2015 PSA Seminar October 7-8, 2015

Transcription

1 2015 PSA Seminar October 7-8, 2015 Thanks to our Sponsors Wednesday, October 7 (K& L Gates, 1601 K Street, NW, Washington, DC) 5:00-6:00 p.m. Executive Committee Meeting at KL Gates 6:30 p.m. Seminar Reception & Seated Dinner (Business Attire) Special Guest: Mark Acton Commissioner Postal Regulatory Commission P.J. Clarke s 1600 K Street NW Washington, D.C. **** Thursday, October 8 Capital Hilton Hotel (16 th & K St. NW, Washington, DC) (Across the Street from KL Gates) (Business Casual) 8:30 Coffee/ Networking/Check In 1

2 8:45 Welcome Remarks Richard Porras (Newgistics) President, Parcel Shippers Association 9:00 Session #1 Introduction: Steve Zwieg (FedEx Smart Post) USPS Financial Update Joseph Corbett Chief Financial Officer, USPS 9:30 Session #2 Moderator Pierce Myers, PSA Postal Costing What Should Be Done?-- Keith Kellison United Parcel Service Jessica Lowrance Association of Postal Commerce Andy German Managing Counsel, USPS Sander Glick Vice President, SLS Consulting 10:30 Session #3 Introduction: Richard Porras (Newgistics) 11:00 Session #4 USPS Local Operations Center Ed Phelan Vice President, Delivery & Postal Operations The 2017 PRC Review Pierce Myers, PSA 11:30 Buffet Lunch Guest Speaker: Fall Mailing Season Update Linda Malone Vice President, Operations USPS 2

3 1:00 Session #3 Moderator: Pierce Myers Executive Vice President & Counsel Parcel Shippers Association Regulation and Legislation the Outlook John Kane Committee on Homeland Security U.S. Senate James Sauber Chief of Staff National Association of Letter Carriers Art Sacker Executive Director 21 st Century Coalition Sander Glick Vice President SLS Consulting 2:15 Session #4 Introduction: Pierce Myers 2:30 Closing Remarks 2016 Politics the Outlook Dan Moll President Moll Strategies LLC Steve Zwieg (FedEx SmartPost) Chairman, Parcel Shippers Association Parcel Shippers Association Phone (571) PO Box Oxon Hill, MD 3

4 PARCEL SHIPPERS ASSOCIATION P. O. Box 450 Tel: (703) Oxon Hill, MD Tele: (571) PIERCE MYERS EXECUTIVE VICE PRESIDENT & COUNSEL October 8, 2015 To Our PSA Members and Parcel Shippers Friends, I encourage you to attend the National Postal Forum, March 20-23, 2016 in Nashville, TN at the beautiful Gaylord Opryland Hotel & Convention Center. At the Forum, you can create new and nurture existing important relationships, improve business processes, and identify and promote new opportunities. The Package Track is particularly exciting this year. In addition to the Package Track, there are over 130 other workshops, networking events and the mailing industry s Premier Exhibit Hall. So please plan to join us in March and sign up for the full NPF experience. The National Postal Forum is offering an additional discount to PSA members so be sure to claim your membership discount when you register. Enter the registration code PSA316 in the Other Discount field for an additional $100 discount off your full registration! Sincerely, JAMES PIERCE MYERS J

5 Parcel Shippers Association 2015 Seminar Attendees October 8, 2015 PSA MEMBERS Amazon Dennis Oates Regional Director Ben Gielow Sr. Manager, Public Policy Heida Kay Sr Program Manager CVS Caremark Tom Underkoffler Director of Log. & Packaging DHL David Loonam Sr. VP Sales & Customer Service John Medeiros Director, US & Domestic Network Engineering Innovations Inc. David Robinson VP Business Development FedEx SmartPost, Inc. Steve Zwieg Director Channel Support Services Andrea Thompson VP, Postal Operations & Engineering Barbara Wallander SVP, Chief Postal Officer Genco Justin Krawczyk Postal Consultant Jackie Makien Sr. Manager Postal Programs & Customer Engineering Gavin Tierney Managing Director, Business Development & Postal Programs Steve Day Director, Parcel Solutions Tom Myers National USPS Manager GrayHair Advisors Jody Berenblatt Senior Advisor Neopost George Hesse Director, Postal Compliance Newgistics, Inc. Richard Porras VP Postal Strategy and Operations Kevin Collins VP Sales and Business Development Roger Franco, Director Postal Services and Support 1

