Self proclaimed Postal Watchdog Douglas Carlson is suing the USPS over the five cent increase on the First Class Stamp. He sites that the increase will be the largest increase in history for the one postage price that most Americans pay. As a percentage, the 10-percent increase is the largest since 1991, and it is about four times the average increase since 2006. Read more here.
WASHINGTON – February 8, 2019 – The U.S. Postal Service reported total revenue of $19.7 billion for the first quarter of fiscal 2019 (Oct. 1, 2018 – Dec. 31, 2018), an increase of $553 million, or 2.9%, compared to the same quarter last year.
First-Class Mail revenue declined by $81 million, or 1.2%, on a volume decline of 428 million pieces, or 2.8%, compared to the same quarter last year. Meanwhile, Marketing Mail revenue increased by $218 million, or 4.9%, on volume growth of 1.0 billion pieces, or 4.8%, compared to the same quarter last year. Shipping and Packages revenue increased by $516 million, or 8.7%, on volume growth of 93 million pieces, or 5.4%, compared to the same quarter last year.
Total operating expenses were $21.2 billion for the quarter, an increase of $1.6 billion, or 7.9%, compared to the same quarter last year. Excluding the impact of the $621 million non-cash workers’ compensation expense increase resulting from changes in interest rates and actuarial assumptions, operating expenses would have been $20.6 billion for the quarter, an increase of $939 million, or 4.8%, compared to the same quarter last year. The remaining operating expense increase was largely driven by increases in compensation and benefits of $657 million, due to additional hours and contractual wage adjustments, and transportation costs of $207 million, due to higher fuel costs and highway contract rate inflation.
The net loss for the quarter totaled $1.5 billion, an increase in net loss of nearly $1.0 billion compared to the same quarter last year.
“We continued to drive growth in our package business and expanded use of the marketing mail channel during the quarter. Nevertheless, we face ongoing financial challenges. We remain focused on aggressive management of the business, legislative reform, and pricing system reform, all of which are necessary to put the Postal Service on firm financial footing,” said Postmaster General and CEO Megan J. Brennan. “Our nation is best served by a financially sustainable Postal Service that can invest in its future and meet the evolving mailing and shipping needs of the American public.”
The controllable loss for the quarter was $103 million, compared to controllable income of $353 million for the same quarter last year.
“Overall volumes increased this quarter driven primarily by growth in Marketing Mail and our package business, which resulted in total revenue growth of $553 million,” said Chief Financial Officer and Executive VP Joseph Corbett. “This growth was offset by increased work hours and related salaries and benefits, increases in transportation costs due to these higher volumes and the continued focus on meeting customers’ needs.”
First Quarter Fiscal 2019 Operating Revenue and Volume by Service Category Compared to Prior Year – READ MORE HERE
In an order issued on November 9th, the Postal Regulatory Commission(PRC) approved the Postal Service’s proposed prices for market-dominant products. In its 63-page decision, the PRC found that the proposed rates do not violate the price cap and that the workshare discounts meet statutory requirements; proposed classification changes also were approved.
Earlier the commission also approved USPS price changes for competitive products.
As a result, the price changes announced last month by the USPS will be implemented as planned on January 21, 2018. Below is a price comparison chart for First Class Rates. For a downloadable PDF of the January First Class Rates, click here.
Participating customers (6 million strong so far), receive an email containing an image of the outside of their letter-sized mailpieces that will be arriving soon. Packages will be presented starting in 2018, and instead of the current grayscale images of today, full color images will start early next year as well.
Notifications can also be viewed on the dashboard at informeddelivery.usps.com. Notifications are not sent on days when there is no mail to be delivered, or on Sundays and federal holidays.
There is a lot of potential for marketers as this program takes root. You have the option to make the images interactive by connecting to your website or landing pages. We’ll review this new service in more detail within our next newsletter.
HOW DO I SIGN UP?
- Visit informeddelivery.usps.com
- Click View My Mail
- Go to My Preferences. Under Account Management, you will see a box for Informed Delivery. Click Manage Your Mail
- Opt IN to Informed Delivery by selecting the check box and confirm your address. Complete ID verification process.
- Start receiving notifications within the next few days!
Since 2000, the 60% rule applies to NP rates. That means that the average NP revenue per piece should be 60% of the estimated average revenue per piece rate, class-wide. The USPS wants to revert to using a methodology that was used prior to the passage of postal reform legislation where regular and ECR (enhanced carrier route) rates are considered subclasses of mail. The Alliance of Nonprofit Mailers alerted members that by reverting to the prior methodology, prices could increase 3.3% to 6.9% over and above other increases that are proposed for implementation in January of 2018.
The PRC Public Representative recognized the potential “rate shock” facing nonprofit mailers, and urged the USPS to apply any corrective price adjustments (over the annual CPI cap increase) over more than two price-adjustment cycles.
There isn’t a time constraint applicable for the PRC to issue a decision on the matter, and the comment period on the USPS proposal ended on September 18th. Knowing the possibility of a legal challenge, the PRC may be more deliberate in issuing its ruling than usual. We’ll keep you posted as this issue unfolds.
