Direct Mail: State of the USPS
Related to the issue of facility consolidation is the entry of mail and Postal Service performance standards. With Sunday counting as a processing day, the USPS will have to deliver mail drop-ship entered to a sectional center facility on a Friday by end of day the following Monday. This means enormous overtime. What's more, 60 percent of Standard Flat Mail is entered on Friday, inflating the postal cost for that product. The bigger issue, however, is moving as much drop-ship entry from Fridays to mid-week as possible, so it can get the mail delivered prior to the weekend. The USPS has performed load-level testing in Southern New Jersey on the weekends of Sept. 14 and Sept. 21 in an effort to minimize cost without impacting performance.
Exigent Rate Increases
Will the Postal Service file an exigency rate case this year? If so, how much?
The five-day delivery program was squashed due to pressure from Congress and, with it, the estimated $2 billion potential savings the program was expected to deliver. Without those savings, the USPS was directed by the Postal Board of Governors (BOG) to aggressively pursue all cost cuts within its power and to look at an exigency rate filing to close the gap.
Postmaster General Pat Donahoe has made it clear he opposes exigency rates due to negative impact on mail owners. Donahoe recommends the mailing industry continue to put consistent pressure on Congress to enact proper postal reform. However, that effort from Congress has been slow to materialize and the chance for postal reform this year is failing fast. Without relief from Congress, the BOG will feel compelled to push for an across-the-board exigent rate increase. The belief is it will be filed at the same time as the CPI-capped filing and implemented in late January 2014, if it is filed. The anticipated range is between 3 percent and 8 percent. This would be on top of a CPI-capped increase estimated to be a little below 2 percent. The mailing industry is trying to stop this effort.