6 Parcel Shippers Association 2015 Seminar Attendees October 8, 2015 Orchard Brands, Inc./Blair Julie Bennett Operations Analyst OSM Worldwide Gaston Curk CEO Herman Curk Vice President/Partner Pitney Bowes Paul Kovlakas Director, Address Quality & Intelligent Mail Bill Shannon VP, Post & Carrier Solutions Parcel Shippers Association Sander Glick SLS Consulting Pierce Myers Executive VP & Counsel Manager-Print Larry Buc SLS Consulting Michael Scanlon General Counsel K&L Gates Kathy Siviter Postal Consultant Toni Scott Policy & Program Asst. Publishers Clearing House Wendy Smith Asst. VP Fulfillment & Postal Affairs UPS Mail Innovations Chester King Manager of Postal Affairs Keith Kellison VP of Publis Affairs Brian Palmer Director Global Affairs Ursa Major Associates John Callan Managing Director GUESTS Joseph Corbett Chief Financial Officer U. S. Postal Service Jessica Lowrance Exec. Vice President Association of Postal Commerce Andy German Managing Counsel U. S. Postal Service Ed Phelan Vice President Delivery & Postal Operations U. S. Postal Service 2

7 Parcel Shippers Association 2015 Seminar Attendees October 8, 2015 Linda Malone Vice President Operations U. S. Postal Service John Kane Committee on Homeland Security U. S. Senate Bruce Marsh Committee on Homeland Security U. S. Senate Alex Fiske Committee on Homeland Security U. S. Senate James Sauber Chief of Staff National Association of Letter Carriers Dan Moll President Moll Strategies LLC Bjorn Borstelmann Pirate Ship Arthur Sackler Sackler Brinkman & Hughes LLC Coalition for a 21C Postal Service Karen Key Director, Shipping, Products & Services U. S. Postal Service Lindsey Taylor Customer Outreach U. S. Postal Service 3

8 ISSUE 1: Should PSA Support Review Proposals and Potentially File Comments at the Postal Regulatory Commission Opposing Changes In (1) Methods for Measuring and Distributing Postal Service Costs; and (2) the Appropriate Share of Institutional Costs to Be Paid by Competitive Products that: Rely more on imputation and estimation or other changes than on actual observation and modeling if those changes increase the attributable costs distributed to competitive products? Require a greater proportion of Postal Service institutional (overhead) costs to be paid by competitive products? TIMING: In a recent filing at the Postal Regulatory Commission the United Parcel Service represented that it plans to file a petition this fall suggesting significant changes in the methods for measuring and distributing Postal Services cost. PSA anticipates these changes, if adopted, would increase Postal Service prices for many competitive Shipping Service products. These changes would be considered at the Postal Regulatory Commission and litigation could be complex and expensive. Existing Law (9) To allocate the total institutional costs of the Postal Service appropriately between market- dominant and competitive products * * * (2) the requirement that each class of mail or type of mail service bear the direct and indirect postal costs attributable to each class or type of mail service through reliably identified causal relationships plus that portion of all other costs of the Postal Service reasonably assignable to such class or type; * * * (a) IN GENERAL. The Postal Regulatory Commission shall, within 18 months after the date of enactment of this section, promulgate (and may from time to time thereafter revise) regulations 1