*from The Bureau-October 2017 issue
During an Industry Briefing with USPS Headquarters in Washington DC on Friday, it was reported that 75% of the Houston area USPS staff have returned to work. It was also confirmed that mail is NOT being held at the North Houston Post Office. The USPS will assess the condition of delivery units effected by flooding and determine reopen dates on a case-by-case basis. USPS delivery status is updated online daily.
The Houston BMEU (Business Mail Entry Unit) will tentatively re-open on Saturday, September 2, 2017. Other tentative drop-shipment acceptance dates are Friday, September 8 and Monday, September 11, 2017.
We will keep you posted on the recovery status and if you have questions or need additional information, please don’t hesitate to contact us.
The Postal Service has signaled for months that it will be filing for a general price increase later this year (calendar below). Publication of revised mailing standards (some below) that would also take effect in January. Much of this follows a pattern the Postal Service sought to establish years ago: regular price changes announced in the fall and effective in January. The question of consequence for Customers, is less whether there will be a price change as how much an increase will be. The amount that prices for market-dominant mail can increase is tied to the CPI-based price cap, including how much “rate authority” from previous rate filings remains unused. As of the July CPI (based on the June CPI), was at an annualized cap of 0.676%. However, under the rules for calculating the CPI cap, because it’s been more than a year since the last general price increase (filed in January 2015 based on the November 2014 CPI), the applicable formula yields a higher cap (0.713%). To this would be added any unused authority (0.308% for First-Class Mail, 0.403% for Standard Mail, and 1.430% for Special Services) to determine the limit on any rate increase at the class level. OK NOW, In English, take the CPI plus unused CPI would come to around 1.5 to 2 percent as I noted last night. Two big issues that I can NOT get my hands around would be, Flats are not covering their cost and drop ship discounts are not covering the cost so I anticipate a slightly greater increase in flats and a decrease in the drop ship discount by .5 to 1 cent. If I “mail geeked” you and want help translating just give me a buzz. Below is the expected time frame and a list of structural changes that I am anticipating.
Time Frame expected to be used by USPS
August: share technical changes and draft postage statements (without pricing) with developers
August: share draft mailing standards
September/October: Final PRC Market Dominant
November: Competitive filings
November/December: Publish final prices, mailing standards
1/8/17: target implement pre-release
1/22/17: targeting price effective date
Structural changes under consideration are as follows:
o Combine AADC and 3D auto letters for First-Class Presort (currently the same price)
o 3rd Ounce free for First-Class commercial letters
o First-Class Mail Promotions
o Combine AADC and 3D auto letters for Standard Mail presort
o Simply Standard Auto letters by eliminating the per-pound rate between 3.3 and 3.5 ounces. Letters would be the same price from 0 up to 3.5 ounces.
o Increase Standard Mail flats piece price weight break from 3.3 to 4.0 ounces
o Standard Mail promotions (sent you the proposed changes about two weeks ago)
o FSS Standard Mail revert to previous structure
Also noted at the MTAC meeting was the issue with DSCF letter Mail. There was a change in DSCF pass-through calculation from FY14 to FY15. DSCF letter pass-through went from 57.4% in the FY14 ACD to 225% in FY15 ADC. FY15 discount $.043. The FY15 Cost avoidance – $.02 per piece. Meaning the USPS is giving us a 4.3 cent discount for drop ship where it should have been 2 cents
The plan instead is to have modest increases over a number of price changes.
The USPS & PRC (Postal Regulatory Commission) have started preparation for the end of the exigent surcharge that’s been in place since January 2014. The surcharge removal is projected to end in early April, but that date is only a forecast at this point, as it’s based solely on when the full amount authorized to be derived from the surcharge ($4.63 billion) will be collected.
For obvious reasons, the PRC is interested in ensuring that the correct date is set for the end of the surcharge and, accordingly, had directed the Postal Service to provide biweekly updates on the amount collected beginning in the postal quarter when the end of the surcharge was anticipated. Also, the agency must give 45 days’ notice of the end of the surcharge.
In its February 14 report, the USPS explained that it had collected an estimated $4.347 billion, including $827.1 million so far in FY 2016. For the 750 days that the surcharge had been in effect through February 14, the USPS averaged about $5.796 million per day in additional revenue. At that rate the total should take just over 799 days to collect, or until about April 3, 2016. As the PRC has noted, the USPS is entitled to collect only the amount the commission authorized, and there’s no process for refunding any excess collected from ratepayers, so the need to be as precise as possible in setting the end date is clear. In the meantime, the surcharge revenue continues to accumulate, mailers look forward to lower rates in April, and the Postal Service worries how it will replace the 4.3% of revenue.
See below for rate changes and comparisons:
If you have questions or need additional information, please don’t hesitate to contact us!
Join us in welcoming Kathy Hall to our BEB Team. Kathy is a business development manager specializing in multi-channel marketing for Houston and national markets. Kathy built a career within the Unites States Postal Service and brings 30-years of industry experience. Her rise through the USPS included serving as a Mailing Solutions Specialist and Senior Sales Executive-HQ | Houston Division . Well versed in the connection between direct mail and digital platforms, Kathy’s expertise in marketing is an exciting addition to our business. She earned her degree in management from Rice University and serves as a volunteer for several faith based charities and industry organizations. Check out her profile on LinkedIn, Twitter or Facebook and connect!