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DeJoy Act: H.R.2230
On today’s podcast, I discuss the mid-year USPS price increase, new members of the Board of Governors, progress in Congress toward meaningful postal legislation, and a recent report from the USPS Office of the Inspector General.
Welcome to the podcast! Well, it shouldn’t surprise anyone when the USPS on May 28 filed their intent to increase prices effective August 29. I’ve talked about this on the podcast before and in fact the imminent intent to raise postage prices is one of the key pillars in the USPS 10-year plan.
The USPS is fully leveraging not only the expanded pricing authority granted by the Postal Regulatory Commission, which I’ve outlined in a prior podcast, but they are using CPI-U and all the banked pricing authority from prior years. In essence, they’ve put all their chips on the table believing they have a winning hand in being able to raise postage by an average of 6.8% just weeks before the beginning of the fall mailing season. And while the industry has filed a stay of implementation in the DC District Court, the likelihood of this price increase to proceed is all but assured as the PRC has already approved it. So, what exactly are the price increases since we know that while 6.8% may be the overall average, there are various subclasses that always seem to get hit with a much higher rate.
For First-Class Mail, the USPS is already breaking with their former position of only increasing stamp prices in nickel increments by raising stamps from 55 cents to 58 cents. Meter price is going from 51 cents to 53 cents, and the non-machinable surcharge is increasing from 20 cents to 30 cents. First-Class flats are being hit hard with a 10.3 percent increase.
Marketing Mail overall is seeing a 6.815 percent increase, but certain subclasses such as flats are seeing a 8.819 percent increase. Marketing Mail parcels are also receiving a large increase at 9.367 percent. Detached Marketing Labels and Detached Address Labels are also seeing a double-digit increase of 16.7 and 18.2 percent respectively. While high density flats are seeing an above average increase, it is worth noting there is a new 1 cent discount for high density flats on 5-digit direct pallets, which is intended to encourage more commingling.
Periodicals are all seeing an increase between 8 and 9 percent on average, but the USPS is applying it in various ways within the zones. Zones 1 to 4 have price increases, whereas zones 5 to 9 have decreases. There has also been some discussion of implementing a Zone 10, which would have a huge impact on the mailing industry, especially software solutions. However, that conversation is still ongoing within MTAC.
While it is highly doubtful that anyone budgeted for a mid-year postage price increase of this magnitude, the likes of which we haven’t seen in over ten years, there are still ways to help offset these increases. The first, of course, is to leverage more workshare. Make sure you work closely with your software provider, or your mailing presort provider to better understand how to unlock all the possibilities in advanced presort schemes to maximize the discounts.
The second strategy is automating the workflow. This not only helps to reduce operating costs but is a great way to improve your productivity if you are struggling to hire employees.
And finally, you need to make sure to fully leverage Informed Visibility by tracking and tracing your mailings. With all the changes to service performance and the network rationalization being done, you will want to know where the mailpieces are and when they are due to arrive under the “new normal” for service performance.
While the USPS was moving forward with a mid-year price filing, the Senate was busy confirming three new Board of Governors. On June 15, Amber McReynolds, Anton Hajjar, and former Deputy PMG Ron Stroman were sworn in as members of the Board of Governors. This means we now have a full USPS Board of Governors, which includes PMG DeJoy, the new DPMG Douglas Tulino, and nine Presidentially appointed and Senate confirmed Governors. It has been a long time since we had a full BOG, and I am sure it is welcomed by the industry.
And speaking of the Senate, the USPS Fairness Act is moving along. Both the Senate under S.145 and H.R.695 are pushing to repeal the requirement that the U.S. Postal Service annually prepay future retirement health benefits. There are also a number of other Bills introduced earlier this year, including H.R.2230, entitled the DeJoy Act, which requires the U.S. Postal Service (USPS) to maintain the service standards for first-class mail that were in effect on January 1, 2021. This Bill was introduced in the House in response to the USPS published 10-year plan.
Finally, I wanted to encourage you all to download and read the latest report from the USPS Office of Inspector General entitled Marketers’ Perceptions of Informed Delivery and Informed Visibility. According to the report, Twenty-two percent of American households have already signed up for ID, and 11,000 brands have conducted ID campaigns since 2017. And while Informed Delivery has gained interest by mail owners for brand awareness and to leverage postal promotion discounts, there has been little to no attempt to leverage Informed Visibility data as part of an omnichannel marketing effort.
Perhaps as Informed Visibility data becomes more reliable, particularly for flats, and as the USPS continues to improve ways to share Informed Delivery campaign data with the industry, we may see these two major initiatives come together. In the meantime, I still fully believe that every mail owner and mailing service provider should be tracking their mailpieces. As I’ve noted in earlier podcasts, there are three main value propositions to mailpiece tracking: accountability, visibility, and predictability. The industry has been using IV data to hold the USPS accountable for service performance, and visibility of where the piece is at in its journey toward arrival will continue to be more important as the USPS changes their network. But in my mind, the real price is predictability of arrival. Being able to use IV data to strategically time a digital complimentary message as part of a multichannel marketing effort makes sense.
To learn more about mail tracking, or how to better automate your mailing workflows, please visit us at BCCSoftware.com or give us a call. As always, we’d like to know “How can we help?” Thank you for listening to the podcast and have a great day!