Mailing/Fulfillment - Postal Trends

U.S. Postal officials have said recently that they plan to implement new postage rates for the Standard and Periodicals classes early next year that include “an FSS pricing structure.”

Details have not been released, but discussions indicate the plan will include significant incentives for mailers to create FSS-optimized bundles for ZIP codes served by the giant machines while continuing to make traditional carrier-route and 5-digit bundles for non-FSS areas.

The move would take aim at a major reason the $1 billion-plus FSS investment so far has increased USPS’s mail-handling costs more than it has reduced delivery expenses.

The U.S. Postal Service added to its losses in the second quarter and is closer to needing “extreme action” to keep it afloat, Postmaster General Patrick Donahoe said.

“At some point our financial liabilities become so large that they cannot be fixed without taking extreme action,” Donahoe said today at a board meeting in Washington. “We don’t want to get to the point where extreme action is the only option.”

In April, the USPS delayed its implementation of five-day delivery schedule until legislation is passed that provides the USPS with the authority to implement a financially appropriate and responsible delivery schedule.

According to Post Master General and CEO Patrick Donahoe, if legislation doesn’t pass, the postal service will have to do something to get revenue in the organization.

“We have not given up on mail at all, we know there is growth and we have not given up on packages,” said Donahoe.

As Dead Tree Edition reported last month, USPS proposed to offer large mailers a one-time “Technology Credit” and then to have those credits considered a price decrease for purposes of calculating its inflation-based rate cap. That would result in permanent price increases that would eventually cost mailers far more than the maximum $5,000 credit per mailer.

USPS clarified—or changed—its position this week in response to questions from PRC Chairman Ruth Goldway.

The government agency that’s supposed to support itself through postage sales lost about $3 billion in the first half of its fiscal year, from Oct. 1 through March 31, Postmaster General Patrick Donahoe said in an interview airing this weekend on Bloomberg Television’s “Conversations With Judy Woodruff.” That decline is projected to double by the year’s end, which is Sept. 30, he said.

The Postal Service continued its money-losing streak by reporting a first-quarter loss of $1.3 billion. The service is scheduled to release second-quarter results May 10, when its board meets in Washington.

The recent U.S. Postal Service financial report for the first three months of fiscal 2013, said that in operational terms the Postal Service had a $100M profit delivering the mail—six days a week. It earned revenues of $17.7B selling stamps and services and had expenses of $17.6B. But the quarter's $1.4B pre-funding cost led to a reported "loss" of $1.3B.

There is much support for rectifying this situation, including from the postmaster general, the postal unions, many industry observers and, most importantly, from hundreds of members of Congress from both parties.

The Washington Examiner has entered this discussion.

At an estimated cost of $66 million, the U.S. Postal Service (USPS) will provide credits to mailers that have mailings containing at least 90 percent Full-Service pieces between June 1, 2013 and May 31, 2014.

Here’s the catch: USPS is asking the Postal Regulatory Commission to consider the credits a price decrease for purposes of calculating the price cap for the next round of rate changes. Without such consideration, USPS claims it would be discouraged from offering future credits that promote more efficient mailing practices.

The logic of the request seems to be that the Postal Service would be paying out credits

Complaining about the postal system is a national pastime in the United States, but looking at the rest of the world can put things into perspective.

"The USPS, even with its vast problems, is still the best and cheapest postal system in the world," wrote an unnamed subscriber in a comment published today on Morning News Beat, a grocery industry news site.

The writer, who frequently sends mail overseas, says "most European countries charge between $2.00 and $3.00" to send a one-ounce letter to the United States, while the comparable rate for an international letter from the U.S. is only $1.10.

The House committee will hold a hearing Wednesday to “explore a range of options to avoid a multi-billion dollar taxpayer funded bailout and restore USPS to long-term financial solvency,” according a statement put out by Rep. Darrell Issa, R-Calif., the committee’s chairman.

Issa condemned the Postal Service’s decision to cancel plans to move to a five-day mail delivery schedule, calling the choice a major roadblock to reaching a deal on reform legislation.

Postmaster General Patrick Donahoe and members of the USPS Board of Governors will testify at the hearing.

U.S. Postal Service (USPS), which recorded a $16B loss last year and expects to lose around $7.5B this financial year, believes reducing letter delivery services by a day per week could save $2B a year.

The Postal Service has been bound by U.S. federal appropriations legislation to provide six-day-a-week mail delivery since the early 1980s. However, after last year saw Congress failing to pass reforms including a move to five-day-a-week mail delivery, Postmaster General Patrick Donahoe ordered a reinterpretation of the law.

The reinterpretation suggested that a temporary appropriations bill running through to September 2013 does not include the language preventing five-day