USPS Incentive Filing for EDDM Retail

It has been a challenging few days. My office is in downtown Minneapolis where the recent police arrest and homicide of George Floyd has sparked days of civil unrest, lootings, and arson. One of the most compelling, and anguish inducing, pieces of news coverage was the arson that occurred at two Postal Stations resulting in their complete destruction. When consumers stand in tears talking about how they loved their local mail carrier, you realize that the Postal Service is a treasured part of America’s infrastructure. Something we often take for granted. Our office tower has been boarded for a few days, accessible only to tenants. We have been subject to city curfews. It has been a strange and frightening time.

There have been some important Postal Service updates that I wanted to share. Here they are:

Reduced Rates/Retail EDDM.  On June 1, 2020, the Postal Service filed with the Postal Regulatory Commission an intention to offer a two-month incentive for Every Door Direct Mail retail to reduce the retail rate by 10% for all pieces entered between August 1, through September 30th of this year. This will not specifically benefit SMC members unless you are offering EDDM retail as another product offering for your customers. The retail rate for EDDM is currently 19.1 cents and would be, for two months, reduced by 10% to 17.2 cents per piece. This is still higher than the Commercial EDDM DDU rate of 16.4 cents that Saturation Flat Mailers pay for shared mail programs.

The stated reason for the filing is to assist small local businesses “that have been hit particularly hard as they adopt austerity measures and pull back on their marketing efforts in response to business closures or drastic reduction in demand.” 

I realize many SMC members see the Postal Service’s EDDM retail as a bit of a distraction, and distrust the Postal Service’s efforts to, at times, compete with your shared mail business. From a strategic standpoint, however, I believe any efforts to recognize the harm that mailers have experienced, and to offer incentives, is something SMC should not oppose. I hope that this is the first of some incentives that could more broadly help SMC members, like a more inclusive marketing mail, saturation mail incentive.

I am attaching to this email a copy yesterday afternoons USPS’s PRC Filing on the requested EDDM Retail price change.

April Financials.  Last week, the Postal Service released its financials for April. Surprisingly, the Postal Service’s decline in revenue, on a year to date basis, was only 3.8% over 2019. This translates to projected loss of 2 billion dollars for the year, as compared to a 13 billion revenue loss the Postal Service was projecting. The financials were much better than expected or signaled by the Postal Service in various public release and congressional hearings. These financials will make it hard for the Postal Service to maintain that it might need to seek an exigent price hike due to the extraordinary circumstances of the COVID-19 pandemic.

Mail Volumes. Every week I participate in two or three association calls with the Postal Service COVID-19 response team. Volumes for marketing mail have been down by anywhere from 25-45%. Saturation mail volumes have clearly suffered as a result of the COVID-19 pandemic. Package services, however, have increased, by anywhere from 65-99%, depending on the week of reporting. Package services generally are fairly profitable sector for the Postal Service and time will tell if the COVID-19 pandemic, and continued interruptions in businesses and cautions about people venturing into “the public” will help the USPS retain package volumes.

Board Nominee and New PMG. On June 3 – tomorrow – a hearing is scheduled to consider and approve the nominations of Donald Lee Moak and William Zollars, to the Board of Governors. Moak is a Democrat and Zollars is a Republican. It is anticipated that these appointments may be approved.

Come June, the Postal Service will have a new PMG. I am doing what I can to try and work with PostCom to be part of an industry “briefing team” that tells the new boss a little bit about his customers. Typically, when an outsiders have been brought into the PMG position they are inclined to do a reorganization at headquarters and attempt a reduction in force. Time will tell what will happen with new leadership. Personally, I am hoping that some of the key people in Marketing, Pricing and Product are  retained as we have been making the case to these same individuals for years for a separate classification and pricing treatment for Saturation Shared Mail Programs for many years and many of them “get it”.

Hope you are all staying safe and well and that business is starting to “bloom” again in your marketplaces.

Donna Hanbery, Executive Director, Saturation Mailers Coalition (SMC)