new postal regs
This just in from the USPS…price increase on the horizon
Release No. 10-064
Postal Service Proposes Price Changes
WASHINGTON —The U.S. Postal Service Governors recommended increasing the price of a First-Class stamp 2 cents to 46 cents and authorized the production of a pane of four evergreen tree branches as the newest image for Forever Stamps. The price of a postcard would increase 2 cents to 30 cents.
The Postal Regulatory Commission must approve the recommended price changes. The increases would not go into effect until January 2, 2011. It would be the first stamp price increase in almost two years.
Holiday Evergreen Forever Stamps will be available to the public in October at the current rate of 44 cents. Once purchased, the stamps are valid literally forever – despite any future price changes. No additional postage will ever be needed.
Faced with plummeting mail volume traced to the recession and increased use of the Internet, the Postal Service is projecting a deficit of nearly $7 billion for the next fiscal year. Despite eliminating 1 million work hours and reducing expenses by more than $1 billion every year since 2001, a budget gap remains.
The proposed price changes, if approved, will raise about $2.3 billion for the first nine months of 2011. Postmaster General John E. Potter said he does not want customers to bear the burden of dramatic price increases. Instead, Potter announced in March that pricing would be one in a series of solutions the Postal Service is pursuing to become financially sound.
“There is no one single solution to the dire financial situation that the Postal Service faces,” Potter said. “These proposed rate adjustments are moderate and part of a fair and balanced approach to insuring mail service for all Americans well into the future.”
Other actions outlined in March included changes to delivery frequency, restructuring prepayments of retiree health benefits, creating a more flexible workforce and expanding access to products and services to places more convenient to customers.
The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.
Complete details of today’s filing can be found on usps.com. No prices will change before 2011.
Update on 5 Day Delivery–New Website
The U.S. Postal Service has launched a website on usps.com to provide information to all customers about its proposal to implement a five-day street delivery schedule. The Postal Service proposes to end regular Saturday mail delivery to street addresses as part of a comprehensive plan to ensure that it can continue to deliver affordable service to the American people. Post Offices will remain open on Saturdays.
The website, www.usps.com/communications/five-daydelivery has a planning guide for businesses and household customers, and answers to frequently asked questions.
USPS summer sale, look for your letter!!
Release No. 09-020 Summer Mail Sale Returns
Customer Loyalty to Be Rewarded Again in 2010
WASHINGTON—The U.S. Postal Service did something for the first time last year, and it was so successful, they’re planning to do it again: launch a summer sale.
The 2010 Summer Sale is scheduled to run July 1 through Sept. 30 and will provide a 30 percent rebate to eligible mailers on Standard Mail letters and flats volume above a predetermined threshold. The threshold will be five percent over each participating mailer’s volume for the same period in 2009. Invitations to participate in the sale will be sent to customers in early March.
“The 2010 Summer Sale is our way of rewarding our most loyal customers and demonstrates that we value their business,†said Robert F. Bernstock, president, Mailing and Shipping Services. “We expect the 2010 Summer Sale to provide as much excitement about direct mail as the sale did last year and to generate between 300 million and 1 billion new mailpieces.â€
Nearly half the 960 customers enrolled in the 2009 Summer Sale increased their mailing volumes. This resulted in approximately 1 billion incremental pieces during the sale period, producing a net revenue contribution of $24 million.
“Direct mail works, and our customers know that,†said Bernstock. “That’s why we will continue to invest in programs that promote the health of our customers’ businesses as well as our own. We very much appreciate our customers’ business, and we will compete aggressively for their advertising and promotion dollars in this highly competitive marketplace.â€
To be eligible to participate in the 2010 Summer Sale, a company must have mailed 350,000 or more Standard Mail letters and flats between July 1 and Sept. 30, 2009. Approximately 3,525 customers are expected to be eligible to participate in the sale, representing 67 percent of the Postal Service’s Standard Mail volume.
The 2010 Summer Sale is a component of a broader pricing strategy that creates incentives to grow and retain volume. It was one of many solutions discussed this week at a Washington, D.C.-stakeholder event in which Postmaster General and CEO John E. Potter addressed hundreds of customers, business partners, employees and the media during a presentation: Envisioning America’s Future Postal Service. At the event, Potter outlined an aggressive plan of cost cutting, increased productivity, and an array of legislative and regulatory changes necessary to maintain a viable Postal Service.
The 2010 Standard Mail Summer Sale is subject to approval by the Postal Regulatory
Reader’s Digest Plans Bankruptcy Filing
From the New York Times
August 17, 2009, 2:00 pm
By Stephanie Clifford
UPDATE Aug. 17, 3:52 p.m. With comments from the Reader’s Digest Association chief financial officer, Tom Williams, and on the banks’ involvement.
The Reader’s Digest Association announced on Monday that it would file for Chapter 11 bankruptcy protection for its United States businesses within 30 days.