9 to (1) prohibit the subsidization of competitive products by market- dominant products; (2) ensure that each competitive product covers its costs attributable; and (3) ensure that all competitive products collectively cover what the Commission determines to be an appropriate share of the institutional costs of the Postal Service. [The Commission currently deems 5.5% of total overhead costs to be an appropriate share It is required by law to review this issue at least every five years). BACKGROUND: PLEASE SEE SANDY GLICK'S PRESENTATION (TO BE PROVIDED) 2

10 ISSUE 2: RATE STABILITY: SHOULD THE 4.3% EXIGENCY SURCHARGE FOR MARKET DOMINANT PRODUCTS, FIRST IMPLEMENTED IN EARLY 2014, BE MADE PERMANENT? TIMING: Immediate. BACKGROUND: As a result of the most recent PRC order in the exigency rate case, the 4.3% across the board market dominant rate increase first implemented in early 2014 will remain in place at least until next March at which time it could be rolled back in some fashion. Estimates of continued low inflation make it unlikely that a CPI price increase will take effect earlier than January Competitive product prices, however, will be increased in January 2016 according to the Postal Service. This is a key issue in negotiations on a legislative compromise ongoing with mailing industry representatives, Postal Service management, and postal labor. The Postal Service, with support from labor, argue that there is a continuing need for the revenue provided by the exigency increase if the Postal Service is to avoid a calamitous financial result. Support for continuing the exigency increase is being tied to support for Postal retiree health benefit reform (Medicare integration) which labor says will adversely affect it members. All agree on the large financial benefit Medicare integration could bring, removing almost $50 billion in unfunded liabilities from the USPS balance sheet. Supporters argue righting the balance sheet through making the surcharge permanent coupled with Medicare integration will make it easier to win continued strong price controls in the upcoming PRC Review (See Issue 3). Some PSA members who mail heavily in market dominant products, such as catalogs, would clearly obtain some short- term benefit from a roll back of those prices. Making the surcharge permanent would mean more revenue from market dominant products prices that are expected to benefit from low inflation at least until completion of the PRC Review (January 2018). Additional revenue from market dominant products would reduce some of the losses currently being incurred (See Issue 3), thereby reducing pressure on Postal Service management to hike competitive product prices to maintain necessary cash liquidity. Regardless of the outcome of this issue, competitive product price increases are planned for January This issue, however, could affect the size of those increases. Also, this is a key issue in ongoing legislative discussions. Some compromise here could avoid a more harmful result in the legislative arena where there seems weak support for rolling back the exigency increase. 1

11 Issue 3: Under existing law, beginning in December 2016 the PRC must review of the system of rates and classifications for market dominant product and may recommend changes. A key issue in this is expected to be whether the CPI Price Cap that limits price increases for market dominant mail classes (e.g. Periodicals, Standard Mail, First- Class Mail, Bound Printed Matter, Media Mail) should be modified or eliminated. There is no cap on competitive product price increases although there is a floor on how low those prices can go. Should PSA take a position on this issue? TIMING: The PRC is expected to begin its review in December This issue is at the center of postal legislation negotiations ongoing on Capitol Hill and the date of the review could be advanced or delayed by legislation. Existing Law (3) REVIEW. Ten years after the date of enactment of the Postal Accountability and Enhancement Act and as appropriate thereafter, the Commission shall review the system for regulating rates and classes for market- dominant products established under this section to determine if the system is achieving the objectives in subsection (b), taking into account the factors in subsection (c). If the Commission determines, after notice and opportunity for public comment, that the system is not achieving the objectives in subsection (b), taking into account the factors in subsection (c), the Commission may, by regulation, make such modification or adopt such alternative system for regulating rates and classes for market- dominant products as necessary to achieve the objectives. Note: a coalition of mailers has argued the exiting price cap imitation is, under the law, a Requirement that cannot be changed through the 10- year review process. We do not anticipate the PRC will address this question until late in 2016 at the earliest. BACKGROUND: Proponents of continuing the price cap regime argue that without question the CPI price cap regime that has been in effect. Since 2008 has limited postal price increases (some estimate average prices could be 15-20% higher today without the cap). This restraint has driven efficiencies in postal operations and substantial reductions in

