Regulator Skeptical on Proposed FCPS Package Slowdown

The USPS wants to slowdown First Class Package service. The PRC issued a non-binding opinion today that raises concerns about the timing and implementation of the plan and found the proposed changes would not substantially affect the Postal Service’s overall financial condition anyway.

The Postal Regulatory Commission (PRC) ruled today on the USPS proposal to slow down First Class Package Service (FCPS). That’s different from the First Class Mail slowdown that will go into effect on Friday.

The PRC said the stated goals of the FCPS “appear reasonable,” but it took issue with a number of issues related to the Postal Service’s plan, with implementation being a top concern.

Some of the most concerning findings include:

• The Postal Service assumed factors necessary for successful implementation of the proposal that have not been demonstrated.
• Flaws in the Postal Service’s transportation model could diminish its reliability. The Postal Service’s surface network impact projections and estimated cost changes are potentially inaccurate and unachievable.

The PRC also questioned the impact USPS changes to FCPS service standards would have even if there were no other issues:

“The Postal Service’s cost-saving estimates of the proposed changes may be inflated and the proposed changes would not substantially affect the Postal Service’s overall financial condition.”

The PRC also expressed concern about the timing to slow First Class Package delivery:

“Implementing processing and transportation changes prior to peak season may be challenging due to the continuation of the COVID-19 emergency and stress on the logistics industry.”

What is the USPS proposing? “The proposal would lengthen service standards by 1 to 2 days for approximately 31.2 percent of FCPS volume and shorten service standards by one day for approximately 4.8 percent of FCPS volume.”

The PRC explained, “The Postal Service states that attempting to meet the existing service standards has led to high costs, transportation inefficiencies, and difficulties in providing reliable and consistent service performance. See Request at 6. The Postal Service explains that transporting FCPS by surface (trucks) is more reliable and cost-effective than air transportation.”

The PRC issued four recommendations the Postal Service should consider before implementing its plan, which are outlined in the press release.

The PRC was clear that its oversight over FCPS and other “Competitive” products is far more limited by law than its oversight over First-Class Mail and other “Market Dominant” products.

“While the Postal Service acknowledged in its request for an Advisory Opinion that the universal obligation applies to the FCPS product, decisions regarding Competitive products are, by law, left to the reasonable business judgment of the Governors of the Postal Service,” the PRC stated, also noting that Wednesday’s Advisory Opinion was a “unique undertaking for the Commission, which has not previously issued an Advisory Opinion on Competitive products.”

Even with Market Dominant products, PRC’s final opinions are advisory in nature. “The law does not give the Commission authority to veto service changes,” the PRC said in March when the USPS filed to change service standard for First Class Mail, giving it 5 days instead of 3 days to get mail delivered.

In today’s press release, the PRC further wrote: “The Governors may establish rates and classes for all competitive products, subject to minimal regulation of price and service quality. With respect to changes in service standards, the Postal Service is required to seek an Advisory Opinion from the Commission; however, the Commission lacks the authority to enforce its advice regarding the proposed changes.”

You can find the advisory opinion on the PRC.gov website, where you can also access today’s press release announcing the opinion.

Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.