As part of the reorganization, Ripplewood Holdings, the private equity firm that owned Reader’s Digest and installed Mary Berner as its chief executive, will shed its shares and board seats, and existing debt holders will become the company’s owners. Ms. Berner will continue to run the company, and Tom Williams will remain as chief financial officer. The company does not expect to lay off any employees or close any of its publications, Mr. Williams said in an interview.
The value of the company will be much lower under the overhaul. Its debt of $2.2 billion will be reduced to $550 million, according to the agreement it has already struck with the majority of the banks. Ripplewood had bought Reader’s Digest for $2.8 billion in 2007 in a leveraged buyout.
“The bank lenders are taking a fairly significant haircut,†said John Puchalla, a senior analyst at Moody’s. While it was common for junior creditors to take a loss, for the senior creditors to take such a loss is “notable,†he said. “It’s certainly a lot less than the value the lenders viewed at the time of the L.B.O.,†he said.
Mr. Williams said a majority of its lenders had agreed to the terms of the restructuring, and the company expected to speed through bankruptcy, completing proceedings 45 to 90 days after it files, he said.
The filing does not cover its businesses outside the United States; it sells publications and products in 78 countries.
The company has lined up $150 million from lenders, through a debtor-in-possession loan, to help finance it through the restructuring, and will get $400 million more upon exiting bankruptcy, for the
total new debt of $550 million.
“Our banks are 100 percent aligned on the vendors that we choose and serve, so there’s no issue associated with paying any vendors,†Mr. Williams said.
That money comes from its new owners: J.P. Morgan, the company’s agent, G.E. Capital, Merrill Lynch, Eaton Vance, Regiment Capital Advisors, Ares Management, and Davidson Kempner. Although Ripplewood made an offer, “the offer from the lender group looks more compelling,†Mr. Williams said.
The company has an additional $100 million in cash on hand, Mr. Williams said.
The overhaul will save Reader’s Digest $65 million a year in cash-interest expense payments, reducing its annual payments from $145 million to $80 million, Mr. Williams said.
The company will continue to operate as usual once it comes out of bankruptcy, but with significantly less debt, Mr. Williams said. “No employees are going to be affected by this, there’s no-to-little
effect on our vendors, our operational performance remains very sound,†he said.
In the company’s most recent fiscal year, ended in June, its revenues, excluding the effects of foreign exchange, declined 1.4 percent, and gross margins and operating profit were flat with last year, Mr. Williams said. Additionally, ad revenue, which makes up about 9 percent of the company’s sales, were down only 3 percent from last year.
The magazine was founded in 1922, summarizing articles published elsewhere, and grew quickly. The company developed other titles, and, in 1990, went public.
The Reader’s Digest Association has been through a turbulent time in the last several years. In 2007, a consortium led by Ripplewood bought the company for $2.8 billion. Ms. Berner, a publishing executive, was installed as chief executive; her brother, Robert Berner, was then a managing director at Ripplewood.
But the company has lost money every year since 2005. The high debt load of the company had led analysts including Mr. Puchalla to downgrade its debt at the beginning of this year. In June, the company announced it was cutting the guaranteed circulation of the flagship magazine to 5.5 million, from 8 million, and decreasing the frequency to 10 times a year, from 12, along with focusing the magazine on socially conservative values.
Postal Officials Ponder Emergency Rate Increases
From the Dead Tree EditionThursday, July 23, 2009
Postal officials are spreading the word that they may seek emergency rate increases next year.
Various scenarios have been bandied about, including one that would raise the price of the 44-cent First Class stamp to 50 cents and other rates by similar amounts. But after several meetings with postal officials, the Direct Marketing Association is telling some members that the Postal Service is more likely to seek an “exigent increase” of only 2% to 3%, including only one cent for the First Class stamp, to help shrink its multi-billion-dollar losses.
Annual increases in most postage rates are generally capped by changes in inflation. Postal officials are realizing that deflation, especially the drop in energy prices since last summer, will probably mean no such rate increases next year, according to accounts coming out of meetings with postal officials. As Dead Tree Edition pointed out recently, USPS will not be able to institute normal rate increases in May 2011 unless the Consumer Price Index rises at an annualized rate of nearly 5% for the rest of this year.
That’s why postal officials are pondering an unprecedented “exigency-based” rate adjustment, which postal regulations allow “only when justified by exceptional or extraordinary circumstances.” Postal Regulatory Commission rules would also require USPS to discuss the circumstances leading to the proposed increases and “whether the circumstances were foreseeable or could have been avoided by reasonable prior action.”
The PRC would hold a public hearing on an exigent rate request and by law would have 90 days to decide whether “such adjustment is reasonable and equitable and necessary to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain” appropriate service levels.
