US PMG Patrick Donahoe was a key-note speaker at this year’s National Postal Forum in San Francisco. He (as usual) delivered his message addressing Congressional hurdles with gusto, vision and without fear.
In a written outline of his opening speech, Donahoe noted the current leaders of the USPS are pushing the Congress to enact comprehensive reform legislation and referred to the journey as a long and winding road. He reiterated that the Congress must allow a new USPS business model that will keep mail relevant and affordable and noted that we are starting to see the end of the continued reservation to move on controversial but essential issues such as retiree health benefit obligations, streamlining operations and governance, transference of ownership to the USPS health plan, and 5-Day delivery.
Donahoe went on to say; We simply must get these issues resolved. This industry needs clarity. This industry needs certainty. It needs Congress to make some decisions and then get out of the way. (go to about.usps.com/news/national-releases/ for details)
Five-day delivery is not a threat to the direct mail marketing industry. The real hazard is an unhealthy, money losing and restricted US Postal Service.
Online services continue to permeate our day-to-day activities and are responsible for new trends. Over the past two years, letter mail delivery continues to decline while package delivery has increased by 14%. A huge contributor to the decline of letter mail is due to online bill payment while the package delivery increase is predominantly due to online merchandise purchases.
integrated online service is a chief contributor to the resurgence of direct mail marketing. Highly targeted and interactive mail is topping the charts for customer acquisition, client interaction and retention with high returns.
The 5-day delivery plan will result in a projected savings of $2 Billion. That savings coupled with the bold move last year to default on payments to subsidize the future retiree fund (mandated solely on the USPS by Washington) would bring the entity very close to operating in the black or at least at a break even.
Post Offices will remain open, box mail will be available and packages will continue to deliver on Saturday.
The decision to end Saturday delivery could still be stopped by Congress. However, the announcement moves postal reform to the forefront. removing the restrictions surrounding our USPS and returning it to a healthy and profitable state are the only ways we can retain the power direct mail contains to drive online traffic and revenue in the future.
As submitted upon request by Mail Magazine – February 2013
Will Congress move on postal reform now that US PMG Pat Donahoe has announced 5-day delivery? After seeing yesterday’s hearing on solutions to the crisis facing the Postal Service, we’re not so sure. Rural delivery and legality of reduced delivery schedule were hot topics in Washington DC yesterday morning.
US Post Master General, Pat Donahoe
Pat Donahoe (US Postmaster General) announced that a 5-day delivery mail schedule would begin in August, saving approximately $2 billion a year. Packages will continue to deliver 6-days a week and post offices will continue to be open on Saturdays. Other countries such as Canada, Sweden and Australia have reduced their Saturday services with positive impact.
The bold move raised immediate legal questions in Washington as some lawmakers claim that Congressional approval is required. Earlier attempts to change the current law have been met with objections and delays from Congress driving the USPS to make the change on their own.
Washington’s mandate, imposed solely on the USPS, to pay over $5 billion a year for health benefits to future retirees remains a central point of contention and a driving factor to make radical change.
USPMG Donahoe continues to push his long-term plan to return the US Postal Service to profitability. The plan calls for closing some of the small, rural post offices and the reconstruction of the postal logistical network by reducing the number of its regional processing plants to gain greater efficiency.
The USPS has conducted studies surrounding the reduction of delivery days and has received surprisingly positive response. The USPS is a reliable and intricate part of our economy and direct mail marketing continues to be successfully drive sales to businesses in an affordable and measurable way.
The decision to end Saturday delivery may ultimately be blocked by an act of Congress, however, the announcement moves postal overhaul legislation to the forefront.
We’ll keep you posted on the latest as it happens.