12 the costs of providing market dominant postal services. Market dominant products are, generally by definition, monopoly products with respect to which the Postal Service would have virtually unchecked market power if not effectively regulated. The price cap regulatory regime has proved effective and should be continued. The Postal Service and its labor unions, who expect to benefit from higher postal prices than those permitted under the price cap regime, are expected to argue that while the price cap may have resulted in efficiencies and economies, it should be modified or eliminated given current circumstances that include: (1) declining volumes and revenues (citing expert economic opinion that price caps do not work well in declining industries); (2) the strict price cap does not take into account the cost of the mandated universal service obligation or the fact that the number of delivery points required to be serviced is increasing despite the decline in volume; (3) applying any cap at the narrow class level limits pricing flexibility and in some cases requires the Postal Service to continue to provide service at substantial losses; and (4) in order to survive the Postal Service must be able to provide its competitive services (e.g. Parcel Select, First- Class parcels, Priority Mail) at competitive prices which may not be possible if competitive product prices have to be artificially inflated to cover market dominant revenue shortfalls. Other regulatory regimes are possible such as cost of service or revenue targets as suggested by the House- passed version of the PAEA (H.R.22). Indeed, cost- of- service regulation was employed form 1971 through Draft legislation recently circulated by Senator Carper s office suggest a regime that takes into account the following criteria: CPI, volume variable costs, the number of delivery points, revenue per delivery point, the mail mix (i.e. decrease in high revenue First Class mail volume and growth in lower revenue mail volume) and any other criteria the PRC deems appropriate. (Indeed, punting the entire issue to the PRC.) In its most recent Annual Compliance Determination, issued March 27, 2015, the PRC estimated the losses since 2008 from just two noncompensatory products exceeds $9 billion as follows: Table III- 1 Periodicals Cost Coverage, FY 2007 FY 2014 ($ Millions) Fiscal Year Volume Revenue Cost Cost Coverage Contribution ,795 $2,188 $2, % - $ ,605 $2,295 $2, % - $ ,953 $2,038 $2, % - $ ,269 $1,879 $2, % - $ ,077 $1,821 $2, % - $ ,741 $1,732 $2, % - $670

13 2013 6,359 $1,658 $2, % - $ ,045 $1,625 $2, % - $509 - $4,447 Source: Library Reference PRC LR ACR2014/5. Table III- 5 Standard Mail Flats Cost Coverage and Contribution, FY 2008 FY 2014 Source: Library Reference PRC LR ACR2014/4. Fiscal Year Cost Coverage Contribution (millions) FY % - $217.8 FY % - $615.6 FY % - $577.0 FY % - $643.2 FY % - $527.9 FY % - $375.9 FY % - $411.0

14 2016 MTAC Meeting Schedule Jan (Tues- Thurs) Mar (with NPF) (Sun- Wed)(Tentative) Jul (Tues- Thurs) Nov 1-3 (Tues- Thurs)

15 10/6/15 Reinventing USPS Costing Is It Needed? Should It Be Done? October 8, 2015 Motivations I ve Heard Accusations of Cross Subsidization USPS Playing Favorites The Joys of Census Data 2 1

