Trends in Print and Mail

Last week, the U.S. Postal Service (“USPS”) announced the first rate change for 2015. The rate adjustment was filed just days after the Postal Regulatory Commission (“PRC”) published a notice outlining the steps the USPS needed to follow when removing the exigent surcharge they approved in December of 2013.

In August, we published a blog post recommending that mailers budget for a 2% postage rate increase in 2015. A few months later, the USPS announced they wouldn’t file for a January increase and many mailers reduced their 2015 postage budgets accordingly. Those mailers will be facing budget shortfalls as the new rate case brings a 1.9% to 2.7% increase for commercial First Class mailers and an average 1.9% increase for Standard Class mailers beginning April 26, 2015.


Many of the pricing tables in the rate case can cause confusion. The figures in the rate case are based on what mailers would be paying without the exigent rate increase. As such, the tables include pricing that is actually lower than the current rates. For example, here’s the First Class Mail breakout:


Current stamped single piece mail is priced at $0.49 and AADC Automation mail costs $0.406, not $0.47 and $0.389 as shown in the charts. This difference makes it more difficult for mailers to accurately assess the impact of the increase on their budgets. We recommend ignoring the prices and using the percent changes for each category of mail that your company produces. Here’s the chart for Standard Mail:


While better charts will be forthcoming (we hope), mailers need to act now to prepare for the April rate increase. Here are 5 steps every mail operations manager can take now:

Last month, we posted the results of our quality control survey. While none of the responses were surprising, the patterns and differences were thought provoking. The areas that are most notable are:

Several weeks ago, we published an anonymous 8-question survey on quality control in print and mail operations. We asked about how many pieces a company printed and mailed in a year, and how many errors were reported in the last 12 months. For companies that use a service provider, we asked the same questions.

Print quality errors are defined as:

• smudges, smears or damaged paper that causes any field in the print output to be illegible
• incorrect document orientation (i.e. portrait versus landscape or print fields printed upside down)
• printing documents on the wrong form or letterhead
• incorrectly printed fields, omitted fields or transposed fields

Software is everywhere in the print and mail industry business – from file formatting to address management to piece-level tracking. Like the rest of the business world, our industry relies on software packages to help us in our daily jobs.

A few weeks ago I posted a copy of the letter I sent to my two United States Senators – Elizabeth Warren and Edward Markey – about the need for the Senate to confirm the nominees to the U.S. Postal Service Board of Governors. In addition to the blog, I sent them the letter through their website, posted a link on Twitter and mailed them a physical letter through the U.S. Postal Service.

A week later, I received a phone call from Senator Markey’s office. His aide didn’t mention any of the electronic methods I used to communicate, but told me he was responding to the letter they had received. Hmm, a physical letter garnered more attention than a blog, email or tweet. Interesting.

The aide stressed that the senator was taking the issue seriously, and had testified at Ms. Kennedy’s nomination hearing. He said that Senator Markey had spoken to the Majority Leader – Senator Reid – and asked for the nominations be brought to the floor for a vote. Unfortunately, the opposition was holding up the vote. He said that Senator Reid felt that the nominations could get approved during the lame duck session.

This conversation was the week before the elections, but the polls weren’t looking good for the Democrats. I asked the aide that if several Republicans had already stated that the Congress should not approve nominations during the lame duck session - why would anyone think otherwise? He replied that those comments were about judges and cabinet-level positions. We chatted a bit more, and the call ended.

Of course, the elections went very bad for the Democrats. The new chair of the Senate Homeland Security and Governmental Affairs Committee, which oversees the US Postal Service, will be a Republican. They may ask for the nominations to be put on hold until the new committee is formed. It’s not an easy call.

However, I did receive a response. From my physical letter. The power of mail endures.

In a competitive environment, “good enough” isn’t “good enough”. Customer expectations continue to rise. They want to receive their documents with the correct information, and expect a printing job to be error-free. They want the right statement, with the right address, in the right envelope to be delivered at the right time.

