Postal Affairs Update, April 30, 2021

April 30, 2021

The Postal Service has announced the first major changes relative to its new 10-year strategic plan. Performance has improved, though we’re watching situations which could affect delivery. Volume has rebounded significantly relative to this time last year.

Quad’s Postal Affairs team remains committed to keeping you up to date and informed. As a significant mailing industry partner, we are in a unique position to provide clear and accurate information regarding the state of the USPS and suggest best practices during this time. Please notify the Quad Postal Affairs team if you become aware of any changes, questions or something new related to how the USPS is conducting business. We will investigate and update all. Please send inquiries to the Quad Postal Affairs Distribution list (Postal Affairs – Team) or ask your Quad representative.

Here are key developments since our last update:

10-year strategy implementation

The industry is beginning to see how the Postal Service’s new 10-year strategy will affect operations. Its focus on packages takes resources away from Letters and Flats — and there are no alternative delivery methods for most of the mail that the USPS handles.

The Postal Service announced major changes relative to processing packages on Tuesday, including:

  • Accelerated investments, with the procurement of 138 package sorters to be operational ahead of 2021’s peak holiday season
  • Leasing 45 additional annex facilities to support surges and any overflow of packages
  • The consolidation of 18 processing facilities

While we won’t immediately see the full effects of these changes, our industry is very disappointed by these moves. Additionally, the timing of the consolidations will almost certainly hurt service and performance for the majority of mail during its heaviest volume season.

Quad belongs to several associations that signed onto a letter imploring the Postmaster General and Postal Service leadership to reconsider its stated strategy. The letter details the flawed reasoning for changes — package volume isn’t sustainable, and the USPS has formidable competition from UPS, FedEx, Amazon and others. The PMG responded in a sprawling letter that did little to alleviate our grave concerns.

Our Postal Solutions teams continue to work through unprecedented changes to find the best tactics for our clients. Quad will also host an informational webinar the first week in June, following the expected official announcement of mid-year changes. We’ll help our clients understand how new prices and other factors will affect their business, and how they might take advantage of opportunities to find the lowest total cost to mail.

Delivery performance

The USPS continues to move Letter mail better than they did in the early days of the pandemic. However, Flat mail is still showing some delays, although data from mid-March to mid-April was impacted by a USPS data transmission failure.

We continue to see delayed processing of Flat mail in Baltimore MD, Linthicum MD, Richmond VA and Philadelphia PA. The USPS has informed the industry that they have identified and are correcting problems in the Philadelphia facilities, and that we should see improvement quickly. A new facility in the Baltimore area will process some of the Baltimore and Linthicum mail, hopefully improving performance there — although we could see some issues as they bring this facility online.

First Class mail is averaging 80-85% in-home by the third day after mail is dropped. This number should be well over 90%, and Quad continues to work with our clients to best position their mail for on-time delivery.

Materials shortages

The February 2021 Texas weather issues severely impacted availability and cost for both transportation and chemical intermediates coming out of the Gulf Coast region. The already stressed raw materials supply chain has become extremely tight, with several suppliers exercising force majeure.

The main base feedstocks of ethylene and propylene are foundational chemicals for adhesives, UV coatings, lithographic fountain solutions and silicones. Below-freezing temperatures severely impacted the chemical plants producing these building-block intermediates. This affected their ability to replenish the supply chain even after weather returned to normal.

The near-term outlook remains unclear. Quad’s main concern is availability of these raw materials for the remainder of 2021. We’re monitoring this situation closely and will follow up with clients as needed while the supply chain situation evolves.

Postal volume

Mail Volume for the week ending April 17, compared to this time last year

  • Total: Up 29%
  • Packages: Up 2.3%
  • Single Piece: Up 3.1%
  • Presort First Class: Up 9.6%
  • Marketing Mail: Up 54.7%
  • Periodicals: Down 4.8%