Chris: Hi, this is Chris Lien
Anita: And I'm Anita Pursley. Welcome to Industry Corner, a podcast where we share postal industry news to help you stay informed.
Chris: On today's podcast we talk about the United States Postal Service Board of Governors and a recent luncheon where Governor Williams talked about the strengths and challenges for the United States Postal Service, so let's get into it. Welcome to the podcast. Hi Anita.
Anita: Hey Chris. Happy New Year.
Chris: Well thank you. Happy New Year to you as well and and exciting 2019 ahead of us. A lot of opportunities, but before we get into 2019, I thought that we'd take a moment on the podcast today to talk a little bit about something very important that happened towards the end of 2018 and that is the confirmation by the Senate for two governors. We have two Board of Governors now that were confirmed by the Senate Governor David Williams and Governor Robert Duncan… and Anita, that's enough for the postal service to have their temporary committee, right?
Anita: That's correct.
Chris: Okay, so we can actually move forward with some things, but before we talk about moving forward and recapping a lunch that you and I were at with Governor Williams, I thought it might make sense to help our listeners understand what the role of the Board of Governors is and sort of their background. So could you kind of walk us through what, what the Board of Governors are and in a how that was formed and so forth.
Anita: Oh sure. That's a good idea. Okay. So the Postal Service's Board of Governors is just like any other board of directors for a public company. The major difference is that the appointees are Presidentially appointed or nominated, and then they have to go through a hearing process in a confirmation by the full Senate. So that's what takes very long. They are political appointees no more than four, or no more than five, excuse me, can be of a different political party. So in other words, if we have four Republicans and we would have five Democrats, but at full compliment it includes nine governors and right now we only have two. Two is better than none, obviously because we went without governors for um, well since December of 2016 and as you said, Duncan and Williams were confirmed by the Senate, I think it was late August, so we're operating under a temporary emergency committee. Duncan was elected chairman of the board while Williams was vice chairman and then flip flopped. Duncan is the vice chair of the temporary emergency committee, whereas Williams is the chairman. And let me just explain that real briefly. I know our listeners probably are aware of that, but we don't have a quorum yet, so the postal service has to operate under this temporary emergency committee. But what's really exciting is that they're reaching out to the stakeholders of the postal service. You know, I know we're going to talk about Williams and sorry if I'm taking over here, but I want to mention Duncan as well. Um, Robert Duncan, he is, got quite an impressive business background when he was assistant director at the White House Office of public liaison, which is where my daughter used to work actually. And then you as the chairman of the Republican National Committee for two years and then went on to be on the board of directors of the Tennessee Valley Authority and I think everybody's excited about that because that too is a regulated entity.
Chris: So he's definitely has a solid background in business, understands that no stranger to government. We know governor Williams is familiar. He had served also in government for quite some time, right? The office of the inspector general?
Anita: Right. He was the IG from 2003 to 2016. And another interesting fact about him is that he was the IG for five different federal agencies including the Social Security Administration and I think the Department of Treasury among others. So he has a wealth of background.
Chris: So both of these governors have a tremendous amount of background experience both in business as far as being able to lead a very, very large organization like the United States Postal Service. Something else that I've heard that maybe some people don't understand. The postmaster general and the deputy postmaster general. Now those are both selected by the Board of Governors, is that, is that correct?
Anita: That is correct.
Chris: And then those two positions, the PMG and DPMG serve on the Board of Governors, but I don't think they've got the same level of authority as an actual presidentially appointed Senate confirmed governor is that correct?
Anita: Right. For example, they cannot raise rates without governors. That's why we went through that lengthy period of time just on edge on, you know, what was gonna happen next to the postal service if they didn't get appointed governors. So you are correct about that.
Chris: So technically it's kinda like we have four governors, but two of which the PMG and tpmg really don't have that full authority that's granted by the appointment of the President and then confirmation through the Senate. But that's enough to have those, at least those two with that temporary emergency committee. And, and hopefully we'll get some more governors going into 2019. But let's talk a little bit about this luncheon that we attended. Anita, you're an active participant in something called WILDS…
Anita: That's exactly right. Women In Logistics and Delivery Services.
Chris: So WILDS, you know, is a great organization, I had the privilege of participating in a couple of luncheons and there was a luncheon that was hosted in November right after MTAC where you and I attended and David Williams was the featured speaker for that particular luncheon and he had some really good things to share. I felt.
Anita: Oh, he's such a great guy. He's a very thoughtful, very intelligent. I think what is the most exciting about him is that he's actively reaching out to stakeholders. In fact, that was actually my third time listening to him speak. He spoke at PostComm back in October and then at IdeAlliance up in Baltimore. And so he really is interested in hearing what the mailers have to say and he's a very, very strong supporter of the things that we would like to see advanced. So what did you find so interesting about his presentation? I know he talked a lot about the strengths of the postal service and then the challenges that they face and also the levers that they feel that they have to push, so to speak. So wanna start us off.