16 By Brian McNicoll It s not like Congress hasn t seen this movie before. The Postal Service is swimming in red ink again, and the only thing that seems to increase faster than its debt is the level of dissatisfaction with its service. And yet again, the Postal Service s response is not to improve the service and reduce costs in its congressionally mandated monopoly business of last-mile delivery of first-class mail, but to set up a series of side businesses to try to cover the losses. If you have a monopoly on a business people used 155 billion times last year, that should be your core business and you should look to it for efficiencies. Instead, we get Metro Post, the service in big cities that delivers groceries to customers, and a proposal, now encapsulated in three different pieces of legislation, to deliver alcohol through the mail. Also, there s the deal to deliver packages for Amazon and the operation in New York City where postal workers load seafood from a local fish market for delivery to restaurants by 11 a.m., and even the wacky proposal by Sen. Elizabeth Warren (D-Mass.) to have the Postal Service enter the consumer loan market. People are less concerned with the Postal Service turning a profit than with receiving their mail reliably and on time. And that s not happening. A recent report suggests the number of letters arriving late has jumped by almost 50 percent since the start of the year, and that s with the Postal Service s new, more-relaxed on-time delivery standards. The Postal Service can deliver those fish in New York by 11 a.m., but it is unlikely to deliver any piece of mail to any address in one day anymore. But up to 15 percent of the mail that is supposed to arrive in two days now does not make it on time, and mail that is supposed to arrive in three to five days, now takes longer up to 44 percent of the time. In all, 484 million pieces of mail were delivered late through June that s up 48 percent in just one year. It s gotten so bad the Postal Service has stopped closing post offices and mail sorting centers until delivery times improve. The Postal Service says it must pursue these outside interests to compete with Fed Ex, UPS and other carriers because first-class mail no longer generates enough income to operate. Its leaders say the only option is to use its unique and existing assets a coast-to-coast, house-to-house delivery system to generate additional revenue from the revolution in e- commerce. First-class mail volume did decline 2.2 percent through the first three quarters of this year and is a fifth lower than a decade ago, according to the Wall Street Journal. But the volumes, as Steve Hutkins, whose blogs on the Postal System, are still immense. Checks, medicine, magazines, mail ballots, newspapers, greeting cards, court documents and communications from non-profits all travel through the mail and will for the foreseeable future. The reach for outside dollars is misguided, and the Postal Service s package delivery business easily the one that comes closest to complementing its core business provides a good example of why. The Postal Service s package business is booming, and is, in the words of Keith Byrd, a shipping consultant, absolutely taking market share from the small parcel carriers, especially on lighter-weight e-commerce. Revenue from these operations has increased 10.6 percent over the last year and now accounts for $3.56 billion of the Postal Service s $67.8 billion in revenue. But because the Postal Service is not truly set up to run a package business its leaders are right now shopping for 180,000 more package-friendly trucks it lost money on the venture. Labor costs alone rose by $8.8 billion in one year, and the Postal Service s own chief financial officer said the added time it takes to deliver packages in dense urban areas, which planners had not factored in, accounted for most of the increase. This follows a long pattern of the Postal Service failing at side ventures because it launched them without adequate costbenefit analysis. For example, Metro Post, the grocery delivery service, generated less than $1 in revenue for every $10 invested and, in one 10/6/15 Accusations/Implications of Cross-Subsidy Postal Regulatory Commission Submitted 2/2/2015 4:18:23 PM Filing ID: Accepted 2/2/2015 COMMENTS OF CAGW CITIZENS AGAINST GOVERNMENT WASTE FEBRUARY 2, 2015 COMMENTS BEFORE THE POSTAL REGULATORY COMMISSION WASHINGTON, DC In accordance with the Postal Regulatory Commission s (the Commission) open docket (ACR2014) for the U.S. Postal Service s Annual Compliance Report for Fiscal Year 2014 ( FY 2014 ACR ), Citizens Against Government Waste (CAGW) submits the following comments for consideration. CAGW is a private, nonpartisan, nonprofit organization founded in 1984 that represents more than one million members and supporters nationwide. The group s mission is to identify, publicize, and eliminate waste, mismanagement, and inefficiency in the federal government. CAGW has always been concerned with the practices of the U.S. Postal Service (USPS), particularly the agency s risky and opaque accounting practices. The true costs of all of the agency s products are currently not transparent or available. The lack of reliable and accurate cost data directly impacts the solvency of the USPS and taxpayers, who would be called upon as a financial backstop if current fiscal trends persist. CAGW urges the PRC to analyze and reveal the true costs of all of the USPS s activities, in particular new lines of business such as same-day delivery services, in order to determine whether these new products and services are self-sustaining or money-losing ventures supported by revenue from market dominant, monopoly protected products. For example, a February 5, 2014 USPS Office of Inspector General report on a same-day delivery experiment in San Francisco, California found that The Postal Service did not properly implement the pilot. They did not have sufficient participation from the six selected retailers to achieve the required daily minimum target of 200 packages per delivery day. Only 95 packages were sent by the six participating retailers over a 5-month period. However, only one large retailer agreed to participate in the pilot, and later withdrew prior to implementation due other operational priorities. The Postal Service was left with small local retailers that could not produce the target daily package volume. The Postal Service earned $760 and incurred costs of $10,288, with a net loss of $9,528. Despite the clear failure of this project, just over a month later, the IG released a report on March 13, Same-Day Delivery: An Opportunity for the Postal Service? that called for additional tests of same-day delivery. The OIG stated that As First Class Mail continues to decline and further disruptions to postal operations are sure to come, new revenue streams will be crucial to the Postal Service s survival. Same-day delivery raises challenging questions for the Postal Service. Will consumer demand increase as the service becomes more widespread? How will it disrupt the parcel delivery business, which the Postal Service is relying on to replace revenue lost from declining First Class Mail? Do the potential rewards for providing the service now outweigh the risks? The IG concluded that, The Postal Service is right to test same-day delivery on a relatively modest scale. As First Class Mail continues to decline and further disruptions to postal operations are sure to come, new revenue streams will be crucial to the Postal Service s survival. The Basis and Extent of the Monopoly Rights and Subsidies Claimed by the United States Postal Service Robert J. Shapiro March 2015 September 14, 2015, 11:00 am Congress should not expand responsibilities of postal service 3 But What Is A Cross Subsidy? Incremental Cost Test: The revenues collected from any service (or group of services) must be at least as large as the additional (or incremental) cost of adding that service (or group of services) to the enterprise s other offerings. If Incremental Cost Test Met, There Is No Cross Subsidy 4 2

