Postal Affairs Update, July 13, 2021

July 13, 2021

USPS leadership shared details for how they plan to avoid another disastrous peak season. A bipartisan group of House lawmakers formally called on the Postal Service to push mid-year price increases to 2022. Meanwhile, USPS profits continue to hold steady as mail volumes recover — but they’re still considering another postage rate increase for January.

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. 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:

Postage rate increase news

Quad, along with our partners in the mailing industry worked with our Democratic and Republican lawmakers in the U.S. House of Representatives, sending a letter to Postmaster General Louis DeJoy “to express serious concern” about the proposed mid-year price increases. The bipartisan group of legislators formally requested that the USPS revise its plan and push the rate hikes to at least January of 2022. It further asked that the Board of Governors provide Congress with accounting for how increases would affect mail use and volume in one, three and five years.

Congress is actively working to pass postal reform bills that currently enjoy broad support in both Houses. The legislation would further reduce the USPS’ need to increase postage rates. Right now, all mailers can assist with advancing legislation to curb postage increases. The more Congress hears about troubling aspects of the USPS’s plan, the more likely they are to push hard for changes with the Postmaster General and the Board of Governors. Please consider taking a few minutes to fill out a short form on this page, which will automatically message your Members of Congress. Or you can text MAIL to 52886. The process is a simple, extremely effective and efficient way to let Congress know your thoughts and tell your story about how important an affordable USPS is to you.

However, at this time, due to the fact that the PMG has yet to respond to the Congressional members, Quad anticipates that price increases will take effect on August 29, 2021.

We’re preparing as best we can to mitigate hits to postal budgets. Registration is open for Quad clients to attend a July 28 webinar for the latest news and options for better pricing. You can also revisit our June 3 webinar for a thorough overview of the proposed rates. Contact your sales reps to understand how changes could affect your marketing campaigns.

Peak season planning

After historically poor delivery performance during 2020’s peak season, the Mailers Technical Advisory Committee asked the USPS to detail any steps it’s taking to improve in 2021. PMG DeJoy stated at MTAC’s June 29 meeting that the Postal Service has plans to:

  • Improve operations by moving away from a one-size-fits-all approach, playing to the strengths of individual plants’ capabilities
  • Make sure staffing is adequate after being shorthanded in 2020, which includes plans to add 13,000 employees to processing and logistics
  • Lease 7 million additional square feet of annex space for processing and backup facilities, plus another 6.8 million square feet for the peak season
  • Move away from reliance on air transport while making better use of its ground fleet and drivers to keep costs in check
  • Deploy additional packaging processing machinery to increase capacity by 4.5 million pieces each day
  • Contract out surface transfer center (STC) where they are co-located with national distribution centers, claiming that this will increase capacity

We’ll wait to see whether the USPS implements these changes, which focus more on packages than on traditional mail. Quad continues to work with our industry partners and the Postal Service to ensure timely delivery of our clients’ mail and ensure that the USPS performs during the upcoming 2021 peak season.

Larger postcard sizes

Through close collaboration with our industry, the USPS has now implemented a larger 6×9” postcard size. This option gives customers a valuable, more cost-effective way to reach addresses. The Postal Service will benefit from increased volume and revenue.

Unfortunately, the rate hikes that will likely take effect in August will hit postcards hard, with a 13% increase. Despite the postage increase, the new postcard size is a win for mailers who will now have a new marketing option.

Delivery performance

The USPS continues to move Letter mail very well, which is typical during the lower-volume summer months. Flat mail, however, is still being processed at a slower pace than usual. Throughout 2021, that has been the trend — averaging 5-10% less in-home the first few days after they receive the mail. SCFs Baltimore MD and St Louis MO continue to process Flat mail much slower than Service Standard. All other locations have only had short-term delays and have bounced back to acceptable levels.

First Class mail performing better than it had been earlier in the year. We are seeing an average of 85% in-home by Day 3 after the mail is dropped. The Service Standard is to be over 90% by that point, but this is an improvement.

Freight market update

The industry is still experiencing challenges due to capacity and slower/inconsistent service, especially in the LTL market. Supply chain disruptions remain heavily in effect, mainly through labor shortages and a low inventory supply that all industries are experiencing. Fuel costs remain higher across the board.

Postal volume

The USPS moves forward with its price increase despite much improved finances, with revenue up 8% year-to-date compared to SPLY. And they continue to focus on packages, the volume of which is dropping as consumers return to physical retailers.

First-Class and Marketing Mail volume keeps improving. For the Postal Service to further strengthen its finances, it should cut controllable expenses rather than raising prices on its biggest customers. And Congress must pass Postal Reform legislation to remove unnecessary financial burdens.

Mail Volume for week ending June 26, compared to last year

  • Total Mail Volume: Up 14.6%
  • Packages: Down 13%
  • Single Piece: Down 6.5%
  • Presort First Class: Up 2.4%
  • Marketing Mail: Up 16.4%
  • Periodicals: Down 21.1%

MTAC leadership update

We are pleased that MTAC named Lisa Wurman as its new Vice Chair. We know Lisa well — she’s a Quad Postal Solutions professional with 20 years of MTAC experience. Lisa will serve as Vice Chair for two years, beginning on January 1. Then she’ll be seated as the MTAC Industry Chair for 2024-25.