In Wednesday’s recap of the Mailers’ Technical Advisory Committee (MTAC) meetings, we reviewed the numerous ways the Postal Service is using data to enhance its operations. Today other topics take center stage, as we look as the current state of the USPS finances and mail volumes, 2015 rates and promotions, and the status of Postal Reform legislation.
State of the USPS
While the use of data was a big topic at the MTAC meetings, so too were broader issues facing the Postal Service. USPS CFO, Joe Corbett, reported Q3 financial results that showed the USPS with $1 billion in “controllable” income before adjustments for retiree healthcare accruals and workers compensation fair value and other non-cash adjustments, which resulted in a loss of $4.2 billion YTD in FY2014. He also noted that USPS liquidity had improved to 19 days cash on hand, but that the Postal Service still needed additional capital for investments in replacement delivery vehicles and additional processing equipment to support growing package volumes.
Postmaster General Patrick Donahoe described Standard Mail revenue and volume as “hanging in there,” with marketers continuing to use mail as a primary marketing channel or trying it for the first time. He also thanked mailers for “their business and their trust.” Donahoe went on to say it was “full speed ahead” with the recently announced “Phase 2” consolidations of mail processing operations, despite concerns expressed by postal unions and some members of Congress. There are 82 additional consolidations planned between January and August 2015.
Rates and Promotions
Donahoe also noted that the Postal Service was “in a fix” regarding postage changes for 2015 because of the appeals currently pending over the exigent price increases put in place in January of this year. Given the fact that court rulings on the appeals aren’t due until later this fall, he said he had a “fairly good degree of certainty” that a price adjustment would not take place in January 2015.
The lack of a clear decision on moving forward with a 2015 price adjustment is leaving the USPS marketing team in a quandary. They usually file proposed promotions for a calendar year with the Postal Regulatory Commission (PRC) along with the rate filing for the same year. Since this year’s rate filing is in doubt, Gary Reblin, USPS VP New Products and Innovation, said the promotions will be filed separately if the pricing measure is pushed back.
There are fewer promotions planned for 2015, but each promotion will run for a longer duration than in the past. It is hoped that this approach will give more mailers the opportunity to participate in promotions and a longer period to recoup any expenses incurred in preparing for the promotion.
The four promotions on the table for next year expand on promotions that occurred this year. They are:
- Color Print in First-Class Transactional Mail: use of variable color print technology in bills and statements;
- Mail Drives Mobile Engagement: linking direct mail to online transactions;
- Earned Value Reply Mail: postage credits for returned reply mailpieces;
- Advanced/Emerging Technologies: encourage use of “enhanced” augmented reality or standard Near Field Communications (NFC) technology in direct mail campaigns.
Postal Reform Update
Congress went on its August recess without completing the job of passing comprehensive postal reform legislation. Postmaster General Patrick Donahoe described the lack of Congressional urgency to put the Postal Service on a firmer financial footing by providing an improved business model as “disappointing,” although he added that he would prefer no legislation to bad legislation.
Negotiations are ongoing among postal stakeholders in an attempt to find a compromise that can pass Congress after this fall’s election; however, the House and Senate remain far apart in their approaches to this legislation.
That’s all from the MTAC meetings. We tried our best to summarize the main information that was presented, but obviously these are complicated matters. If you have any questions, particularly how to take advantage of the anticipated 2015 rate promotions, please send me a note and we’d be happy to help.
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