Key Notes Volume 03 Number 13

PRC Reports “Failures in Overall Service Performance” from USPS – The PRC issued its statutorily mandated Annual Compliance Determination (ACD) assessing the Postal Service’s compliance with pricing and service performance standards in fiscal year (FY) 2015.  In an official statement about the ACD, the PRC commented: “The most pointed critiques identified in this year’s ACD relate to service performance generally, and cost and service problems with flat-shaped mail (flats).”  The problems associated with flats have been a source of on-going concern for the PRC.  In FY 2015 the attributable costs of two products consisting of flats, Outside County Periodicals and Standard Mail Flats, combined to exceed revenues by over $1 billion.  The ACD further notes that the Postal Service’s related efforts to improve flats performance and profitability are ongoing.  As a result, the Commission requires the Postal Service to provide a report on flats issues within 120 days that quantifies what the Commission understands to be the main drivers of these significant and ongoing service failures and cost issues.  Source:  Post & Parcel

Busting Myths about Print and Paper – Two Sides, an organization that promotes the sustainability of the Graphics Communications Industry and dispel common environmental misconceptions, has produced a video dispelling some of the myths about print and paper.  View here.  Source:  Two Sides
USPS’s Digital Mail Program Will Go Nationwide in 2017 – Though the linchpin of USPS’s digital strategy—Informed Delivery—is now but a 67,000-person beta test in New York and Virginia, Chief Marketing and Sales Officer Jim Cochrane is confident he’ll be able to meet his boss’s 2017 deadline for a national roll-out of the service.  In her keynote address at the National Postal Forum, PMG Megan Brennan committed to the aggressive time table for Informed Delivery (ID), a free app that sends people visual notifications of what awaits them in their mailboxes each day.  Letter mail sorters take pictures of each envelope running through them and Informed Delivery takes those, corrals them by address, and emails them to subscribers.  What Informed Delivery currently does not do is provide pictures of catalogs or packages.  Nor does it offer up color renditions.  Both of those deficiencies need to be corrected for USPS to profit from the service.  If brands are going to pay for interactive services linking digital images of mail to sites or landing pages, they’re going to demand high-quality creative.  Source:  Direct Marketing News
USPS Enjoys Quarter Billion Dollar Cash Surplus in February – The US Postal Service took in almost a quarter billion dollars more than it spent in the month of February, bringing its year to date operating profit to $1.8 billion for the first five months of the fiscal year, according to preliminary, unaudited reports filed with the Postal Regulatory Commission.  That compares favorably to the $1.2 billion profit the agency had at this point a year ago.  Mail volume for the month of February was up by a whopping 6% in February, led by standard mail, which increased by 9% compared to a year ago.  First Class was up by 3%.  Mail volume for the year to date, however, is still down by 1.4%.  The increase in February may have been helped by political mailings as the primary season began.  Overall USPS revenue was up 9% for the month, and is up 3.6% for the year to date.  Source:  Postal News
Moving In – A fast-growing online retailer is mailing its first catalog to customers, aiming to drive more shoppers to its site.  Wayfair, which sells furniture and other household goods, began mailing the publication this month.  The 92-page catalog features 775 items selected by a team of buyers and editors using research developed by the company’s data experts.  Source:  USPS
A New Normal for Ad Mail – Back in the day, advertising mail volumes pretty much tracked the economy, declining in a bust and then rising when a boom eventually came along.  But those days may be gone, as our recent white paper, Advertising Mail: Past and Present, indicates.  Yes, ad mail plummeted during the Great Recession, but volumes have lagged behind as the economy has improved.  The trend is troubling because advertising mail is so important to the U.S. Postal Service.  In fiscal year 2015, it generated more than $19 billion in revenue and $7.8 billion in contribution, or profit.  Source:  OIG
PRC Report: USPS “faces significant financial challenges” – The Postal Regulatory Commission (PRC) has warned that the US Postal Service (USPS) “faces significant financial challenges”.  This was main conclusion of the PRC’s report on the financial condition of the USPS for fiscal year (FY) 2015, which was published on March 30th.  The PRC said, “Although the FY 2015 Integrated Financial Plan included a capital investment budget of $1.5 billion for mail processing equipment, vehicles, and information technology, the Commission’s analysis identifies persistent financial challenges for the USPS.”  After reviewing various assets and liabilities the PRC statement included this stark warning:  “Negative net worth indicates that the Postal Service has spent both its initial capital and the debt borrowed from the Federal Financing Bank. Simply put, its debts are no longer secured by its assets.”  Source:  Post and Parcel