Last week, I was able to escape the freezing temperatures in the Midwest for the (relatively) balmier weather of Washington D.C. and the quarterly Mailers Technical Advisory Council (MTAC) meetings. A lot of Postal Service news was shared during the meetings that could have a big impact on our industry, so today I wanted to summarize the important takeaways that direct mailers need to know about.
Despite ongoing litigation between the Postal Service and the Postal Regulatory Commission (PRC), Postmaster General (PMG) Megan Brennan announced at the MTAC Stakeholders Meeting that the Postal Service expects the exigent portion of postage rates to be rolled-back in early April. She promised the assembled group the Postal Service would provide no less than 45-days notice of the price change, so we are expecting the notice to go out in late February. This is a very simple rate change that only adjusts rates in existing cells – there will be no changes in rate structure. CFO Joe Corbett expressed concern the loss of exigent rates will reduce USPS revenue by about $1 billion each year, so the Postal Service is still pressing Congress for postal reform legislation to help offset the loss.
Postal Reform Update
Speaking of postal reform, there is activity in both the House and Senate toward possibly moving a measure forward this year. Rep. Jason Chaffetz (R-UT), chair of the House postal oversight committee, has told mailing industry leaders that postal reform is one of his top priorities this year. In the Senate, Sen. Ron Johnson (R-WI), chair of the Governmental Affairs Committee, will hold a committee hearing on postal finances tomorrow. Most industry observers are cautiously optimistic we will see progress this year, although many say the most likely scenario is a small postal reform measure incorporating items with wide stakeholder agreement being added to a larger bill, probably after the election in November.
What’s Coming for Pricing in 2017?
Other Postal Service news included an update on pricing. USPS management used the MTAC sessions to begin the discussion with the mailing industry about various pricing initiatives they are considering for the next price change for market dominant products (First-Class and Standard Mail), which will likely occur in January 2017. The Annual Compliance Determination that the Postal Service filed recently with the PRC has raised industry concerns about the accuracy of some of the USPS’ costing measures, which could drive unexpected price changes that may impact which mail preparation procedures are the most cost-effective, possibly disrupting internal USPS workflows. We appreciate the Postal Service starting this conversation now so we can find the most cost-efficient mail preparation solutions for both the mailing industry and the Postal Service.
The Postal Service is already well on the way to developing the list of mailing promotions for 2017. The goal is to have the promotions approved by the PRC in the fall so mailers have more of a head start in planning their mailing programs to take advantage of promotions than has been allowed in recent years.
Mail Volume Trends
Mail volume trends are largely a good-news story. Standard Mail volume (advertising mail) has stabilized and is showing slight growth. Commercial First-Class Mail volume (transactional mail) was stable in FY 2015 as well. Single-piece First-Class Mail (correspondence and bill payment) continues to decline, but no faster than anticipated. The real success story is the volume of parcels being handled by the Postal Service. Shipping volumes in FY 2015 grew by 2.9% and the Postal Service handled 18.5% more parcels during the holiday shipping season in December than it did in December 2014.
Board of Governors
The Postal Service is usually led by a Board of Governors consisting of nine presidentially-appointed governors as well as the PMG and Deputy PMG. Due to expiring terms and the fact the Senate has not acted on any board nominations since 2010, there is only one presidentially-appointed member left on the board, and his term expires in December. There are currently five nominations that have been approved by the Governmental Affairs Committee and are awaiting approval by the full Senate. That approval is currently blocked by Sen. Bernie Sanders (I-VT), who opposes two of the nominees. IWCO Direct stands with the leaders of a wide range of mailing industry associations who recently called on the leadership of the Senate to begin acting on these nominations and rebuild the Board of Governors so it can fulfill its intended role in guiding the Postal Service.
Looking Forward to the National Postal Forum
We look forward to visiting with customers and prospects at the National Postal Forum in Nashville, which takes place March 20-23. IWCO Direct and Mail-Gard will be participating in four seminar sessions and Mail-Gard will have a booth on the exhibit floor. Be sure to watch the Events Listing on our home page where we will announce seminar times and Mail-Gard’s booth number as soon as they are available.
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