Trends in Print and Mail

On Tuesday, December 24, the Postal Regulatory Commission (“PRC”) conditionally approved the US Postal Service’s request for an exigent rate increase. This means that on January 26, 2014, postage rates will increase an average of 6.0%.

According to current laws, the US Postal Service (“USPS”) may increase postage prices at the rate of inflation as determined by the Consumer Price Index (“CPI”). If there are “exceptional or extraordinary” circumstances, the USPS may request and additional, or exigent, rate increase. The USPS filed such a request in 2010, citing the impact great recession of 2009 on mail volumes. The PRC rejected the request. The USPS filed an appeal in court, which directed the request back to the PRC. There was no action by either party at that time.

On September 26, 2013, the USPS re-filed the 2010 exigent rate request, while also filing for the CPI increase. 

In this latest decision, the PRC found that the Postal Service experienced financial harm as a result of the recession and is legally entitled to implement price increases in excess of the CPI cap. In an unexpected move, the PRC denied the Postal Service’s request to make the increases permanent. It found allowing the increases to remain in effect indefinitely would be inconsistent with fundamental postal policies underlying the price cap.

In brief, the PRC determined that the USPS didn’t adequately break out losses due to electronic diversion from the losses due to the recession. The PRC analysis determined that the recession caused the loss of 25.3 billion pieces with a value of $2.8 billion. The exigent rate increase will stay in effect until the USPS recovers the $2.8 billion, with the additional requirement of reporting quarterly on revenues generated by the rate increase.

This decision will be greeted with dismay by most mailers. After the November PRC ruling that the USPS couldn’t implement Full Service IMb requirements concurrently with the proposed increased rates, it looked like the PRC would also deny the exigent rate increase. Major mailers and mailing associations will probably use the decision to put more pressure on Congress for postal reform legislation.

Sen. Tom Carper (D-Del.) is the chairman of the Senate Homeland Security Committee, which has authority over the USPS. He recently stated that he expects postal legislation to be approved in January by his committee – with bipartisan support. However, the bill is very different than the proposed House legislation. Also, there’s significant opposition by members of both parties who don’t want to see cuts in service to their constituents.

It will be an interesting 2014.

Outsourcing is neither the magic bullet depicted by some vendors and consultants, nor the evil villain feared by many operation managers. It’s a strategic tool for enhancing performance that should be considered by all companies. As with any strategy, it should be reviewed on a regular basis for consistency with the organization’s mission, shifts in technology and vendor performance.

Let's dispel certain myths about outsourcing:

Myth – Outsourcing is easy.
Reality – Outsourcing requires significant planning and resources to be effective. This is especially true when transitioning from an internal operation to an outsourcing vendor.

Myth – Outsourcing shows a failure in management.
Reality – Outsourcing is an effective tool used everyday by competent managers. Most shops outsource some functions, like couriers, presort or offset printing.

Myth – Outsourcing can't be done in a union shop.
Reality – Outsourcing exists in all environments. I visited a shop that was half-union, half-vendor. And it worked.

Myth – Outsourcing will solve all my management problems.
Reality – Outsourcing relationships need to be managed to be successful. The function may have been outsourced, but the responsibility for success remains internal.

Myth – Outsourcing will solve all my human resources problems.
Reality – Outsourcing staff are people too. The vendor may have responsibility for the actual hiring and firing, but the customer will have to work with the employees.

Myth – Outsourcing is guaranteed to save me money.
Reality – Outsourcing may cost you more if not used properly. The manager must keep accurate records of service levels, volumes and charges to ensure the vendor is in compliance with the contract.

Myth – Outsourcing is inevitable.
Reality – Outsourcing is only one choice among many. Vendors will often cite statistics that show how quickly outsourcing is growing. However, there are also companies that insource after failed outsourcing attempts, and many companies that decide to keep their internal operations.

Myth – Outsourcing is a topic I should never bring up with management.
Reality – Outsourcing options should be reviewed on a regular basis. Putting your head in the sand will only guarantee that you won't see what hits you. Face the outsourcing challenge, and make the appropriate business decision for your company.

On November 21, 2013, I gave a presentation of Full Service Intelligent Mail Barcode (IMb) to the Postal Customer Council of Lincoln, NE. I was asked if there was any possibility the USPS would delay the requirement that all mail presented at a discounted postage rate have a Full Service IMb by January 26, 2014. I said, "Probably not. The US Postal Service (USPS) has not shown any indication they will delay the date." That same afternoon, the Postal Regulatory Commission (PRC) ruled against the January date.

On September 30, 2013, the US Postal Services (USPS) filed their annual request for a rate increase. Also, they refiled a 2010 request for an exigent rate increase higher than the rate of inflation. That means on January 26, 2014, postage rates may go up by 6%.

Contrary to rumor, this doesn't mean the end of print and mail as we know it.