17 10/6/15 An Economic and Intuitive Standard If revenue exceeds incremental cost, then USPS offering product: Improves USPS finances Benefits other users of postal system Not allowing USPS to provide product for which revenues exceeds incremental cost hurts USPS finances. And USPS has financial incentive to charge packages what market will bear 5 Incremental vs. Attributable Cost [T]he Postal Service measure of attributable cost understates the value of a product s true incremental cost by only a small percentage amount. -- John Panzar 6 3

18 10/6/15 PRC Has Consistently Found No Cross Subsidization Table III-6 Total Competitive Products Volume, Revenue, and Cost ($ Millions) FY 2014 FY 2013 Difference % Change Volume 3,448 3, % Revenue 15,280 13,741 1, % Attributable cost 10,970 9,881 1, % Contribution to institutional cost 4,310 3, % Source: FY 2014 and FY 2013 Postal Regulatory Commission Financial Reports, Appendix A. 7 Fully Distributed Cost FDC includes: Incremental cost plus A non-causal allocation of other costs Not economically meaningful Requiring revenue to cover FDC costs would result in: Bad pricing decisions Loss of profitable volume 8 4

19 10/6/15 Two Cents From Our Foreign Correspondent 9 Playing Favorites Pricing Investments 1 0 5

20 10/6/15 Pricing 12.0% 10.0% 8.0% 8% 8% 9% 10% 10% 10% 9% 8% 8% 6.0% 4.0% 2.0% 3% 2% 2% 2% 1% 0.0% Parcel Select DDU Lightweight CPI 11 Investments Invest where capacity is needed Common sense Not playing favorites Why replace vehicle fleet? It s really old! 1 2 6

21 10/6/15 Tracking Data 1 3 Full-Service IMb Not a census Barcodes are on mail USPS costs mostly for people Opportunity for improvement Not a cure all 1 4 7

22 10/6/15 Recommendation Current overarching costing framework is correct. Some costing methods can be updated and improved. Existing PRC procedures for updating methods are appropriate. Thorough vetting High bar 1 5 8