With quality control, the goal must be 100%. Integrated processes and tools, best-in-class procedures and tight quality control processes minimize the opportunity for mistakes. But no print and mail operation is perfect. Even in the best run shops - a faulty line of software code - or a malfunctioning piece of equipment - or a distracted operator - can cause an error.

The two most common errors are print quality and inserting errors.

Print quality issues include:

Like most people in our industry, I’m not hopeful that Congress will pass any meaningful reform for the U.S. Postal Service (“USPS”) in the near future. It will take tremendous effort and compromise by all parties to create a solution that will resolve at least some of the issues impacting the USPS. In the current political environment, that is highly unlikely.

Any changes will have to come from the leadership of the USPS. But key leadership positions on the USPS Board of Governors are vacant. President Obama has nominated 5 people to the board, including former President Bush appointees, but the Senate has not confirmed them. They haven’t even voted on any of them.

I want to know why. So I’ve emailed and mailed the letter below to my United States Senators. Please feel free to copy and send to your own senators. We deserve answers.

Dear Senator Markey / Dear Senator Warren:

My name is Mark Fallon, and I am one of your constituents. I’m also the President of The Berkshire Company, an independent management consulting firm that specializes in the print-mail industry. We help our clients use the best practices and available technologies to create and mail documents to customers. Taken as a whole, our clients produce over 500 million pieces of First Class Mail every year. And contrary to popular opinion, those numbers are not rapidly declining.

A recent study showed that the mailing industry employs over 9 million people in the United States, and contributes almost $1.2 trillion to the national economy. At the heart of that vital industry is the United States Postal Service (“USPS”).

The well-publicized financial struggles of the USPS are the result of a shift in mailing practices, an expanding number of delivery points due to a growing population, overpayments into the federal retiree system and an oppressive pre-payment requirement of future retiree health care costs. The last two problems can only be solved by an act of Congress. There’s been no indication of any solution that will be agreed to by both political parties.

The first two issues must be addressed by the USPS leadership. However, due to the inaction of the U.S. Senate, a significant part of that leadership is missing. As of today, there are 5 vacancies on the 9-member Board of Governors of the USPS. The terms of 2 additional governors will expire on December 31, 2014.

President Obama has nominated competent individuals for these positions, 2 Republicans and 3 Democrats. The 2 Republicans are men who served as members of the Board under President Bush. There’s been no public opposition to any of the nominees. However, there’s been no vote taken to confirm them.

The current nominees, and the months they were nominated are:

• Hon. James C. Miller III (R) – March 2012
• Stephen Crawford (D) – June 2012
• David M. Bennett (D) – April 2014
• Victoria Reggie Kennedy (D) – February 2014
• Mickey Barnett (R) – July 2014 (his term expired last year, but still serving)

Mr. Miller and Mr. Crawford were both nominated over two years ago, and have testified twice before the Senate Homeland Security and Governmental Affairs Committee. In their latest hearing on July 14, 2014, Mr. Bennett and Ms. Kennedy also participated.

Watching the hearings, I was impressed with the testimony of the nominees. While I don’t agree with them on every issue, it was clear that they had given serious consideration to the changes the USPS must make to remain viable. They’ve even been meeting informally as a group to exchange ideas. They’re ready to get to work.

Although Chairman Carper (D-DE) ordered the nominations to be reported favorably on July 30, 2014, there has been no vote taken on the Senate floor.

It’s time for the Senate to get to work. You should publicly call for the Senate leadership to hold a vote on the nominees. If there’s an issue with any of the nominees, then those matters should be made known to the public. If there are no issues, then a vote should be held as soon as possible.

We deserve to have a full Board of Governors for the USPS – one of the oldest and most trusted government institutions. We need you to take action.

Regards,

Mark M. Fallon
President & CEO
The Berkshire Company
36 Gilmore Rd
Southborough MA 01772-1721