Transcript

Chris: 00:00 Hi, this is Chris Lien.

Anita: 00:01 And I'm Anita Pursley. Welcome to Industry Corner, a podcast where we share postal industry news to help you stay informed.

Chris: 00:11 This is part two of a two part series recapping the August 2019 Mailer's Technical Advisory Committee meetings. On today's podcast we discuss an update to Seamless Acceptance, more USPS organizational changes and concerns regarding the United States withdrawing from the Universal Postal Union. So let's get into it. Welcome to the podcast. Hi Anita!

Anita: 00:33 Hi Chris. How are you today?

Chris: 00:34 I am doing great, thank you. It's a nice day here in Rochester starting to cool down though. It's a reminder that we are in Rochester, New York. At least I am. You're in sunny Atlanta, Georgia, right? But up here winter is knocking at the door, so yeah, the leaves are starting to turn and stuff and apple season is big here too. That's another thing that is really fun about moving from Minnesota over to New York is just the access to all that great apples and the wine and everything like that here. What a great place. So thrilled to have BCC Software's headquarters here in Rochester, New York, but of course we have offices now in La Crosse, Wisconsin and Seattle, Washington. So hello to everyone. As we jump back into recapping the August 2019 Mailer's Technical Advisory Committee meets. There's so much content to talk about that we thought we'd break that into two different podcasts. We talked about the first part a couple of weeks ago and now we need to talk a little bit about some of the other things. And Anita, I think the first thing for our listeners is just a quick update on Seamless Acceptance because that was a topic that we talked quite a bit with Mark McCrery and his group.

Anita: 01:33 Exactly. And Mail Entry and Payment Technology. So they're delaying the Federal Register Notice again. They still have some things to work out, but the problem really is on the flat side of things. You know, we recorded some statistics before where most of the letter mailers have now converted to seamless, but it's the flats where weight directly affects the price. So in marketing mail if you're over four ounces or if you're a periodical – in fact, it's the periodicals that have been most vocal because they're the ones that have incidental enclosures, ride-alongs, blowing cards.

Chris: 02:08 Just so many complexities. And the other topic that I recall, what we discussed, which is a topic we've brought up over and over and over again at MTAC is humidity in the plants. The fact that paper absorbs the moisture and that weight variance that goes with that. I know that was a big topic and one of the suggestions in one of the focus groups, I can't remember which specific one, but you know – “Maybe we should have a work group that talks about how to accommodate or figure out something with this humidity of the weight,” and I'm like, “Oh, we've gone down that path many, many times. I don't know where you're going to have an answer for it.” Stop making it humid people! Right?

Anita: 02:39 Right, right. I know. I think the example that was given was, you know, you enter mail in let's say Wisconsin and then you're shipping it to Miami. Is the piece weight gonna vary in Miami, than Rochester, New York for example, where it's less humid? But they are going to start a pilot to see if they can get away from the PAF process, which I think it would be great. And they don't want to have multiple methods of coming up with a piece weight. So what they're gonna do is they're going to go back and look at July data and look at how the actual piece weight from downstream sampling varied from the actual piece weight that was taken at the plant.

Chris: 03:18 Okay. And so kind of get, get a little bit of a range or something like that on there. Maybe there's a median or something with that. And just for our listeners, uh, when we say PAF in this context, we're talking about a postage adjustment factor, not a process acknowledgement form. Cause my eye twitches every time they do that at MTAC, reuse that acronym.

Anita: 03:36 I know, I'm not sure why they did that, but it is confusing. So hopefully they'll be able to come up with some sort of error threshold. You know, give this data to the statisticians and say, okay, well come up with an acceptable variance. And that way we don't have to worry about having problems downstream and having adjustments on jobs or versions because of humidity and so forth. So hopefully that'll work. But anyway, as far as the Federal Register Notice, I believe it's supposed to be posted in September with a 30-day comment period. Parallel will still remain at March, 2020 but they won't require seamless until February of 202. So again, a delay. In fact, somebody asked, you know, if you don't have a procedure in place yet, why are you even issuing?

Chris: 04:17 Why even put a date out there? Yeah. And maybe it should be, once we figure out how we're going to do this, then x number of days after that date that we can all agree on it. That's when it becomes required or having some kind of a trigger that's time to when we finally say yes, this makes sense.

Anita: 04:31 Exactly. So anyway, they're making progress though. Little by little.

Chris: 04:35 Good. Okay. So let's talk next about the Plus One market test. And this is an attempt by the Postal Service to try and stimulate more mail volume or, or bring a greater awareness to a type of mail that has proven to be very effective. And it's something that is often called like a Marriage Mail envelope, right? Where you've got multiple advertising pieces in a single envelope, Anita?