The Postal Service, which is supposed to break even, is projecting a loss of about $6 billion this fiscal year. To close that gap, which USPS says will grow unless it takes drastic action, postal officials are also discussing plans with mailer groups and postal unions to transition to five-day delivery in the fiscal year that starts in October 2010. That would require Congressional approval.
The closing of thousands of post offices is a possibility, the consolidation of processing and distribution centers has recently accelerated, and USPS continues to shrink its workforce — all in response to declining mail volume that is causing the budget shortfall.
The meetings have also been an attempt by postal officials to shore up union and customer support for legislation that would reduce USPS’ unusually high pre-payments for retiree health care. The Congressional Budget Office estimates H.R. 22 would save USPS about $2.5 billion annually for the next three years.
Lousy economy has a bright side: Less junk mail
Editor’s note: As a direct marketer, you should see this drop in direct mail as a tremendous opportunity to get your message out there in a less cluttered environment!
By Christine Show
From the Orlando Sentinel
July 22, 2009
Sherry Batts used to sort through stacks and stacks of unsolicited mail, from credit-card offers to requests from charities.
But Batts, as a member of a nonprofit group that runs a tiny post office in the small south Lake County community of Ferndale, has noticed a sharp decline in such mailings.
“That kind of stuff I hardly get anymore,” she said. “There’s just not as much junk mail as there used to be.”
Credit-card mail, which spiked in 2006 to 8.3 billion pieces in the U.S., dropped nearly 35percent in 2008 to 5.4 billion pieces, according to Mintel Comperemedia, a Chicago firm that tracks the direct-mail industry. Direct-mail companies — which used to send unsolicited mail to virtually anyone — are now targeting specific customers to cut back on expenses in this difficult economy.
In a reflection of the struggling housing market, mortgage companies also have slashed mailings. Mortgage companies using traditional mail sent 203 million pieces in 2008, down 75 percent from 800 million pieces at the height of the housing boom in 2005.
“It’s fallen dramatically,” said Stephen Clifford, Mintel Comperemedia vice president of financial services.
These businesses have to rethink how they spend on the services to avoid taking big risks, Clifford said.
“There’s definitely a lot less direct mail than there was even a year ago or even six months ago,” Clifford said. “They’re being much more particular and selective of who they’re offering mail to.”
Companies want the most specific information they can get on potential customers — for example, whether someone has children, a swimming pool, a pet or certain ailments, said Ken Lombardi, owner of Action Mail Services in Orlando.
Such pinpointing is essential, agreed Jack Curtin of Tribune Direct, a direct-mail marketing company owned by Tribune Co., whose media holdings include the Orlando Sentinel.
“We lead with data to help them [clients] to understand who their best prospects are and target those prospects,” Curtin said.
Postal Service concerned
The industry’s changes have hurt the U.S. Postal Service, one of the largest avenues for direct-mail companies to reach customers. The Postal Service doesn’t record drops in direct mail but is aware of the situation nationwide, said Elaine Pancake, spokeswoman for Orlando-area post offices.
“It affects us in that we have a lower mail volume,” Pancake said. “There’s a concern.”
The Postal Service already is struggling with large deficits, including a potential $6.5 billion loss this year.
Besides declining advertising budgets, the Internet is playing a role in the dwindling direct-mail volume.
Marketing companies now have more options on how they can get the word out, including e-mail, text messages and Web sites to target specific audiences.
“Communication is more effective if you can do it over more than one channel,” Curtin said.
Low point?
One bright spot for direct mail may be banks. Hit hard by failed mortgages and foreclosures, they are pushing to increase new checking accounts, Clifford said.
So far in 2009, bank mail about checking accounts has reached its highest level since 2005 with 226 million pieces of mail, according to Mintel Comperemedia data.
“Despite the challenges banks are experiencing in this recession with mortgage losses, they are continuing to market checking accounts and savings accounts,” Clifford said. “They are looking for more deposits in order to keep sustaining their loan business.”
But Clifford said it’s too early to tell when and if the decline in the direct-mail industry will pick up again.
But as the industry continues to reinvent itself and recovers from economic turmoil, the numbers of direct mail may increase.
“Perhaps we reached the low point,” Clifford said. “It’s definitely anyone’s guess at this point.”
PMG briefs employee organizations on the USPS’s current situation
From the Postal News Blog
Postmaster General Briefing
July 14, 2009
USPS Headquarters
On Tuesday, July 14, 2009, Louis Atkins, NAPS Executive Vice President, represented NAPS at a briefing with Postmaster General Jack Potter. Also in attendance were the leaders of all of the craft unions and the other two management associations.
Postmaster General Potter briefed the attendees on the current situation facing the Postal Service:
Continued losses in volume are crippling the finances of the Postal Service. Between 2008 through 2010, the Postal Service expects that it could lose as much as 25 – 30 billion pieces of mail volume. Every time the Postal Service loses a billion pieces of mail, the Postal Service looses $ 360 million dollars in revenue at current rates.
