Episode 57 – Industry Corner Podcast

IN THIS EPISODE: Chris discusses this year’s National Postal Forum, USPS market competitive price increases, and we now have a fully seated USPS Board of Governors.

 

Show Companion

Links to the resources mentioned in the podcast.

Transcript

On today’s podcast, I recap the National Postal Forum, a recent Postcom Study Day meeting, and the industry braces for uncomfortable price increases as inflation continues climb to its highest rate in forty years.

Welcome to the podcast everyone! 

We are back from an outstanding National Postal Forum. If you didn’t get the chance to attend, that is unfortunate as it really was exceptional and felt very much like a normal NPF. As always, NPF Executive Director Maureen Goodson did an amazing job at putting together another first-class NPF with excellent workshops, plenty of well-attended receptions, and fairly decent attendance. I think there were about 3,000 attendees if I recall, which is about the same as pre-COVID attendance. I also want to give a shout out to Mary Guthrie for helping to arrange an excellent exhibit hall. BlueCrest, BCC Software, and Window Book were all in a row right in front and we had good booth traffic, excellent conversations with customers, and were able to generate new business. I can always count on NPF to be the foundation for our overall sales lead generation and this year’s NPF didn’t disappoint.

I arrived at NPF Saturday evening as I was presenting a workshop Sunday. I was a bit concerned initially about being in the very first workshop periods, but was pleased when approximately fifty people showed up to hear my presentation on Mitigating the Great Resignation with Automated Workflows. Several attendees told me that I “…hit the nail on the head” as they were indeed struggling trying to attract and retain people to operate their current workflows. The topic initiated some great cross-talk amongst the attendees and hopefully everyone walked away with some ideas to mitigate what many are calling the Great Resignation.

NPF had a very-well attended welcome reception on Sunday evening and everyone remarked how it seemed like old times with familiar faces, great music, and delicious food. After the reception, I headed over to the Women In Logistics & Distribution desert reception, which BCC co-sponsored. That too was well attended by many people. I saw Ron Stroman, the former Deputy Postmaster General and now a member of the USPS Board of Governors, and PRC Commissioners Ann Fisher and Ashley Poling. Since I was still full from the NPF reception, I only limited myself to one small desert. But there were so many tempting ones to choose!

Monday morning was the PMG opening address, and PMG DeJoy was his typical candid self. He once again highlighted how his Delivering For America plan will mitigate the projected $160 billion loss for the USPS over the next ten years, and how under his leadership the USPS is coming out of what he called some very “dark times”. He also acknowledged that the industry should brace for some “uncomfortable price increases”, which according to PMG DeJoy would hopefully end by 2024 which is when he was predicting the USPS would be more financially stable.

You could clearly tell that PMG DeJoy is a logistic person. It was very evident to me that he is shaping the USPS processing network into more of a classic hub and spoke methodology that focuses on shape and weight rather than class and content for mail and packages. And he is “tired of shipping air” and wants to move toward cubing out containers and trailers. Again, this is a classic logistics approach, which is familiar to me as I entered the mailing industry in 1992 through an LTL company.

After the opening session, I headed straight to our booths in the exhibit hall to greet the many attendees that were anxious to enter the hall. Shortly after I arrived in the booth, I was thrilled to see PMG DeJoy stop by to meet our BlueCrest CEO Dennis LeStrange, BCC Software President Christopher O’Brien, and Window Book Chief Operating Officer Steve Lopez. Louis DeJoy was in a great mood and very engaging. He even got some great group pictures with the PMG, and we are hoping they will be posted by NPF soon.

Monday afternoon, I presented another workshop entitled Where Did My Customers Go Now. This too was well-attended with nearly fifty people in attendance. The presentation focused on best practices in address quality, which continues to be an important topic as Undeliverable As Addressed mail continues to be measured in the billions of pieces. Having a complete, correct, and current address not only ensures timely delivery of the mail, it also helps to mitigate postage price increases.