Chris: Sure, absolutely. And let me just add to that, I found him to have a tremendous sense of humor. He had me laughing a number of times. So for our listeners, if you ever get a chance to be at a venue or listen to governor Williams to be prepared to laugh, he's quite humorous and a tremendous speaker. The thing that I took away probably the most important was transparency. So he's very open. He is what you see. And I appreciate that he started off with strengths of the postal service and began first with something that was also called out in the President's Task Force, which is Universal Service Obligation. The postal service has a USO mandate, it's specified in the law, but what does that mean? It's a strength certainly for the postal service, and I agree with Governor Williams that the post service has this universal service obligation to go to every delivery point and some kind of a defined cadence with that. But we need to further understand what that is. I also thought it was interesting that the governor talked about the package business for the postal service. I wrote down a note here that according to Governor David Williams, 23% of all packages are handled by the postal service. 67% of all small packages are handled by the postal service. That's what you heard as well?
Anita: Exactly. Packages under a pound. They're really under the domination of the postal service and he also mentioned returns. So that's something that I believe the postal service will be focusing on going forward further in 2019 because that's a real opportunity for them.
Chris: I think so too. Particularly with the consumer facing part that the US Postal Service provides, so package returns, particularly after the holiday season with a lot of ecommerce going on. That could be a growth opportunity for the postal service with that and speaking of small packages, Governor Williams talked about pharmaceuticals as an important strength of the postal service. And I have to agree with that. I, I've been thinking about that for a long time. Anita, that with an aging population for the United States, more and more people are receiving their pharmaceuticals…they're prescriptive drugs through the mail, and so that's an important and vital way for the postal service to be able to connect with the consumer and the country in general is that you know, that you're getting your pharmaceuticals delivered from a trusted organization like the United States Postal Service, and then of course we also have to make sure that anything delivered like that is protected as well, which is where we have the Stop Act and other things that Congress has been focused on.
Anita: And that goes back to the USO. The postal service has an unmatched delivery network. I mean, no doubt about it and it's really working extremely well. They can mix letters and parcels together where no one else can do that. So pharmaceuticals, you're absolutely right. It's a trusted network and I think that the postal service is really our only option.
Chris: I like your point on mixing letters and flats and putting all those different classes and shapes and sizes together in that way. The postal service has really put together an impressive distribution network to be able to handle that and of course that network is also fed by the mailing service provider community, the entire mailing supply industry, and that's one area, Anita, that I was very pleased to hear governor Williams talk about as a strength is the relationship between the US Postal Service and the mailing industry.
Anita: And I think that's what everybody really wanted to hear him say. You know, he supports workshare. He thinks it's an incredible model that locks into efficient market forces and that it scales and it's just perfect is I think the word that he used. So he's quite supportive of the mail service providers and and understands that it's a vital part of the community and the network.
Chris: That was definitely welcome to hear from him on that. He did talk about some challenges though. I touched on one drugs being shipped through the mail. That's a challenge of course, and I know that the Stop Act is there to be able to give the postal service and Congress a little bit more ability to do that. And of course the US Postal Service inspection service, they are on top of that actively looking at and trying to make sure that the mail is safe for both the shipper and the receiver of those products.
Anita: He wants to make sure that it's very, very difficult to ship drugs and that it's a very punishable offense. And I think he really meant that.
Chris: Yes, I agree. The Postal Accountability Enhancement Act, PAEA. There's so many problems with that and we've talked about it at length on a couple of different podcasts. I was pleased to hear that he called that one out and noted that that's a challenge that needs to be reviewed, needs to be fixed. Of course that's going to be in the hands of Congress and we'll have to see what the new Congress for 2019 is going to be able to do with some of the change in the House.
Anita: Right? Yeah. And Chris, remember when he said that the governors are going to be more active on the hill. So I think he really wants to come up with an ideal piece of legislation and be on the hill promoting it. Although my understanding is that they're really not allowed to lobby, so that's going to be interesting to watch.
Chris: It is. But you know, he did make a comment like this, do that. If he has it his way, he'd like to establish the largest Board of Governor's Staff ever. I think his point on that is just that there's a lot of work to be done and, uh, a lot of analysis that has to be done of the mailing industry and the postal service. And I think one area that he talked about and touched on that I was really pleased to hear this phrase, the Middle Mile. We often talk about the first mile and the last mile. Of course, the last mile is a large part of where the postal services helping companies, uh, Amazon, for example, to do the final disposition of packages for them as a carrier. But at the Middle Mile, he talked about that and some of the challenges with the Middle Mile,
Anita: Right. He said it appears to be too slow and too inefficient and too expensive. So he, he really wants to focus on that and I'm not sure if it was in the WILDS luncheon that he mentioned this, but he did say that there's a lot of smoke pouring out of the FSS and so you know maybe we'll finally get down to the, you know, what's really the truth with that?
