As one of the most challenging years in recent memory draws to a close, we wanted our final postal issues update of the year to reflect on what has been a bumpy year for the U.S. Postal Service and take a look at what may be ahead in the coming year.
COVID’s Impact on the Postal Service
Beginning in March, the Postal Service has needed to respond to the most significant pandemic to impact the United States in the last hundred years. The agency scrambled to acquire and distribute personal protective equipment to a workforce of more than 600,000 individuals spread across the entire country, while coping with an immediate drop in mail volumes accompanied by a spike in parcel volume. Mail volume began to recover in June, and has been slowly increasing since. Parcel volume is still at record level highs, and as we will discuss below, is having an ongoing impact on USPS service performance.
Louis DeJoy joined the Postal Service in June as the 75th Postmaster General (PMG). He is the first PMG in nearly twenty years who came from outside the Postal Service. He instituted several operational changes in July that had a noticeable impact on service and created a great deal of political theater in an election year when the pandemic was driving record numbers of Americans to vote by mail. The operational changes were temporarily rolled back, and the Postal Service was able to successfully fulfill its expanded role in our electoral process.
What’s Ahead for the Postal Service in 2021?
There’s a lot still going on in the postal world. Let’s look at some of the hot issues:
- Service Performance: The holiday mailing/shipping season has been overwhelming for the Postal Service, and that is again putting the Postal Service in the spotlight with the national media. The combination of COVID-19 impacts on employee availability with an unprecedented surge of parcel shipments has left the Postal Service scrambling to keep up. The agency has imposed mail redirections and embargoes to allow beleaguered facilities to catch up. Most of the impact has been on facilities, like Network Distribution Centers (NDCs), that handle primarily parcels and flats. IWCO Direct and our clients are fortunate that 97% of our volume is entered at Sectional Center Facilities (SCFs) that handle fewer parcels, bypassing many of the issues caused by these temporary redirections and embargo orders.
- Postal Regulatory Commission (PRC) Ruling: The PRC has issued its final ruling on the postal rate-making process. Their ruling would allow the Postal Service to impose rate increases above the Consumer Price Index (CPI) cap based on complex formulas designed to compensate for declines in mail volume and density and required accruals into retiree pension and health benefit funds. The Postal Service won’t be in a position to take advantage of this new rate authority until at least mid-2021, and it is currently unclear whether the agency would take advantage of the full rate authority the ruling grants and what the timing of such a rate increase would be. To further complicate the picture, the ruling is likely to be appealed to the Circuit Court for the District of Columbia. Exactly how all these pieces play out is still to be determined. IWCO Direct will be working closely with mailing industry associations to address our many concerns with this ruling. We will continue to track developments and report to clients as this situation develops.
2021 Promotions: Despite all the challenges the mailing industry is currently facing, we do have some good news going into the new year. The PRC has approved both Market Dominant and Competitive prices for 2021, which includes a full slate of mailing promotions. The promotions follow the same calendar they did in 2020, and requirements for participation are little changed from previous years. One notable exception is that the Earned Value Promotion for those using reply mail no longer has a volume threshold to receive rebates. All reply mail returned during the promotional period will result in a 2¢ credit that can be applied to future mailings.
Of most interest to advertising mailers are the Tactile/Sensory/Interactive Promotion (February 1 – July 31) that features incorporating various tactile elements into a mailpiece or use of a mailpiece with a trailing edge die-cut (TED-C), the Emerging and Advanced Technology Promotion (March 1 – August 31) that includes digital to direct mail programs and integration of the mailpiece with voice assistants, and the Informed Delivery (ID) Promotion (September 1 – November 30). The Postal Service is planning several enhancements to ID in 2021, like reminders, social sharing, and embedded coupons, which will make ID an even more valuable extension of your marketing program’s reach.
Have questions about what’s happening with the Postal Service? Contact me or your IWCO Direct account team for assistance. Your team can provide more detailed options for participating in 2021 promotions, as well as help you stay on top of any new developments in the postal world.
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