Distribution Directions Vol 9 No 1 Periodical Mail Costs, USPS Labor Contract Impasse and Worksharing Discounts

The U.S. Postal Service’s costs for handling Periodicals mail are so high partly because it insists on providing services that publishers don't want, according to a leading publishing executive. A recent Office of Inspector General report cited unofficial “Hot 2C” (or “Hot Periodicals”) programs as a major reason for the extensive – and expensive – manual processing of magazines and newspapers that supposedly help make Periodicals a money-loser for the USPS. “Periodicals publishers have repeatedly made clear that they do not desire and are not willing to pay for 'hot' processing," Jim O’Brien, Vice President, Distribution & Postal Affairs for Time Incorporated, responded in a letter to the OIG. “Every publisher that we at Time Inc. have spoken with is quite willing to live within the USPS’ published service standards and neither requests nor supports manual processing of Hot 2C.” Claiming that Periodicals mail only covers 75% of its costs, the Postal Service wants to change the rules so that publishers’ postage rates can be increased faster than inflation. (See Postal Service Preparing Double Whammy for Publishers.) But publishers have repeatedly pointed out the Postal Service’s insistence on bypassing automated sorting equipment and its use of questionable cost-accounting methods.

Source: Dead Tree Edition

Impasse Appears Possible in Postal Labor Talks

Labor contract talks between the U.S. Postal Service and its largest union are not at an impasse — but they may be heading there. Cliff Guffey, president of the American Postal Workers Union, recently said on the union's website that postal executives "seem unwilling to make the commitment necessary to reach a negotiated settlement." Guffey "summoned" the APWU's Rank and File Bargaining Advisory Committee to Washington for an update. No tentative agreement appears imminent, he said. Following the Postal Service's usual policy, spokesman Mark Saunders declined to comment. "We prefer to negotiate our contract at the table than through the media," he said. The APWU represents 209,000 clerks, mechanics and other workers. Its four-year contract with the Postal Service was set to expire November 20th, but the terms have been repeatedly extended as negotiations continue. At this point, either side can declare an impasse that would result in mediation or binding arbitration, Saunders said.

Source: Federal Times

Are Worksharing Discounts Too High?

In a report issued December 23, 2010, the USPS Inspector General’s Office (OIG) echoed what the APWU has been saying for years: Worksharing discounts for large mailers mail are too high. The OIG’s study (Report Number MS-AR-11-001 [PDF]) echoed the results of a March 2010 report by the Postal Regulatory Commission [PDF], which concluded that in many cases the Postal Service grants discounts to large mailers at a rate that exceeds the costs the USPS saves when it accepts pre-sorted mail. The OIG found that the Postal Service’s “justifications for 19 workshare discounts that exceed avoided costs by approximately $104 million were not supported by detailed documentation.” The OIG also concluded that the revenue loss may be even greater because “Postal Service cost avoidance models may not accurately reflect avoided costs for workshared mail.”

Source: Postal Reporter News Blog

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