Thursday, December 06, 2018

Postal Service task force recommends changes that could raise some package prices for rural customers

A Treasury Department task force released a 74-page report Tuesday that recommended big changes to the U.S. Postal Service in order to keep it afloat, some of which could cost rural residents more, but stopped short of full privatization. President Trump ordered the review in April after saying that the Postal Service was losing money on its shipping deal with online giant Amazon. At the time, the president was feuding on Twitter with Amazon, whose CEO also owns The Washington Post.

The report does not address contracts with individual companies, which are confidential, but it says the Postal Service is "unsustainable and must be fundamentally changed if the USPS is to avoid a financial collapse and a taxpayer-funded bailout." The service lost almost $4 billion in fiscal 2018, even as package deliveries increased, and is expected to lose tens of billions of dollars more over the next decade, Reuters reports. The financial stability of the service has been major concern of rural newspapers that rely on the mail and fear further rate increases.

The report did not recommend a reform promoted by the National Newspaper Association and other Postal Service allies that would remove the requirement that the USPS pre-fund health benefits for its retires for 75 years. No other agency must meet that requirement, which Congress imposed in 2006, Ivanova reports. The task force also "did not recommend what the Postal Service and lawmakers consider the key piece of their legislative overhaul, namely to require most eligible employees and retirees to use Medicare as their primary provider," Eric Katz reports for Government Executive.

NNA issued a statement that said in part, "We particularly appreciate the task force’s recognition that the rural areas served by our members have unduly suffered from some of the therapies tried thus far. We also like the task force’s agreement with us that universal service is essential and that all areas of the country, including rural areas, must be fairly served. We believe any entity but the United States Postal Service will inevitably fail at providing that service, having seen the challenges faced by other nations who have experimented with privatization. But there are areas within the system where more involvement from the private sector would benefit the system. There are other aspects of the report, such as the recommended removal of the price cap on rates, that would cause our members great concern—unless it is carefully and successfully balanced by serious cost control and by a fair evaluation of the need of readers of newspapers and magazines to receive their periodicals on time and at fair rates."

The report recommends that the service develop a new pricing model that would remove current price caps and charge market-based prices for mail and packages that were not deemed to be 'essential postal services'," Irina Ivanova reports for CBS News. "That recommendation could raise costs for Amazon and other major businesses that are currently using the Postal Service to supplement their delivery operations." That could mean higher prices for consumers, including rural residents who depend on Amazon and other online retailers to access goods not available locally.

Mail and packages from one person to another would be considered essential and therefore exempt from higher rates. The report also recommends the government more clearly spell out the types of mail and packages whose delivery it should financially support, such as prescription medications, Ivanova reports.

"Most of the recommendations made by the task force can be implemented by the agency. Changes, such as to frequency of mail delivery, would require legislation," Reuters reports.

No comments: