Transcript

On today’s podcast, I recap the January MTAC meetings, the Board of Governor’s brief meeting on January 12, and make some predictions about the July price increase now that the USPS is beginning a more frequent cadence of price adjustments as part of their Delivering for America Plan.

Welcome to the podcast everyone, and Happy New Year!

The Postmaster General’s Mailers Technical Advisory Committee held its meetings on January 11 and 12, which is quite early compared to any prior year. Like most MTAC members, I attended the meetings remotely via Zoom and was surprised to see that the USPS permitted a small number of industry members to attend the meeting in person. I do not recall that being an option and based on some conversations with other members it appears that it was sort of a last-minute decision. Nonetheless, the meetings were informative as always despite some technical glitches and I certainly look forward to an in-person MTAC meeting in April if the COVID pandemic permits it.

Postmaster General Louis DeJoy provided a candid and relatively unscripted opening statement, which I think reflects a continuation of trying to engage more with the industry. He recapped many of the same topics he shared at the Postcom meeting last fall, which I covered in a prior podcast. This included the dire prediction of a $160 billion loss in the next 10 years unless the USPS acted quickly and boldly to implement their Delivering for America plan, which included taking full advantage of all expanded pricing authority as they did in August and will do so again in July of this year. I will share on that in a moment, though.

As I said earlier, PMG DeJoy was very candid, which personally I appreciate, and spoke very highly of his leadership team. He said he was very proud of how the USPS did through peak, which despite some of the concerns I heard from industry regarding availability of mail transport equipment, certainly was improved over 2020. However, the PMG was quick to note as was Isaac Cronkite later in the meeting that 2020 performance was certainly not a benchmark. They still have work to do in order to improve service further, much of which is dependent upon postal employees showing up to work during this ongoing pandemic.

PMG DeJoy noted also that the USPS has been working closely with the White House in order to distribute COVID test kits. This, in my opinion, is a great example of how the USPS can help bind the nation and help bolster their image in the wake of lengthened delivery times; especially for First-Class Mail. On that note, Senator Collins sent a letter to PMG DeJoy on January 11 expressing her concerns about widespread delays in mail delivery in the State of Maine. She wrote, “A number of constituents have reported no delivery at all for a period of up to five to seven days.” She went on to ask a number of very specific questions as to why there have been lengthened service delays, which may have been due to more than the COVID-19 pandemic. No deadline for a response was expressed in the letter, so it is uncertain when or if the USPS will respond to the Senator. However, it certainly indicates that Congress is still closely watching the USPS and PMG DeJoy as it continues to consider postal reform legislation, which by the way hasn’t moved at all for a number of months. At this point, it remains uncertain when or if postal reform legislation will continue moving forward, though some in the industry continue to hold out hope for it.

Back to MTAC. After PMG DeJoy’s remarks, we next heard from Doctor Josh Colin and Isaac Cronkite who provided a recap of the 2021 peak mailing season. As you may recall, 2020 was pretty bad in terms of late delivery and Isaac was quick to point out that the PMG was correct that 2020 was certainly no benchmark. But thanks to starting much earlier and with a focused investment in people, transportation including air transportation, and expanded mail and package facilities and equipment, the 2021 peak mailing season went well. Some notable statistics provided included:

• 245B packages were delivered. Of those, 133.9M packages were delivered between 6am and 9am (10.75%)
  • This was 33.4% better than prior year
• 94% on-time service performance
• 5% carriers return by 21:00

After Isaac and Dr. Colin, Gary Reblin and Pritha Mehra provided an update on emerging technology. Pritha noted that the USPS will be investing heavily in their IT infrastructure this year as well as continued investments in cyber security, something I know everyone in the mailing industry is concerned about these days.

I was very pleased to see Informed Delivery is continuing to gain adoption, and we have now crossed an important threshold. 25% of the nation now has at least one person in the household subscribed to Informed Delivery. That is over 45 million subscribers with 37 million of them receiving the daily email feeds of what is in their mailbox.

Some interesting improvements for Informed Delivery and Informed Visibility include Informed Greetings, which allows online card suppliers to do personalized/individualized campaigns on behalf of the end customer, which includes unique images by mail piece. And something else we had been waiting for is Advanced Expected Delivery Window (AEXD™). This would enable a 1-4 hour window of anticipated delivery time on day of delivery, ultimately approaching how many stops away the carrier is in a particular delivery area. This technology leverages the carrier’s mobile delivery device, which captures the breadcrumb trails of the carrier while they are on their route.

Sharon Owens once again provided an in-depth breakdown of how the July priced adjustment may play out depending on CPI-U trends and the various pricing adders the USPS has. She noted that July 9 is the current target date for implementation of the mid-year price increase and based on current trends the increase would be just over 6.4%. Of course, that could trend a few percentages higher as there are some classes and sub-classes that are not fully covering their attributable costs. The Annual Compliance Report filed by the USPS seemed to indicate that some First-Class Mail subclasses may have increased workshare discounts since less than 100% of the costs avoided are being passed through and some subclasses of Marketing Mail, such as flats, may see less workshare discounts as they are not fully covering their attributable costs. We likely won’t know the final price proposal until early April, but for now mailers should probably figure 6.5% to 8% for an increase, which by the way would reflect nearly a 15% to 20% increase in postage in 18 months.

Finally, I was pleased to hear from Garrett Hoyt, the new VP of Technology Applications, that he is going to work with the mailing software development community to return to a major/minor approach to price adjustments and specification changes. Sharon Owens noted that July price increases would be based on CPI-U and all pricing adders whereas the January price increases would be based on six months of CPI-U and any unused pricing authority. Perhaps that cadence of pricing is an indication of the return to a major/minor schedule. We shall see and I certainly encourage our fellow software providers to take Garrett up on his offer and suggestion for us to return to the table; perhaps using the MSDG group with DTAC as an appropriate venue.

After the January 12 MTAC Focus Area meetings, which are now posted on PostalPro, the USPS Board of Governors held their meeting. PMG DeJoy provided an opening statement that pretty much mirrored what he said to MTAC on the previous day, followed by a vote for the BOG Chair and BOG Vice-Chair since Ron Bloom the former chair was no longer on the Board of Governors. The vote was unanimous from the attending Governors with Governor Martinez being elected to the Chair and Governor Hajjar being elected as Vice-Chair. Governor Martinez then gave a rather lengthy endorsement of PMG DeJoy removing any doubt that PMG DeJoy would continue to remain as Postmaster General under the current Board of Governors.

Finally, I wanted to share some highlights with you from a recent report published by Winterberry Group. If you haven’t checked out Winterberry Group, you really should. They provide some fantastic information, and their latest report includes an outlook for advertising, marketing, and data in 2022.

Per the Winterberry report, 2022 shows a high probability for solid growth, with marketing advertising spending up double digits for a second consecutive year. During COVID in 2020, advertising and marketing spending was down 4.4% from 2019, which was expected as so many businesses were closed. However, as we transitioned into 2021, advertising and marketing spending came roaring back at 21.6% compared to prior year. The forecast for 2022 is continued healthy growth at nearly 12% in overall spending. That’s great news for many MSPs that are processing Marketing Mail, which is expected to grow by 3.5% for 2022 spending. I spoke to a customer of ours recently and she said that they are swamped right now with mailings, so it certainly seems like we’re off to a good start this year.

Thank you for listening to today’s podcast, and if you’d like to learn more about mail tracking, or how to better automate your mailing workflows, please visit us at BCC Software.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!