These Five Issues Need Immediate Attention from USPS BOG

August 31, 2018

It’s amazing how quickly Washington can move at times. This week we were looking forward to a ruling from the International Trade Commission and public release of the report from the Presidential Task Force examining the Postal System. What no one expected was action on the USPS Board of Governors (BOG).

On the expected news from Washington we hit 50 percent. This past Wednesday, August 29, the ITC overturned the Commerce department’s proposed Canadian newsprint tariffs. This action was a tremendous victory for Quad’s clients that print on uncoated groundwood paper, and clients that rely on the local newspaper to deliver their marketing materials. Quad led the effort to partner with others in the industry and engage our Congressional Delegations across the country to ensure that the message was clear — consumers of newsprint paper could not afford the unjustifiable cost increases these tariffs were imposing, and the tariff would result in the loss of jobs throughout the economy. It’s clear that the political pressure on the Department of Commerce and the ITC was the turning point in this battle, and we are very pleased that we were able to repeal these tariffs and remove at least one barrier to help our customers use and enjoy the benefits of print.

Unfortunately, however, the report from the Presidential Task Force is rumored to be delayed beyond month end. It’s the unexpected news on the Board of Governors though that gives a reason to comment.

On Tuesday, 10 months after their nomination, the Senate confirmed Dave Williams and Robert Duncan to two of the nine open seats on the USPS Board of Governors. Not to be outdone, the Administration announced two additional nominees for the BOG — Ron A. Bloom of New York, and Roman Martinez IV of Florida. At first glance, both of these proposed nominees bring excellent backgrounds that make them strong candidates to go through the nomination process and eventually join the BOG.

With two members confirmed and two prospective nominees for the BOG, there are five things this new BOG needs to tackle as soon as they are sworn in:

  1. Learn the ropes: The BOG needs to reach out to parties in the mailing supply chain and initiate conversations and visits. This is because the USPS is the core organization of a huge mailing industry, meaning now is the time for a crash course on how that industry works. So many mailing organizations and unions in this ecosystem would be willing to share their point of view with those wanting to better understand what’s important. Take advantage of this time to listen and learn. Our expectations are high that the USPS will seek out opinions and make changes that benefit all.
  2. Move on promotions: For years the USPS has capitalized on promotions to stimulate growth, helping clients offset the costs of adding to the mail stream or producing new and creative mail pieces. The new BOG needs to look at promotions and quickly move forward on those that strengthen mail, whether for late 2018 or as part of a CPI pricing proposal for 2019.
  3. Scrutinize flats processing: The cost coverage for flat mail has been falling for a number of years and the USPS is hesitant to address the issue. (For more on cost coverage for flat mail, download the PRC’s latest Annual Compliance Determination Report here.) The PRC has an open docket to examine these costs, and the OIG recently published a report questioning the operation of the USPS’s major investment in flats processing, the Flats Sequencing System (FSS). Quad has made it clear that we believe the FSS should be scrapped and the USPS needs to encourage the creation of carrier route mail to bypass processing equipment. The BOG needs to join the conversation and push the USPS to become part of the solution instead of fighting everyone.
  4. Market informed delivery: At the BOG hearing, both confirmed nominees talked about the positive features of Informed Delivery. There are 7.5 million email subscribers (current active users of the program) which equates to 6 percent of the residences in the US, assuming only one subscriber per household. To be a viable marketing tool and allow the USPS to achieve a positive ROI, that number needs to be closer to 40 million, a percentage of the population most in the industry would like to see. The BOG must take a full look into this program, including why consumer adoption is low. If they believe it is a proper investment, they should guide the USPS to reach balance between technology investment and marketing for new consumers.
  5. Stay competitive: The USPS core competency is delivering mail to consumers. This area has increasing competition and will need special focus in the future. The USPS seems to be forgetting this as they invest in areas where the competitive market has products being undercut by the USPS offering a free service. The BOG needs to help the USPS focus on keeping mail a viable medium by being the low-cost delivery provider. They also must focus on being a service performance leader, versus investing dollars in areas with limited or no ROI.

We can look forward to this new board working with USPS management and the mailing industry to keep mail meaningful.

PS: The Inspector General position has not had a confirmed appointment since the new Governor, Dave Williams, retired from the position. The board needs to finalize the appointment of this critical oversight position.