23 10/6/15 PRC Regulatory Report October 8, 2015 Topics Exigency First-Class Mail Retail Parcel Transfer Full-Service IMb Remand City Carrier Street Costs Costing 2 1

24 10/6/15 Exigency Exigency Remand Addressed Count Once issue Rollback would likely be next April USPS Appeal Basis: Whether the Postal Regulatory Commission s (PRC s) computation of the loss of mail volume and contribution due to the Great Recession is contrary to 39 U.S.C. 3622(d)(1)(E) and the PRC s implementing regulations, or is otherwise arbitrary, capricious, or an abuse of discretion. 3 FCM Retail Parcel Transfer Denied Me: If it s profitable to raise price by 20+%, the product, almost by definition, is not competitive (regardless of whether it s a package). Majority Opinion: If it s a package (particularly a commercial one), it s probably competitive, but USPS has to provide product-specific proof. Taub/Hammond: If it s a package, it s competitive. No more analysis needed. 4 2

25 10/6/15 Open Questions How Much Evidence? DC Circuit Viewpoint? 5 Full-Service IMb Remand DC Circuit Court PRC is authorized to treat rule changes affecting the rates actually paid as rate increases for price cap purposes. Not all mail preparation changes should be treated as rate increases. PRC must articulate standard of when a rule change should be treated as rate increase. 6 3

26 10/6/15 Full-Service IMb Remand USPS Rule changes should not be treated as rate changes for price cap purposes PRC can regulate rule changes through other regulatory provisions Mailers Unless trivial, rule changes that affect rates actually paid are rate increases for price cap purposes Any other interpretation would gut price cap 7 Costing 8 4

27 Joseph Corbett Chief Financial Officer and Executive Vice President Joseph Corbett was named chief financial officer and executive vice president of the United States Postal Service in February 2009, reporting directly to the Postmaster General. He heads the organization s Strategy, Finance, Treasury, Accounting, Supply Management, and Regulatory Reporting functions. He also is a member of its Executive Leadership Team and Chairman of the Investment Review Committee. The Postal Service has annual revenues of more than $65 billion and is an independent, commercially funded entity of the Federal Government. Corbett has more than 25 years of finance, treasury and accounting experience. He has extensive experience in strategy, financial planning and analysis, accounting, SEC and financial reporting and banking and capital market transactions. He began his career working for more than a decade with Big Four accounting firm, KPMG, where he served as a senior member of their Commercial Practice Group, serving publicly and privately held companies in the manufacturing, professional services and transportation industries. Corbett also spent more than ten years serving in senior management roles at three multibillion dollar commercial companies: controller, chief accounting officer and executive vice president and CFO at Intelsat, Ltd; CAO and CFO at BearingPoint, Inc.; and before these positions, chief of internal audit at NVR, Inc. At these companies, he led multiple efforts related to all aspects of accounting, financial planning and reporting, and treasury transactions including an initial and numerous other SEC-filed capital market transactions. Corbett s success as a transformational leader in complex environments and accounting situations aligns with the financial needs unique to the Postal Service. Corbett graduated with honors from George Washington University, where he received his bachelor s degree in business administration and was later admitted to the GWU Athletic Hall of Fame in Corbett is a member of the Greater Washington Society of CPAs, has chaired Sarbanes-Oxley (SOX) and Retirement Plan committees, and was previously a director on the boards of two private companies. March 2014

