Direct Mail: State of the USPS
There has been no real movement in terms of postal reform and industry support has been fragmented. The largest line item to be addressed that has the potential to create significant cost savings (an estimated $8 billion) for the USPS is healthcare and retirement benefits. The USPS wants to go private and manage these costs. The other big-ticket item is the prefunding requirement for the Civil Service Retirement System (CSRS). Properly calculated based upon postal employees rather than federal government employees, the amount already prefunded would cover future costs. The $5.6 to $5.7 billion per year amount needs to be eliminated. However, both houses of Congress feel otherwise, and want to continue prefunding at perhaps a less-aggressive rate.
In response to Donahoe's disappointment in the lack of support given by the mailing industry, PostCom has approved a set of nine principles it believes should be part of any legislative reform. Additionally, House Oversight and Government Reform Committee Chairman Darrell Issa posted a discussion draft of new legislation.
The Senate bill in play seems to be an effort to forgo real reform until after the 2014 Congressional elections. This proposed bill would cease facility closures, put off five-day delivery for two years and eliminate the CPI rate cap in 2016, while making it an overall cap rather than a per-class cap. The Senate bill would also create a consulting advisory committee to ascertain what it would take to make the USPS financially secure, with its findings required nine months after enactment. The bottom line: Postal legislative reform does not seem likely this late in the year.
The Future of the USPS
Congress must work before it's too late to enact postal reform. "Too late" for the USPS doesn't mean just running out of cash. Uncertainty, not cash flow, is the issue. Not knowing what and how Congress will act is enough to cause companies using the mail to look elsewhere. If direct marketers find alternatives that work, they will not come back to the USPS—a problem that will have a ripple effect throughout the direct marketing community.