Postal Affairs Update, March 4, 2021

March 4, 2021

Joel Quadracci advocated for our clients during a Congressional hearing last week. Delivery performance has improved for Flats and Letters, though First Class mail is still moving slow. And the USPS wants feedback on the potential for customers to mail larger postcards at a lower rate.

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 reacting to the pandemic. 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:

Quad advocates for mailing industry in Congressional hearing

On February 24, the US House of Representatives’ Committee on Oversight and Reform convened for a hearing on Postal Reform. Committee Chairwoman Rep. Carolyn B. Maloney invited Quad’s Chairman, President & CEO to testify on behalf of the Postal Service’s private customers.

On behalf of business mailers and industry coalition C21, Joel Quadracci was the voice of postage payers. He conveyed to the committee the critical partnership between business mailers and USPS, a partnership that supports the overall mailing economy that generates over $1.4 trillion of economic activity throughout the country. In its coverage, The Washington Post underscored the importance of business mailers, who generate the vast majority of USPS revenue.

“Given the combination of service and pricing circumstances over the past year, our coalition and the industry as a whole are alarmed and question the continued ability of the Postal Service to provide affordable universal service,” Joel said in his testimony. “We firmly believe that raising prices and/or reducing service will only exacerbate the problem of retaining volume. The solution, in our view, is for Congress to act on comprehensive reform legislation. The Chairwoman’s discussion draft is an important step forward, that our coalition supports wholeheartedly, but we believe more is necessary.”

We are encouraged that the committee and its Chairwoman have prioritized USPS reforms. Now is the time to work with Congress to enact important reforms that will protect postage rate payers, reduce costs and put USPS on a path to sustainability. We must stay diligent and educate our elected officials on the impacts of postage rates and volume. Quad is committed to communicating how the industry partners with the Postal Service through innovative workshare programs to ensure that the mail performs as efficiently and effectively as possible.

Read the details of proposed solutions in Joel’s verbal statement on the Quad blog, where you can also download his full written testimony as a PDF.

Postal Regulatory Commission (PRC)

The courts rejected the mailing industry’s motion to ‘stay’ on the PRC’s 10-year review decision, which grants the USPS greater pricing authority. When the Postal Service does try to use its new authority, though, the industry will have the option to request the stay again. At such a point we might have an ability to show imminent harm to postage payers. The courts will expedite that request.

Additionally, PostCom filed comments with the PRC regarding the Postal Service’s 2021 Performance Plan. Quad has a position on their Board of Directors and supports the comments, which conclude, “As noted above, the contents of the Postal Service’s performance plan raise serious concerns. Given perpetual underperformance on service, we believe that the ACR process is inadequate to drive the necessary improvements and therefore request that the PRC initiate a separate rulemaking proceeding to develop a performance review process that will enable customers of the Postal Service to receive the service for which they have paid.”

Delivery performance

Both Flat and Letter mail improved again over the last two weeks to roughly the performance levels we saw in early 2020. There are still a few facilities struggling with Flat mail. And although others are hitting a decent amount by Service Standard, they have a longer ‘tail’ with the last 10-20% of the mail. Still, we are encouraged by noticeable improvement.

The massive storms that hit much of the country the week of February 15 severely impacted the entire US transportation network for both trucks and rail. This in turn affected Quad’s delivery to the USPS—and we’ll still be challenged by these factors into next week.

First Class mail continues to be our main concern right now, though. We’re very disappointed that only an average of 55% of mail is in-home by Day 3 of the Service Standard after it’s dropped. We’ve voiced our deep concerns regularly, and work with Postal Service representatives to find more efficient solutions.

Logistics challenges

Overall, the freight market this past week was slightly better than the previous week — but it continues to face challenges to recover from the nationwide weather events from the week of February 15. Quad continues to work to get in the best possible position as we prepare for what looks like an increase in volume for the coming weeks.

For Less-Than-Load (LTL), embargos continue, though there are fewer every day for what carriers are calling ‘Limited Operations.’ These are due to the volume of backlogged freight now hitting areas that were affected most by winter storms. We expect this will continue through at least mid-next week.

For Truckload, the supply and demand is a challenge for everyone. The chart below shows the radio of load to trucks in four of Quad’s biggest shipping states, which jumped in February. Competition for trucks is heightened, making contractual rejection rates, spot rates and give-backs very high.

Product moved via rail continues to be delayed due the disruptions caused by February’s winter storms, on top of high volume from China at the west coast ports, which is causing unloading delays at the rail yards. This, in turn, is causing mail to deliver to postal facilities along the west coast later than intended.

USPS Survey: larger size First Class mail postcard

The Postal Service wants input from mail owners on the potential use of a larger size First Class mail postcard. Quad fully supports the ability to mail a 6×9” piece at postcard rates, which would give our clients more real estate to effectively communicate.

Take the survey before March 10.

Postal volume

Final January numbers, compared to 2020

  • First Class: Down 7%
  • Single Piece: Down 3.9%
  • Presort First Class: Down 8%
  • Marketing Mail: Down 15.9%
  • Periodicals: Up 8.4%
  • Packages: Up 34.4%