28 Edward F. Phelan, Jr. Vice President, Delivery Operations Edward F. Phelan, Jr. was named vice president, Delivery Operations, in August He reports to the chief operating officer and executive vice president. In this position, Phelan has responsibility for all aspects of delivery within the Postal Service network of 154 million households and businesses. He oversees city and rural delivery operations and evaluates field performance measures to improve productivity. In addition, he also manages Delivery Strategy and Planning and Fleet Management of more than 200,000 vehicles. Prior to this selection, he was vice president, Delivery and Post Office Operations, where he had the responsibilities mentioned above as well as overseeing operations at nearly 32,000 Post Offices, stations and branches. Before that, Phelan was the district manager for the Albany District which reaches more than 3.5 million postal customers served by 705 Post Offices across approximately 27,800 square miles of Upstate New York. Since joining the Postal Service in 1979 as a distribution clerk, Phelan has also served as district manager, Connecticut Valley District; manager, Delivery Program Support for the Northeast Area; and as Postmaster, Syracuse, New York. Phelan worked at USPS Headquarters on special projects including Breakthrough Productivity Improvement (BPI) studies and in Syracuse as a national Delivery Redesign Test Site. He received the prestigious Area Vice President (AVP) award in 2005, 2007 and 2008 for exceptional achievement in these areas. He served with the National Advisory Committee for Postal Customer Councils and was a panelist at four National Postal Forums. A graduate of the Postal Service's Advanced Leadership Program (ALP), Phelan has degrees in business from Columbia College and the State University of New York at Morrisville. January 2015

29 Linda M. Malone Vice President, Network Operations Linda M. Malone was named vice president, Network Operations in February This role encompasses responsibility for the distribution network of the Postal Service. Her responsibilities include the overall design of the network, policies and programs for processing sites, logistics required to move the mail, and maintenance policies and programs that support the network. She reports to the chief operating officer and executive vice president. Malone began her postal career in April 1985 as a letter carrier in Wilmington, DE. She has extensive mail processing and customer service experience. Most recently she served as manager, Processing Operations. Before that, she held the positions of district manager, South Jersey District; senior plant manager, Central PA; manager operations, Technical and Systems Integrations Support in Washington, DC; system/process engineer, requirements analyst, operations specialist, Merrifield, VA; economist, Washington, DC; and manager, Customer Services, Wilmington, DE. Malone holds a Bachelor s Degree in Business from the University of Delaware and a Master s Degree in Business Administration from Averett University. She is Lean Six Sigma Black Belt Certified. February 2015

30 BIO Jessica Lowrance Jessica Lowrance currently serves as the Executive Vice President of the Association for Postal Commerce (PostCom). She came to PostCom after working in different positions within the pricing department at the U.S. Postal Service. Her area of responsibility dealt mainly with the many aspects of Negotiated Service Agreements. Jessica has worked with many customers within the industry to develop, file, and implement these customized contracts. She has served as a witness for the Postal Service before the Postal Regulatory Commission. Jessica has been recognized on numerous occassions for her outstanding work within the Postal Service through various departmental awards. Jessica has been awarded the designation of Certified Association Executive by the American Society of Association Executives. She has authored and presented papers at national and international conferences on postal policies, economics, and operations sponsored by the Rutgers University Center for Research in Regulated Industries (CRRI). She is a member of Women in Logistic and Delivery Services (WILDS), and the Professional Pricing Society. Jessica is also a two-time state champion, high school girls' acrosse coach. She also serves as a women's lacrosse official. She received her master degrees in marketing and management from Strayer University and her bachelor's degrees in economics and marketing from Lynchburg College in Lynchburg, VA.

31 BIO Sander Glick, Vice President, SLS Consulting, Inc. Mr. Sander Glick is a co founder and Vice President of SLS Consulting with over 20 years of consulting experience, eighteen of which have been focused on postal issues. Clients include mailers and trade groups that use all classes of mail. His work has included providing expert witness testimony before the Postal Rate Commission (now Postal Regulatory Commission) on numerous topics, including costing, rate design, work sharing, mail preparation, and operational issues. Since the enactment of the Postal Accountability and Enhancement (PAEA) in 2006, Mr. Glick has been involved in shaping the Postal Service s regulatory framework and has actively participated in Postal Regulatory Commission proceedings

32 R. Andrew. German R. Andrew German is currently the Managing Counsel for Legal Strategy in the Law Department of the United States Postal Service. He is responsible for legislative and policy matters, as well as appellate and commercial litigation.