Anita: 04:55 Right? Like a Valpak. Yeah. I don't know that there are that many products out there that are Marriage Mail are there? Maybe I'm misunderstanding, but it doesn't seem like there's that many around.

Chris: 05:05 Right. And I think that the idea behind this though, isn't it, to try and encourage others to maybe create that type of mail or maybe to do more with it. Look, the nuts and bolts of this it's an experimental product that'll be market tested beginning on October 1st, and the Postal Service's plan is to run that for two years. That's going to depend on how the early successes of the test go, but again, this is an advertised card that's mailed as an add-on piece, so it's sort of like a ride-along with a periodical that might have, but this is an advertising card that goes along with it in the envelope and both pieces have the address on it is my understanding.

Anita: 05:39 Right. And that surprised me.

Chris: 05:41 And they both have to be mailed at the same time. Yeah. There was a question in MTAC like, well, do they have to be mailed at the same time? Well yeah, that kind of seemed obvious to me that they would, but you're right. The fact that they both have the address on it and that those matched together, that'll be interesting too.

Anita: 05:56 So there'll be pre-sorted together?

Chris: 05:58 Pre-sorted together, yep. Even though they could be slightly different from an operational or mail preparation aspect. It could on the surface look like it's two different processing streams that somehow now have to be married together. And I wonder if that's going to create some logistic's challenge within a mail service provider or a printer to be able to do those. But it's an interesting thought and I certainly applaud the Postal Service for trying to come up with some innovative ways to get at least a little bit better awareness for mail use and different ways to do that. And I do think that these envelopes, like the Valpak you mentioned before, I mean there's valuable coupons in there. I certainly look at that. I know a lot of the people that I talked to that receive those types of mail pieces, they take time looking at that, as we talked about before, Anita coupons, millennials value coupons, they like that. So that's a good way to be able to get some greater awareness for that demographic as well.

Anita: 06:43 And they're going to be testing different price ranges, correct?

Chris: 06:45 That's my understanding. So this is really kind of a broad task, but stepping back a little bit further, it's good that the Postal Service is looking for different innovative ways to do things. Certainly that was a large part of what's driven Informed Delivery, but I think kind of coming back to the nuts and bolts of what is the Postal Service in the business to do, deliver the mail – and coming up with innovations that are mail-centric is a good idea.

Anita: 07:07 I agree. No, this is a good step. It's going to start October 1st I was kind of surprised at the swiftness.

Chris: 07:12 Yeah, it's coming up quick. All right, so a couple of organizational changes to, you know the Postal Service continues to kind of move some people around and stuff. Why don't you kick that off Anita.

Anita: 07:20 Yeah, well at MTAC we learned that Dale Kennedy, who was in the Product Management group, I think it was Special Services that he managed. He's now the Acting Manager of Product Classification. You remember Becky Dobbins? She retired quite a while ago, but I guess there's been upheaval or some turnover in that area, so Dale has given it a try. And Sheila Marano, who I don't know, she's taking his spot in Product Management.

Chris: 07:46 I don't know Sheila either, but I definitely know Dale and Dale's a friend. He's a great guy. He's absolutely somebody that listens very carefully to the mailing industry, customers, partners, and so forth, and just a really incredible individual. So, glad to see that Dale is moving into that. And I think he'll bring some really good levelheaded thought,

Anita: 08:03 I agree. That's a tough job. It's one I wouldn't want to have.

Chris: 08:07 But you know what? Dale's the right person for that. He's got the right attitude and demeanor. He can stand there and listen to the concerns and the challenges and respond to it tactfully and professionally. And I'm really, really happy that Dale's moving into that position. And of course he was at MTAC and involved. Dale was the MTAC Program Manager when I was the Chair or the ViceCchair. And it was great working with Dale in that regard. So congratulations Dale, you got a lot of people supporting you.

Anita: 08:32 That's right. Good luck to Dale. Definitely. And then Mark McCrery made some announcements on August 28th which was right during MTAC, but it wasn't brought up during the meeting, so I was a little surprised to see the memo that came out.

Chris: 08:43 Yeah, I thought so too. Yeah. Especially since they're very familiar names, right. Angela Dyer.

