I’ve worked in the mailing industry for four decades now (hard to believe, and yes, I started as a baby!). During that time, I’ve seen our industry go through many changes — many Postmasters General, many USPS reorganizations, the staggering USPS rate increases of the pre-PAEA years, the implementation of the Intelligent Mail barcode (IMb), Full-Service and Seamless Acceptance, and many more significant changes. One thing I have learned over and over is that the mailing industry is resilient, entrepreneurial, and passionate about its work. This industry has faced and weathered many storms, and while there are many challenges facing us now and in the coming year, I have no doubt that mailers will weather those storms as well, coming out just as strong! Here are but a few of the challenges our industry is facing over this next year, along with some thoughts on how to deal with them.
Postal Price Changes
By the time this article is published, the USPS will have implemented its August 29 price change for market dominant products, barring any last minute “stay” by the U.S. Court of Appeals where events that led to this price change are being litigated. This price change is notable for several reasons – first, it comes in summer versus the January price changes that the industry has become accustomed to. Second, it was unexpected, so mailers did not budget for these increases. Third, it is the highest USPS price change for market dominant products since the current laws governing the USPS were enacted late in 2006. The reason for all these notable factors is the same – this is the first USPS price change under new rules enacted by the Postal Regulatory Commission (PRC), which gave the USPS additional rate authority categories that allowed it to increase prices above CPI. The litigation in the U.S. Court of Appeals is to determine whether the PRC had the authority to make these changes, and the outcome of that proceeding is still to come.
At the time this article was written, the USPS had just announced a temporary peak surcharge on its Competitive Services products (parcels) and also started preparing for a January 2022 annual price change for parcels (no details had been shared at this point) that may also contain new fees and other structural changes for parcels. Whether the USPS will also change market dominant prices again in January 2022 was unknown at the time this article was written. If the USPS did so, it would only be able to raise prices up to the CPI, because the PRC does not determine the annual amounts the USPS may use for the new additional rate authority until March/April, so they could not be included in a January 2022 price change. Of course, the USPS could increase prices in January 2022 up to CPI and then do another change in summer 2022 to use the additional rate authority (like it did this year).
So, what can mailers do to mitigate these price changes? First, mailers need to budget for and prepare for the possibility of two price changes in the same year going forward. That does not mean it will definitely happen, or that it will happen every year, but better to be prepared than not. In addition, there are strategies that mailers should be exploring if they are not already doing so.
The USPS has increased the discounts for some of its promotions, as well as increased the length of some promotions. These programs offer mailers some significant discounts, as well as helping drive their return on investment with mail. Being able to take advantage of USPS discounts from promotions – as well as increasing response rates – will help mitigate increases in USPS prices.
Another strategy mailers should be exploring is using a commingler (letters) or comailer (flats) to prepare and enter their mail. Commingle and comail are tried and true programs that have been available for some years and continue to grow throughout the industry because they have many advantages for mailers. By combining mailings from different companies prior to USPS entry, comminglers and comailers sort mail to the deepest depth possible (more than the mailer can achieve on their own in most cases), as well as entering it deeper into the USPS network to achieve better service performance. These providers also take away from mailers the resource-intensive stresses of meeting Full-Service or Seamless Acceptance requirements. These businesses are professionals who work closely with the USPS, are familiar with its products, services, and mail entry and preparation requirements, and they can work with mailers to find ways to reduce postage costs and improve their ROI.
Mailers (including printers) who are preparing and entering mail should explore the benefits of using a commingler/comailer because there are postage discounts, improved service performance, and many related services available from these providers. If you haven’t looked at these providers recently, check them out.
In addition, mailers should be looking at the total picture when it comes to mail ROI. Yes, postage prices are going up, but the new rules also present improvements in workshare discounts; the promotion discounts present opportunity to improve the overall ROI of mail; and there are many ways that mailers can look to improve their overall ROI from mail -- ensuring that mailing lists are current and correct, optimizing mail piece design to obtain the best response rates, ensuring that as much mail as possible qualifies for all available postage discounts, integrating digital and hardcopy marketing, and more! Go back to the basics and review all aspects of mailings to improve the total ROI.
Service Standards and Service Performance
On October 1, 2021, the USPS will implement changes to service standards for some First-Class Mail letters and flats. The USPS also plans to change service standards for some First-Class Package Service (FCPS) pieces – at the time this article was written, the PRC was in process of a proceeding to review the USPS’s request for FCPS service standard changes. The USPS rationale for these changes is to reduce its reliance on air transportation and move much of First-Class Mail to ground transportation, which it said is less costly and more reliable. The USPS plans to establish a goal of meeting the new service standards 95% of the time, and has noted repeatedly that it had not met the existing service standards for these pieces in some years.