As I was preparing to start my presentation, I was approached by a very familiar person. Former PMG Pat Donahoe came up to say “hi” to me and I was absolutely floored that he chose to attend my workshop! Talk about an interesting turn of events! I was normally the person sitting in attendance while PMG Pat Donahoe would update MTAC at USPS headquarters, and here he was attending my workshop at NPF. We both laughed and updated each other on business and personal lives. And Pat was just as charming as always. He also stopped by our booth in the exhibit hall to say “hi” to everyone there. Pat is such a class act, and we were all thrilled to see him.

While the exhibit hall closed on Tuesday afternoon after the exhibitor reception, I decided to stay through Wednesday evening’s NPF closing reception. Maureen Goodson and her team always do a great job in lining up a fun closing reception on Wednesday evening, and this year didn’t disappoint. Though candidly, my favorite NPF Closing Reception of all time was when the band America played, but that was back in 2014. After dancing for a few hours to the excellent live band, my feet were tired and I called it a night wrapping up yet another excellent NPF.

A few weeks after NPF, I attended a very informative Postcom Study Day meeting. Bob Fisher provided an update on the impact of COVID on the USPS and mail volume. He validated that First-Class Mail is relatively stable and that Marketing Mail is continuing to improve in volume. We are seeing that at BCC as well, primarily through our data services. And thanks to the passage of the Postal Service Reform Act of 2022, which many are starting to call PSRA, the USPS should end up $200 million to the positive this year. Bob also noted that about half of the $41 billion the USPS needs for the DFA capital spending initiatives can come from their cash and expanded borrowing limits, thus inferring that the USPS may not need to raise prices as aggressively as they’ve been doing.

Joy Sanzone from the USPS OIG gave a very nice presentation on their latest report regarding trends in delivery points. She noted that the “edit book” the USPS carriers use to manage addresses on their routes will soon be embedded into the Mobile Delivery Devices. The carriers are already beginning to use the MDD to record Move Left No Address records, which we are seeing is increasing.

One interesting item from the report was the increase in cluster boxes. In the past ten years, we added over 13 million new delivery points and many of these were cluster boxes, which increased by 34% during that timeframe. There are also several challenge for the USPS with cluster boxes, especially for package delivery. Many cluster boxes only have one or two package receptacles and if there are more than three residents receiving a package, then the ones that cannot be placed in the package receptacles are often routed for pickup at the local post office presenting a burden on the mail recipients. Also, if the cluster box is damaged, there can sometimes be a dispute as to who is responsible for replacing it. I would encourage listeners to download this latest OIG report.

The other interesting speaker at the Postcom Study Day was PRC Chairman Michael Kubayanda. Chairman Kubayanda noted that the PRC is actively seeking data analysts to assist with analyzing all the emerging USPS data. This includes a Chief Data Officer. He also responded to a number of questions, including if the PRC could limit the USPS to only one price increase per year. The Chairman seemed to indicate that the PRC does have that authority, but that this was the first he was hearing that industry was being severely impacted by frequent price increases. That left many of us scratching our heads as we thought the industry was pretty clear that four to five price changes per year, which includes Market Dominant as well as Market Competitive changes and roll-on/roll-offs was effectively shutting us down in being able to do anything other than regulatory product updates. Even the USPS is struggling with getting their CAT and PostalOne systems ready early enough for industry to finalize our software testing prior to release.

And speaking of price increases, which I will remind our listeners the PMG said would be “uncomfortable” until 2024, we have a 6.5% average increase coming on July 10. BCC is finalizing the software releases and should have them to customers at least two weeks prior to the July 10 deadline. This price increase will result in a cumulative increase of over 15% in the past 12 months for most mailers, and even higher for non-compensatory products such as Periodicals. And look, I know it’s high, but the reality is that most of the increase is due to this very high inflation. Inflation accounts for 5.8% of the 6.5% increase and with no signs of it slowing, I would agree with the PMG that things will remain “uncomfortable” for at least the next 12 to 18 months. So, hang in there, and let’s work together to mitigate the increases through better address quality and leverage every postage workshare discount possible. That not only helps lower postage, but also helps the USPS achieve their operating cost reductions as part of the Delivering For America plan.

Folks, I want to 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!