The USPS recently shared some interesting data on the volume and cost of undeliverable as addressed (UAA) mail. That tab was $1.3 billion in 2010, and that was just the cost to the Postal Service, which has to incorporate these costs into its rate-setting. All this UAA is money down the drain to the mailers—who designed, produced and labeled it and applied its postage—and to the Postal Service that has to deal with its final disposition.
The Postmaster General at the 2011 Postal Forum acknowledged that as mail volumes grew during the 2000’s there was an underlying weakness in market fundamentals that postal management didn’t recognize. I believe the deteriorating market fundamentals he mentioned were the massive loss of small and medium sized mailers (SMMs) from the mail stream. As financial services companies ramped up direct mail marketing campaigns that drove mail volumes higher, the total number of customers substantially decreased.