Chris: Yeah, no, that would be welcomed in and certainly that's important, particularly as the postal service is looking at applying additional automated capabilities like this ALPS machine, A-L-P-S. And getting a handle on that. There's this whole concept of a middle mile. I appreciate him using that phrase and I have to agree with that. Just a fresh set of eyes or look at how is the postal service handling the mail once it's received by them once it's inducted to the point where it goes out for that last mile from a carrier, what's happening in between there needs a thorough review and I think that there's opportunities for the mailing industry, right? To help from a work aspect to make that more expeditious.
Anita: Right. That's a little different than the task force report. That task force report said, you know, let the postal service handled the processing of mail since fast delivery was not exactly what was needed from the postal consumer. It was more predictable. So as a little bit at odds here, but I'm with you. I think the Middle Mile needs some analysis and of course the postal service now has the data to do that.
Chris: And I'm glad to hear that Governor Williams talked about data. Looking to be more data driven, data driven culture organization and standardizing things. He talked about the culture within the postal service. Obviously. I mean, it's a huge organization with hundreds of years of history and again, this universal service obligation that goes along with that, but there's a certain culture. And Anita, I think you would agree, you and I have seen it at times when we're at MTAC or when we're interfacing with our postal partners that sometimes there's kind of this large overarching culture that will let, you know, we can't move as quickly as we'd like or this and that. And so hopefully that, uh, you know, with the Governors, they'll find ways to become more streamlined, more business minded in getting new products out to the market and new areas to be able to grow the value of mail. And again, leverage the mailing service provider that mailing industry.
Anita: Exactly. You know another thing that he talked about is the final mile, and he didn't mention this at the luncheon at WILDS, but he mentioned it at another event where he talked about the fact that there's explosive growth of other companies in the last mile space and that we're probably headed for a business cycle of a shakeout. And so I think everybody in the room was a little bit nervous. you know, what is it that you're talking, right? If there's more players in that market, you know, in margins start to fall. I think that there will be fewer companies that survive, but the postal service is definitely going to survive in that space.
Chris: Exactly. You kind of shake your head with people talking about, well, the Postal Service is going to go bankrupt. Things like that, that that's not going to happen. It's fundamental to our country and for communication and of course for commerce and that's an important part. And that came across with Governor Williams, that is, we talked about before the package business, leveraging that, leveraging returns, leveraging the mailing industry as a partner in expanding on that. But I really welcomed the fact that he was very transparent, that the Board of Governor's staff, that he wants them to be the eyes and the ears for the industry so that he's open and wants to hear from us and I think they also need to find out what America wants from a postal service. Right? How often do we want to have mail delivered? Uh, what should a post office look like? I know the task force kind of touched a little bit on that in the context of expanded services, government services and things like that. It's a great point… For me growing up as a boy in northern Minnesota, I mean the post office was a defining point of our little community in Saginaw, Minnesota. Near Twig, you know, but, but so all this stuff, that's how communities identify themselves. So I think that's the question is what is universal service mean and what does this cadence of deliverance mean?
Anita: And I got the impression that he envisioned each post office being a little unique in what that individual community needs.
Chris: And sort of an identifier of the community. Certainly I think in some cases we've seen that where your suggestion to close the post office has proposed and then you'd hear the rally cry from the community that that's an identity point for them. So we'll see how the population responds. But I expect that a governor Williams in Governor Duncan and, and of course other governors, hopefully that can be confirmed by the Senate here in 2019. I expect them to be more transparent, more hands on with the mailing industry and hopefully very forward thinking and what we can do collaboratively to grow the value of mailing , grow this mailing industry.
Anita: I agree. And I do believe that Mr. Duncan will be speaking to IdeAlliance in February. At least that's the rumor.
Chris: That'd be great. Good. It would be nice to hear from him as well. Well, that's uh, that's what we had for our podcast today. Anything else, Anita?
Anita: No, I don't think so. I'm just anxious to get started and hear from Duncan and hear more from the Governors and make 2019 a great year.
Chris: I agree. Absolutely. And we're excited to hear from you, our listeners as well. So if you've got any questions or would like to know more information, we urge you to go to BCCsoftware.com or give us a phone call. Let us know how can we help. Thanks everyone and have a great day.