The USPS’ Kearney says a five-day postal week is ‘probably going to be necessary’ to reduce costs
Q: What was the impetus behind the Summer Sale?
A: Even before the summer sale, we did the Saturation Mail Incentive program, which was part of our general price change that took effect May 11. In both cases, we were listening to customers. After we did that, we continued to talk with a larger group of mailers who said we needed a broader stimulus package. It’s really a big grand experiment to see how much of an impact we can have on standard mail volume trends, which are very negative right now. If we can bend that curve through the summer sale, we’ll have learned a lot. Also, summer is typically a slow period in the advertising business, and we have the capacity for more volume right now.
Q: What’s been the feedback so far?
A: We’ve had inquiries from hundreds of mailers already. The enthusiasm is great. The one caveat we have received from a number of people is that they would have liked a lot more advance notice that this was coming, and they would have been able to participate more readily if they knew about it earlier.
Q: Do you see these as efforts to more aggressively boost volume or at some point will volume just be what it is?
A: We’re trying to figure that out right now. We don’t have the visibility into the next couple of years because we’ve had a larger drop in mail volume than ever before in our history. Another innovation we’re doing is a survey through the Mailers Technical Advisory Committee. There are 56 associations that belong to that committee, and we’re asking each of them to ask their members where they think mail volume is going in 2009, ’10 and ’11. That’s really the first time we’re getting a quantitative reading about where our customers think mail volume is going. That will be a major input into our efforts to size the postal service correctly.
Q: Will we ever see a five-day postal week?
A: We believe it’s probably going to be necessary. If you look at the cost reductions we’ve achieved this year, the costs cut involving our retail operations and our processing plants are in the 12% or 13% range. If you look at delivery costs, we’ve only cut it about 4% or 5%, so it’s a very fixed cost. The only way to bring that down, we think, if there is a major change in future mail volume, which is very likely, is to go to five-day delivery. But we think that it will be a year or two before that is even addressed.
Q: With a new Priority Mail ad campaign to boost awareness, what is the biggest challenge in getting that message out?
A: Our biggest challenge is that we have not advertised typically like FedEx and UPS have, and now we will be for at least some time. We have a very clear, simple message that Priority Mail flat rate boxes are the simpler way to ship and represent great value. We’re doing a very complete integrated campaign so that people will have a 1-800 number and a specific Web site they can inquire at, and we will follow that up with either a sales contact or a direct mail piece.