How can mailers maximize their USPS service performance? Mailers can do a comparison of the old service standard versus the new service standard using files available from the USPS, but keep in mind that may not show your actual service experience because it compares the “standards,” not the actual performance your mail experiences. More meaningful would be to compare the service you have actually been experiencing with the new standard – there are providers out there who are performing these kinds of analyses for their customers.
Second, as laid out above, using a commingler/comailer helps improve service performance because it results in maximum levels of presort as well as entering mail as close to the destination as possible. There are other things mailers can do to improve service performance – some of which may seem basic, but you would be surprised how many companies don’t consider these techniques. Start with ensuring your letters/flats are automation-compatible so they are processed on USPS equipment versus having to be sorted manually. If you are mailing flats, evaluate whether they could be converted to letters (which generally experience better service performance as well as being a lower price). If you are mailing large Marketing Mail postcards, consider switching to the new First-Class Mail larger postcard category for better service.
Make sure your mail has unique Intelligent Mail barcodes (IMb) on each piece, and use a tracking method or service to monitor your mail as it moves through the USPS network. Communicate any issues you are seeing with the USPS. There are businesses that provide tracking and reporting services, so you may want to explore those options instead of trying to develop something in-house, which can be expensive as well as inaccurate.
In 2020, the USPS began a structural reorganization of its leadership ranks as well as geographic organizational changes, reducing its 67 district offices to 50, streamlining reporting relationships from the field to headquarters organizations, and establishing accountability within those organizations. The USPS has said more is still to come in terms of its organizational changes, and of course it will take time for all the people and positions impacted by these changes to move around or retire, meaning there has been and will continue to be much HR “churn” and distraction within the organization.
What can mailers do? Identify the local USPS resources that you should work closely with and develop relationships with any newcomers to those positions. If a position is vacant or eliminated, identify who within the USPS you should be working with. Local relationships with USPS managers are invaluable to mailers. Of course, if you encounter difficulty at the local level, you should reach out through your association, as they will have contacts within USPS leadership to help get issues resolved.
USPS 10-Year Strategic Plan
In March 2020, the USPS published a new 10-year strategic plan, Delivering for America. There is a lot of information in the plan on strategic direction the USPS plans to take on many fronts, not just improving its finances. Whether you agree with everything in the plan or not, it is a plan the USPS is following and often refers to, which does bring some transparency to the USPS’s direction and objectives. There are several initiatives in the plan (aside from the price and service changes discussed above) that the USPS is moving forward with over the next year or so, and mailers should be sure they are looking at these areas and planning any business changes accordingly.
First, the USPS is changing its processing and logistics network, which will impact all categories of mail and parcels. For letters/flats, the USPS is planning to largely eliminate processing these pieces through its existing 21 network distribution centers (NDCs) and instead moving to a model that utilizes its 13 surface transfer centers (STCs) for letters and flats while converting the NDC facilities to become “regional distribution centers” that process parcels. This will mean changes in the way both letters/flats and parcels are prepared and entered to the USPS.
Another initiative the USPS is moving forward with over the next year is development and rollout of a new USPS Connect parcel offering, starting with USPS Connect Local, which offers customers same- or next-day delivery of parcels entered at local delivery units. The details and requirements of this new offering are yet to be finalized, and the USPS envisions a regional and national level of the service as well.
What can mailers do? Read and familiarize yourself with the plan. Think about the changes the USPS has said it is looking to make in the future and how your business and its services fit in. Focus on the initiatives the USPS is planning to implement over the next year – the USPS has been sharing information and talking about these initiatives (some of which are outlined above) at MTAC, at PCC meetings, and at other venues, so make sure you are engaged in those discussions and thinking about potential impacts and opportunities for your business.
The Bottom Line
Keep in mind that although the USPS has laid out a broad plan that outlines many strategic initiatives and goals, there are many areas where the details are yet to be developed. That means there is opportunity to work collaboratively with the USPS on development of specific initiatives – after all, it’s a 10-year plan, not a one-year plan.
Yes, things have already started changing in the mailing environment and will continue to change as the USPS moves ahead with its plan. Look for opportunities for your business in where the USPS is heading and consider the changes you may need to make to be successful in the future. Change is never easy, and it can be a bumpy road, but it can still lead you to a good destination.
This article originally ran in the September/October, 2021 issue of Mailing Systems Technology.