Mailers Warn the USPS: Service Cuts, Price Increase Will Cost Business

Postmaster General Louis DeJoy may have just celebrated his first year in office but he remains resistant to customer input that differs from his perspective about the Postal Service.

Nonetheless, another group of commercial mailers has offered its own warning to DeJoy that his ill-advised service reductions, combined with an exceptionally large price increase, will cost the agency volume (and revenue) it can ill-afford to lose.

People who know

During a mid-June member forum, the Imaging Network Group, a peer group of large commercial mail producers (and Mailers Hub subscribers), readily determined that many of their largest clients – primarily financial institutions clearly interested in getting their messages and bills to recipients – would not react favorably to proposed concurrent service reductions and increases in postage.

In a statement following the forum, Fred VanAlstyne, COO of Content Critical Solutions and INg President, commented

“The Postal Service’s plans for reduced service and higher prices are causing great concern for many of our members.  Clients such as banks and credit card companies will see these changes as a strong motivation to transition to electronic bill presentment.  That won’t be good for the companies that produce that mail or for the USPS.”

Such warnings have been publicized by other groups but the collective advice from people with centuries of experience in commercial mailing has yet to sway the PMG’s obstinate dismissal of those who disagree with his plans.

Though commercial mailers will work with their clients to mitigate the consequences of USPS service cuts and higher prices, they know that those clients, sensitive to service and postage costs, will not easily set either aside.  The annual, predictable price increases for which most likely had budgeted did not include a mid-year hike that was equal to the past five years’ price rises combined.  Similarly, if any clients had sympathized with the impact of pandemic-related challenges to postal delivery, that understanding is unlikely to extend to accepting a permanent degradation of service.

Recipients of mail, on whose opinions the USPS rests its belief that “reliable” slower service will be acceptable, are not the senders of mail (and the payers of postage) who expect promptness of delivery, not the relaxed standards being proposed by the Postal Service.

Ripples

When financial institutions and similar senders conclude that the Postal Service’s proposed actions are the tipping point that motivates them to shift from hard-copy mail to electronic messages, the initial impact will be on the companies who had been preparing that mail.

Participants at the INg Forum were well aware that the business impact of clients’ dissatisfaction with USPS service and prices could be calamitous for even well-established firms who have supported financial clients for decades and invested heavily in the technology to optimize their operations.

However, the lost revenue (and lost jobs) at commercial mailing facilities will ripple to other companies with similar effect.  Demand for mailing equipment, paper, envelopes – even ink and glue – will decrease as hundreds of millions of financial mailpieces are no longer being produced, and the revenue (and jobs) at those supplier companies will be harmed as well.  In turn, those impacts will ripple outward to the companies the suppliers engage, and on from there.

Not my problem

It’s doubtful that such impacts in the private sector will concern the postal econometricians, marketers, and operations executives who dutifully assure the PMG that his twin policy decisions are correct and will benefit the USPS.  It’s similarly unlikely that any would dare warn him of potentially unanticipated consequences.  In the postal Pyongyang that USPS HQ has become, support for the PMG’s 10-year Plan is virtually dogmatic, and open disagreement is non-existent.

"Oh well."

Unfortunately, reality, and the perspectives of postal customers over whom Louis DeJoy has no control, may not be as obediently supportive of his Plan.  While DeJoy may believe that he was “prudent” and “judicious” in raising rates by nearly 9%, the postal marketplace, fully prepared to accelerate its embrace of electronic messages, feels no compulsion to fall in line with his self-assured myopic thinking.

Just as unfortunately, it will be commercial mail producers, and their employees and suppliers, who will have suffered when the imprudence of DeJoy’s strategies is manifest

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