Marketers bear the brunt of postal woes

The U.S. Postal Service unveiled details of its proposed “exigent price increase” last week and filed an application with its regulator, the Postal Regulatory Commission. Direct mailers sprang into action decrying the move, and mailers across the board vow to fight the increase (see cover story).

The unprecedented action by the USPS continues to draw ire from the direct marketing community, but it is a tough pill to swallow on the heels of its plan to reduce its delivery services to five days instead of six in order to stem financial losses at the organization. The postal rate increase of course is far scarier to marketers than the reduction in delivery days.

If accepted, it will mean catalog mailers will see average postage increases of 5%, while companies mailing standard mail parcels will get hit with a whopping 23% hike.

Unfortunately, because USPS is at a point where its very solvency and viability is at stake, there is no other choice.

It’s official: they’re in crisis mode. The Postal Service is on track to lose $6.5 billion in this fiscal year and $7 billion in fiscal 2011, and the proposed January rate increase could provide it with $2.3 billion in annual revenue.

Mail volume has dipped dramatically: some 36 billion pieces of mail disappeared in the past three years, prompted by both the recession and the ease of conducting business online rather than through the mail. There’s industry agreement that much of that mail is not coming back.

What is most unfortunate is that direct marketers will bear the brunt of the Postal Service’s problems. It is in large part because the Postal Service does not control its own destiny.

Drastic measures are unavoidable. A common refrain is that USPS should be operated like a private company, but the simple fact is, that is not the reality. In fact, it is its biggest problem. The agency cannot forge ahead with any of these changes without going through layers of oversight. They have powerful unions. Service changes must go through Congress and the PRC.

That is the main element that needs to change. And Congress has to get out of the way.

Even they agree. Sen. Tom Carper (D-Del.) summed it up well in a statement released last week: “The Postal

Service is looking at every option available to them to raise revenue and cut costs. I don’t think it should be

Congress’ role to critique every business decision made by the Postal Service; rather, I think it would be most constructive to allow the Postal Service to exercise the discretion we have given them to make the hard choices necessary to remain financially viable.”

Until then, we’ll continue the mad carousel ride where no one snags the brass ring, least of all direct marketers.

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