Anita: 08:48 Right, right. She's going to be the Director of Business Acceptance Solutions, which she'll be responsible for the Business Acceptance Solutions Group and Business Acceptance Performance Teams. And then also MSSC, that's a new acronym we have to get used to, the Mail Solution Service Center, which is the 800-number where you can call in and get acceptance questions answered immediately, so that's a big job as well. And then Randy Workman is going to be the Director of Commercial Acceptance. He'll probably be the one that the most mail service providers work with on a regular basis on acceptance verification and entry procedures. So that's good. And then Vicki Bosch, she's the name that we all know as well, Director of Commercial Systems. So she's a sharp lady. She really is. She's going to be responsible for overseeing the IT portfolio within Mail Entry and Payment Technology. And then she's going to be the liaison between IT and the business support systems such as Postal One, FAST, SASP, the Package Platform. I mean, yeah,

Chris: 09:54 That's a lot of systems that we all rely upon every single day. So, so Vicki's got a lot on her plate with that position. So good luck to Vicki.

Anita: 10:01 Exactly, exactly. A Name I did not know was Lisa Arcari, do you know Lisa?

Chris: 10:06 No, I don't.

Anita: 10:07 So I think she's going to be involved in initiatives like PC postage and working with meter vendors and the Automated Package Verification Program.

Chris: 10:16 Certainly looking forward to meeting her and hearing more about how she's performing in that particular role. And then of course Angela, Randy and Vicki are all familiar names, great people, and I think they're going to do well in those new positions.

Anita: 10:26 I do too.

Chris: 10:28 All right, so the final topic today is something that was very contentious and I think we touched on this before, but I felt that we need to get a little bit deeper into the conversation and that is the intent of the United States of America to withdraw from the Universal Postal Union. And I want to be clear when I say that as well. This is not the USPS saying that they're withdrawing from the UPU. This is the United States of America. And it was explained to us at the June MTAC meeting and then as a followup to the August MTAC meeting, which is Giselle Valera, she's the Executive Director of Continuity of Global Operations. She talked about what is involved with that and as a reminder to our listeners, the United States Postal Service falls under the Executive Branch of our government system, not Congress, not the Judicial, but the Executive Branch and is thus the President of the United States who issued this decree back in October of 2018 the intent to withdraw from the UPU. That was really a signal for the USPS to follow and take that memorandum series and begin planning for that. And the basis for it really quite simply is related to terminal dues and a disparity for international postal authorities that are providing mail into the United States to deliver through the United States Postal Service, but are receiving discounted postage rates that are lower than a domestic mailer who's mailing from one point to another. So if somebody is mailing from China and sending goods and services into the United States for deliverance through the United States Postal Service, and let's say it comes into Boston or something like that, it needs to go out to Los Angeles. Their postage from Boston to Los Angeles is significantly lower than a US company who's mailing a similar product from Boston to Los Angeles. And that disparity in postage was initially introduced back when countries like China and Japan and all these other countries were still recovering from the war or building out their economic situation, and so the United States in the interest of global trade and interacting, lowered the postage to try and encourage more goods and services to be shipped in the United States. Kind of lower that barrier to make it easier. Well now some of those countries are doing better and so it's calling into question. This is all kind of under that large, broad spectrum of the administration revisiting some of these things that have been in place for many, many decades. And this is one of them, where the administration looked at this and said, that doesn't seem to make sense. A US based company is paying quite a bit higher for postage, for delivering through the United States Postal Service, a quasi-government entity, then an outside foreign entity. So that's kind of in a nutshell what has prompted this. But it's creating a lot of angst, isn't it, Anita?

Anita: 13:13 It is. Most of the questions during the general session of MTAC were about this exact subject and MTAC usually doesn't deal with international, but you described that exceptionally well I thought. What is really happening is that because e-commerce is growing so rapidly, it's becoming so much more pronounced. And so when Trump made the announcement, the Postal Service was behind it. They are lock, step and barrel with the administration. And so they're in the process of a parallel path. They're trying to build support for the US position, which they do have other supporters. I believe Canada is in support of self-declared rates, but they also have to at the same time they have to have an exit strategy. So October 17th I believe is the date that they would have to pull out if the Extraordinary Congress does not vote to allow self-declared rates. So this is going to come to a head pretty quickly because the Extraordinary Congress is meeting September 24th and 25th, so we'll probably be talking about this on another podcast because we'll know pretty soon what the outcome of that is.

Chris: 14:17 Exactly. And just for our listeners benefit, so the UPU, the Universal Postal Union, think of that as like the United Nations of postal authorities. There's 192 member countries that are all part of this and they discuss and agree on how the postage rates are going to be for deliverance mail through their respective systems. If somebody in the United States wants to mail into Japan, for example, there's a terminal due or an adjustment on the postage to be able to do that. Once that mail arrives at Japan Post and they take possession of it and they're going to deliver that. And so, you know, as I stated before, the President of the United States feels that that's unfair and is proposing terminal dues and adjustment to that or they're going to withdraw from it. So it's a little bit of, hey, we're planning on withdrawing from the UPU unless you're willing to pay a higher amount, these other postal authorities, for deliverance of mail. The challenge here is that there are a lot of American citizens that are living abroad that absolutely mail to and from the United States for very critical things. Passport renewals, certainly personal letters and parcels and things like that, commerce and so forth. But also what was brought up in August are voting ballots. Three and a half million Americans, I think is what was stated that are relying on their ballot to be delivered through these agreements between a foreign entity in the United States Postal Service. And if we can't agree on how that's going to work, how are they going to be able to get their votes counted in those ballots?

