Mailing industry stakeholders gathered last week at U.S. Postal Service headquarters in Washington, DC for the summer meeting of the Mailers Technical Advisory Committee (MTAC). These meetings always provide a great opportunity for networking among USPS executives and industry leaders, as well as the chance to learn more about what’s happening in the postal world. I wanted to briefly recap some of the main challenges and opportunities facing the USPS and their potential impact on users of direct mail in the coming year.
Lack of Governors May Delay 2018 Promotions
As you may recall from my most recent postal issues update, we focused on 2018 postage prices, postal promotions, and the various factors that could determine the magnitude of the price change for next year. One of those factors was the lack of presidentially appointed governors on the USPS Board of Governors, as those governors are the only officials authorized to approve rate increases.
It had been widely assumed that James Bilbray, the last presidentially appointed governor who left office in December, had pre-approved both a CPI price increase effective in January 2018 and a continuation of 2017 mailing promotions into 2018. We were surprised to learn that although the CPI price increase had indeed been approved by Governor Bilbray, he had not approved any mailing promotions for 2018. This means the USPS marketing team cannot move forward with any new postal promotions until at least one governor is nominated by the President and confirmed by the Senate. Depending on how quickly that happens, the rollout of 2018 promotions may be significantly delayed.
2018 Pricing Guidance
Sharon Owens, VP Pricing & Costing, confirmed the USPS would likely file an inflation-based price adjustment with the Postal Regulatory Commission (PRC) in late September or early October that would take effect on January 21. The average increase should be about 2%, but individual rate cells could vary between 1% and 3% increases. Among the rates that could see higher increases are SCF-entered Marketing Mail letters (as the USPS narrows the gap between origin-entered and drop-shipped mail) and High-Density (Plus) Enhanced Carrier Route (ECR) letters (as the USPS narrows the gap between ECR and 5-digit mail).
Neither the PRC rate and regulatory review or potential postal reform legislation are expected to be resolved in time to have any impact on the January 2018 price change, although both could have pricing impacts later in the year.
Mail Volumes Becoming a Concern
The USPS financial results for Q3 of FY 2017 reflected a year-to-date net operating loss of $1.26 billion. Even more concerning were continuing declines in mail volumes. Year-to-date through July, Marketing (Standard) Mail is down 2.3% and First-Class Mail is off 4.1% compared to the same period last year. Although USPS management continues to press for the flexibility to raise postage prices beyond the rate of inflation, the mailing industry is deeply concerned that doing so would only exacerbate the growing loss of mail volume.
USPS Continues to Rollout New Postal Products and Services
On a more positive note, the USPS is continuing to move ahead with the rollout of a number of new products and services that promise to make mail more valuable and easier to use. Among these services are:
- Informed Delivery – Launched nationally in May, this service gives subscribers a digital preview of the mail they will receive later that day. It also provides mailers with the ability to use their mailpiece to make an additional digital connection with the recipient. Subscriber numbers are growing rapidly, and new tools for managing Informed Delivery campaigns are being rolled out over the balance of the year.
- Informed Visibility – Although off to a slower-than-hoped-for start, this tool to allow mailers more robust, real-time tracking information about their mail is rolling out this fall. Additional features will be added to Informed Visibility in phases throughout 2018. IWCO Direct has been an active participant in the pilot phase of this program and is ready to use this new tool to fine-tune in-home dates and provide the information marketers need to coordinate other marketing channels with direct mail campaigns.
- Informed Mobility – Moving into pilot this fall, this latest “Informed” service will provide postal processing facilities with a better understanding of upcoming workflow by allowing better visibility to truckloads of mail moving across the country.
- A new Enterprise Payment System – This modernized payment system was launched earlier this year. It will eventually replace the Centralized Account Processing System (CAPS) system with a more robust, secure payment platform that will allow mailers to pay for a wider variety of postal products from a single platform. (CAPS only supports payment of permit postage.) Payment for post office boxes and addressing services are currently in pilot and a pilot for payment of permit accounts will be launched this fall.
- A more intuitive and easier to use Business Customer Gateway – This USPS portal, which acts as an entry point for business mailers to access a variety of postal products and systems, is getting a facelift to make it more intuitive for users to navigate. We expect the changes to be launched early next year.
I would be remiss if I didn’t congratulate Bob Schimek on being elected MTAC vice-chair for 2018-2019. Bob is Sr. Director of Postal Affairs for Satori Software and Chairman of the Board for PostCom. We wish Bob and incoming MTAC Chair Wanda Senne a productive tenure guiding MTAC over the next two years.
Still uncertain about how these changes could impact your marketing plans? Get in touch with me to find out how IWCO Direct’s postal expertise can help you navigate an ever-changing postal landscape.
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