The 3 Postal Issues You Need to Watch
The USPS is in crisis mode. Here’s what magazine publishers need to focus on this year.
There's been grim news coming from the U.S. Postal Service—steep revenue declines, massive workforce reductions—so AD spoke with postal consultant and 37-year USPS veteran Ed Mayhew on three issues that are sure to be of concern to publishers in the coming year.
1. Price Increases and Operational Issues
The USPS this year, said Mayhew at a recent NTCFI panel discussion, is facing heavy revenue losses, a significant downturn in mail volume, facilities consolidation and a reduction in workforce.
The Postal Service lost $715 million in January this year alone and will likely run out of money by the end of the year, he said. Flats volume was down 16.5 percent in 2008, with overall volume down 12 percent so far this year.
On May 11, the mailers will see a 3.8 percent increase in postal prices. According to Mayhew, additional costs such as weight and level of presort could result in an actual price increase of 6 to 17 percent.
A declining CPI is hampering price increases beyond that, however, and has raised the specter of an “exigent case” where the USPS applies for a “very serious price increase,” said Mayhew.
2. The FSS Machine Boondoggle
The USPS recently announced that it is increasing the amount of bulk mail centers that house FSS machines from 32 to 44 throughout this year. Publishers need be aware, however, that the number of machines available will not increase, according to Mayhew, so be prepared for changes in drop shipment schedules.
The biggest concern, Mayhew says, is that FSS machines have a 17-hour start-to-finish run time, which may cause publishers of weekly magazines to lose a day in delivery time. “The machines have to start running at 10 in the morning in order to finish their job at 3 or 4 the following morning,” he says. “Most publishers aren’t prepared to have their shipments ready that early.”
3. Periodicals Coverage Crisis
Complaints have been filed at the Postal Regulatory Commission that push for the periodicals class, which currently pay 83 percent of their rates, to pay 100 percent. The Commission, said Mayhew, is sympathetic to the complaints, which could spell disaster for some publishers. “If publishers get a 17 percent hit, it will kill the industry. [The increase] should be spread out over about 10 years.”
Light At the End of the Tunnel
Although the situation is looking bleak for mailers, Mayhew says there is a bright side. “The USPS had a $715 million revenue loss in January, which went down to $653 million in February. So things seem to be leveling off. The USPS is also trying to move into a new distribution network, which will reduce costs and delivery time.”
The USPS is also offering some mailers a summer discount on postage. “It’s all long way to go yet, but they’re making every effort possible,” Mayhew says.
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