Anita: 15:49 Right. The hardest part about this withdrawal is so much uncertainty coming up with these bilateral agreements and going through the RFP process to come up with agreements with the countries that are most critical to the United States. I'm sure that's keeping Giselle awake at night.

Chris: 16:07 Oh, absolutely. And she did talk about how there's a potential for the United States Postal Service to work with a commercial carrier as a means to pick up these critical pieces of mail ballots and so forth and bring them into the United States. That'll be interesting to see if that happens or if they're able to, to agree on something. Because certainly when we think about things like ballots and voting and stuff like that, there's a lot of concern and rightfully so on the integrity of the piece and making sure it continues to stay sealed and protected and so forth. So there's a lot of angst on this and we're all kind of waiting to see what's going to happen. But in the meantime, the United States Postal Service has no choice but to take the President's memorandum and position serious and prepare to withdraw in October of this year as you stated.

Anita: 16:49 Right, and you know what? There's a new development that I hadn't thought about. It was an article in Supply Chain Dive, I believe is what it was called, where the Postal Service had sent notices to organizations who have NSAs with the Postal Service and warning them that the international rates in their contracts may be null and void after September 30th of this year.

Chris: 17:11 That's right. Oh Man. There's a number of our customers and listeners to the podcast that are doing international mailings and I know a lot them are really on edge about what's going to happen with this. We'll have to wait and see. I hate to speculate, but I can say that based on the conversations at the last two MTACs, the authority in the law is well established. The President and the State Department have the authority to withdraw from the UPU if they choose to do and that's the path they're on. The Postal Service is a part of the Executive Branch, so they have to follow what the President says and they're behind it. They agree. And if you look at it on the surface, yes it absolutely is a disparity and has to be dealt with. Like everything, though, it's a question of negotiation. How do you negotiate from one country to another and hopefully reach something that works? In the meantime, at least I have some comfort that the Postal Service recognizes that there are some critical mail that they need to have a solution for in the event that there's a withdrawal and they can't agree on the terminal dues and they're beginning to have those conversations.

Anita: 18:10 Right. I believe it was mentioned that the PMG had been at the White House discussing vote by mail and the critical nature of that to ensure that the election military mail are not impacted.

Chris: 18:21 Exactly. So that's the situation folks. So stay tuned as that continues to move forward. And again, mid-October is when the special meeting of the UPU is supposed to happen. I think it's in Bern, Switzerland is where they have those. So we'll have to watch that very closely and see what the result of that is. But that's the latest on that. Is there anything else to touch on here Anita before we wrap up?

Anita: 18:41 There's just one other thing I wanted to mention that the July CPI was posted August 14th and it dipped below 2% already. So it's a 1.978, and so the August CPI, which is what the Postal Service will use in their October filing should be out, I'm guessing about September 13th or 16th. And then the Postal Service will likely file before October 14th roughly. That's when the September number will come out. So they always file the very last minute. Of course, we talked last time about the Board of Governors meeting on October 2nd and 3rd, right? So they're probably going to be voting on the rate filing and then discussing the Ten Year Business Plan. So that'll be a lot to talk about in the future as well.

Chris: 19:26 Yeah, exactly. My understanding is that the three new governors are actively drinking from a fire hose, as the saying goes, trying to get caught up to speed on how this industry works and all the rules and the laws and everything around that. So hopefully they're ready to go on that meeting because one of the things that is our understanding and from the PMG herself is that that's the meeting where she's going to be presenting the Ten Year Plan. So it'll be interesting to see how soon we'll get a glimpse of what's involved.

Anita: 19:49 Yeah, so I saw that their pictures are posted on the USPS website, so they're official.

Chris: 19:56 All right, good. Well, thank you again, Anita for all the great information. Looking forward to a future podcast.

Anita: 20:03 You bet!

Chris: 20:03 And thanks to our listeners as well. We really appreciate your comments and feedback on the podcast and glad that you're enjoying the podcast as you've told us. Please, if you ever have any questions or concerns, visit bccsoftware.com or give us a phone call because as always we'd like to know how can we help? Thanks everyone and have a great day.