Postal Affairs Update, June 18, 2021

June 18, 2021

The USPS Board of Governors met as a fully seated body for the first time since 2012. The Postal Service hosted an informational webinar this week to finally address proposed postage rate increases. Read on for easy ways you can urge members of Congress to consider pushing for change with the Postmaster General and Board of Governors.

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:

USPS rate increase news

The USPS Board of Governors is fully seated for the first time since 2012, with all positions filled along with the Postmaster General and Deputy PMG. The new BOG met for the first time in a closed session on Wednesday. Unfortunately, we do not expect that these new Governors are going to rein in the USPS’s postage rate increases. Quad continues to work through the courts and Congress to address the increased rates.

On Tuesday, the USPS held its first webinar to discuss proposed increases publicly. They expect the Postal Regulatory Commission to complete its review of changes by July 19. We know that the PRC has found areas where the USPS will have to adjust proposed prices, but these are very minor.

Nothing of substance came out of the webinar’s Q&A, with many answers to burning questions defaulting to the claim that they haven’t made any decisions about 2022 increases. There was pushback from attendees on postcard rates, and the hosts addressed concerns about high-density marketing mail — we could speculate, but we don’t immediately know if anything will change based on this feedback.

Quad plans to host another webinar for clients following the PRC’s completion of its review, at which point we’ll have certainty about rate increases. We continue to work with industry partners on a possible re-request to issue a stay on the increases while the courts review potential harm to mailers.

Clients can revisit our June 3 webinar for Quad’s overview of the proposed rate increases. Contact your sales reps to understand how changes will affect your campaigns specifically.

We have heard questions about how postal reform bills in Congress might affect new pricing. At this point those documents don’t address it. However, the legislation would take a huge financial burden off the USPS, making the proposed rate increases even more frivolous.

Individual members of Congress have undertaken efforts to express their grave concerns for the Postal Service’s rate increases. A bipartisan letter will soon circulate through Congress asking members to sign on and together send a strong message that Congress is concerned about mailers and marketers — especially during this critical time for the nation’s economy as these postage rate increases will likely dampen recovery.

All mailers can assist with this effort. The more Congress hears about troubling aspects of the USPS’s plan, the more likely they are to push 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.

Delivery performance

The USPS continues to move Letters very well, processing an average of over 90% of the mail by the third day after they receive it.

However, they are slower in processing Flat mail, working less in the first few days after they receive it. They are now getting to about 80% by the third day of processing, but that average was 85% prior to the pandemic. 

Some facilities continue to struggle with Flat mail, though — specifically Baltimore, and to a lesser degree Philadelphia, St. Louis and Memphis.

Quad continues in our efforts to draw USPS attention to these issues. We believe labor and transportation challenges are causing the delays. We’re also concerned about how the Postal Service will move mail this fall, as volumes are much lower now than they will be ahead of the holidays. These challenges will not go away anytime soon.

Raw materials and fuel shortages

Our UV Coating and raw material supply chain is improving. We’ve been vigilant in working with a number of suppliers to procure the main base feedstocks of ethylene and propylene, which are foundational chemicals for adhesives, UV coatings, lithographic fountain solutions and silicones.

We are currently working to get supply back into all of our facilities and are confident that as of July 1, Quad plants will be back up and running with UV coating. Thank you for your patience and understanding as we worked to replenish and build the supply back to a sustainable level.

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.

Below-freezing temperatures severely impacted the chemical plants producing the above building-block intermediates. This affected their ability to replenish the supply chain even after weather returned to normal.

Quad’s main concern has been monitoring the supply chain and doing everything we can to procure additional resources for these raw materials. We continue to be hopeful that supply will be back by mid-summer and will communicate updates as the situation evolves.

The industry is still experiencing challenges due to April’s Colonial Pipeline cyberattack. At this point, our customers will see an increase in their fuel surcharge costs. But capacity is not limited right now due to this hack.

However, supply chains have been severely impacted by other factors. And this cyberattack comes on the heels of the CVSA’s annual Truck Inspection Week which disrupted truck capacity across North America. As such, any diesel shortages will have wide-ranging capacity issues.

Postal volume

Mail Volume for week ending June 12, compared to last year

  • Total Mail Volume: Up 20.5%
  • Packages: Down 17%
  • Single Piece: Down 4.1%
  • Presort First Class: Up 7.8%
  • Marketing Mail: Up 27.4%
  • Periodicals: Up 29.4%

May Data:

  • Total Mail Volume: Up 17.2%
  • Single Piece: Down 7.6%
  • Presort First Class: Up 6.2%
  • Marketing Mail: Up 35.1%
  • Period: Down 4.7%