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Postal Affairs Update, July 23, 2021

July 23, 2021

The Postal Regulatory Commission granted final approval for mid-year price increases on Monday. The USPS issued a letter that rejected calls from a bipartisan group of House lawmakers to push the rate hikes to 2022. Quad clients can attend a webinar on Wednesday, July 28, to learn about ways to partially mitigate the increases.

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

The Postal Regulatory Commission approved the Postal Service’s proposed rate increases (PDF) on Monday. This followed a letter from the USPS Vice President of Government Relations and Public Policy to Congress rejecting their bipartisan calls to push increases to 2022.

In his letter, Peter Pastre gave very little detail about the financial necessity for hitting customers with unexpected mid-year rate hikes. He instead called it an important part of their 10-year strategic plan, which itself has raised several additional concerns in the industry.

Quad, along with our partners in the mailing industry had 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 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. Unfortunately, the PMG’s response to the Congressional letter indicated that the USPS continues to plan for the rate increase in August. Therefore, Congressional action on the postal reform bill is becoming all the more important.

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, Quad anticipates that price increases will take effect on August 29, 2021.

We’re preparing as best we can to mitigate impacts 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.

PRC statement on proposed changes to Service Standards

While the PRC approved the rate increases for August implementation, it stated in a published advisory opinion that USPS-proposed changes to Service Standards do not have any reasonable foundation in financial viability. The PRC goes on to say that the Postal Service’s conclusion that impact to First-Class Mail and Periodical volume will be modest is based on “numerous unproven assumptions” about customer satisfaction and demand.

The USPS can now take or disregard the Commission’s advisory opinion. Both the mailing industry and the regulator fully understand that any minimal benefits that the Postal Service might experience in terms of operational efficiency is little more than an rounding error. We hope that USPS leadership sees clearly that customers drive volume — and that deteriorating service will have a negative effect on their income.

Delivery performance

The USPS released an Industry Alert on July 16 touting their improved performance for July 1-9. They reported that 90.6% of First Class mail was delivered on time (per Service Standard). The USPS Informed Visibility (IV) scan data that Quad has for our First Class clients indicates that 91.66% was in-home on time during that period — slightly higher than the USPS overall average.

The USPS reported Marketing Mail was delivered at a rate of 91.6% on time during the same period. The IV data for our clients showed lower numbers. Letters were moved at a significantly faster pace than flats — 88.46% versus 84.27% for flat mail, but still lower than what the USPS reported.

Our data only includes drop shipped mail, primarily to SCFs. Most of the mail Quad tracks is in Carrier-Route, Five Digit or finer bundles and trays — some of the most efficient mail the USPS handles. It should be showing better performance than the overall average. We believe the discrepancy between the data we have and what the USPS is reporting is due to the amount of mail the USPS does not have in measurement — mail we keep in our performance data. This could include pallets without a ‘start the clock,’ but with a closed FAST appointment. It could include mail without a ‘delivery’ event, but with a scan on a flat sorter that could be considered ‘final.’

Quad continues to push for more visibility — better USPS scanning to get more mail into measurement, which would therefore give more a more accurate view of performance.

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

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 July 3, compared to 2020 when the week included the July 4 holiday — this year there was one more day with mail

  • Total Mail: Up 11.3%
  • Packages: Down 3.5%
  • Single Piece: Up 6.1%
  • Presort First Class: Up 10.1%
  • Marketing Mail: Up 32.6%
  • Periodicals: Down 5.2%

While Marketing Mail appears to be rebounding strongly, Quad’s Postal Affairs team looked at the growth relative to the more normal baseline year of 2019. With the category down 29% in 2020 then up 32.6%, we can see that Marketing Mail is down 5.85% compared to 2019 — even with the extra mailing day.