service ﬁles data on its 2007 costs, volume, revenue and service performance. The information we’re looking at now is based on the last rates under the old 1970 law, but future reports will check compliance with rates set under the new system. Although we have a formal complaint process, we’ll issue proposed rules soon to update the current procedure to incorporate certain requirements of the PAEA. We are now operating as a true regulator. We have subpoena power and the ability to levy ﬁnes in instances of noncompliance with the law. Making sure that there is an open and transparent complaint process is critical as the new law is implemented, especially for rate modiﬁcations. We also anticipate the Postal Service seeking a rate adjustment for competitive and market dominant products using the new regulations we issued in October. | MAY-JUNE 2008 WWW.MAILINGSYSTEMSTECHNOLOGY.COM 37 http://www.prc.gov http://www.mailingsystemstechnology.com

Table of Contents Feed for the Digital Edition of Mailing Systems Technology - May/June 2008

Mailing Systems Technology - May/June 2008 Contents Editor’s Note Peer to Peer It’s an Inside Job Greening Your Mail Center Adopting an Automated Document Factory Intelligent Mail and Address Quality 7 Steps to Combat “Do Not Mail” A Successful Resolution Q&A with Dan G. Blair, Chairman, Postal Regulatory Commission The Intelligent Mail Barcode Developing High-Performance Teams Simple Strategies to Save You Money A Powerful Social Network With Change, Comes Opportunity Increasing the Deliverability of Mail Kate’s Slate Products & Services People of Distinction Advertiser Index Sho Time

Mailing Systems Technology - May/June 2008

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