Employees need to know that the Postal Service has already taken steps to bring our Health Benefits in line with the rest of the federal government by the agreements that were reached with the unions and management association in the last round of pay agreements by increasing the employee contribution by 1% each year.
There are no plans to have any new equipment deployments in the near future. Right now the Postal Service has enough equipment power to process all of the world’s originating mail in just six hours time.
The “Summer Sale†was explained to the attendees. Mailers who use this opportunity will be required to maintain their expected volume of mailings through October, 2009 to earn a rebate on summer mailings. Customers who simply advance their mailing cycle will not get the discount rebate.
PMG Potter then provided information on the Postal Service’s strategies for FY 2010 and beyond:
• The Postal Service needs to continue to cut costs
• Grow the Business
• Protect Liquidity
Key Strategies are expected to include:
• Continued freeze on hiring
• Additional Tour compressions
• Restructuring Delivery Routes
• Continued integration of Network Distribution Centers
• Flat Sequencing
• Station and Branch consolidations
• Further reductions in administrative positions
The Postal Service continues to stress that relief from the passage of HR 22 alone will not bring the Postal Service the financial relief that it needs and the implementation of five-day delivery is vital to the future solvency of the Postal Service.
Although there has been much discussion of the change to five day delivery, and that the change must have congressional approval and a change to the current law, it now appears that Saturday would be the day that delivery would be eliminated. In a five-day proposal, retail units would remain open on Saturday to provide service to customers.
Post Office boxes and Caller Service would also be maintained under the Postal Service’s plan. Remittance mailers could use Post Office boxes and/or Caller Service to maintain their cash flow.
Under the Postal Service’s proposal, there would be no delivery or collection of mail for city routes, rural routes or contract routes. Express Mail would continue to be delivered as it is currently.
• Mail processing would process originating mail Monday – Friday.
• Mail processing for destinating street addresses processed Monday – Friday.
• Mail processing for destinating PO Boxes and Callers Monday – Saturday.
• Mail processing for destinating remittance mail Monday – Sunday
The Postal Service is also considering options to increase the sale of non-postal items in retail units. As these plans are finalized there will be information provided to employees and the public.
PMG Potter stated that the new Priority Mail initiative with flat rate boxes is performing well and helping us improve our revenue. Employees should tell everyone they know about the benefits of the flat rate boxes.
Few Bright Spots In Media Sales Forecast: Magna
From DIRECT: Jul 14, 2009 1:23 AM
Media supplier advertising revenue will sink to $161.4 billion in 2009, according to media services firm Magna. That figure represents a 14.5% drop from 2008’s level. And there isn’t much hope for recovery during the next few years: Magna anticipates the compounded annual ad revenue growth rate between 2009 and 2014 to be only 0.9%.
At least that represents growth. Radio ad revenue has dropped of late, dipping to $14 billion in 2009. And the next five year’s won’t be fun, either, with radio ad revenue slipping by 0.8% a year.
And at $15.7 billion, magazine spending has plummeted, and there isn’t much hope for turnaround. Its declines will continue through 2014, on a compounded annual basis of 3.3% every year.
Move from slick paper to pulp, and the future looks bleaker. Total ad sales for newspapers – including online revenue – will amount to $28.5 billion, and that number is going to drop by 3.7% annually through 2014.
What good news there is, is tepid. For instance, total television consumption is set to rise, as population increases and viewing will outstrip embracement of digital video recorders. Total television spending, which stands at an estimated $47.7 billion for 2009, will rise by 3.2% during the next five years.
And while the rate of broadband computer penetration is slowing, it is still rising and should it 70% by 2014. At that time, most computer access will be broadband-based, Magna predicted.
Where is growth? No surprise there: Direct online media expenditures will amount to $13.9 billion in 2009, and will increase between this year and 2014 by 10.2% on a compounded annual basis.
Similarly, total online spend, which stands at $23 billion for 2009, will jump by 8.4% compounded annually through 2014.
The biggest surprise may be in Magna’s direct mail predictions. At $19.2 billion, supplier revenue is down 11.2% for the year. But – whether due to postage and printing increases, or a swing back of the pendulum as marketers re-embrace the mail – between now and 2014 it is seen as growing at 2% annually.
Ethical Implications of the USPS Mystery Shopper Program
By Bob Wilson, 6/17/2009 from Postal Mag.com
Over the last several years, I have become increasingly uncomfortable with the ethical implications of the deceptive practices of the USPS retail operation, as exemplified by the “Sales Script” and enforced by the “Mystery Shopper” program. These unscrupulous tactics, dictated by somewhere far up the chain of command (perhaps from the PMG himself), amount to nothing short of theft, in addition to treating our customers with contempt as it relates to their time and individual needs. This was brought into clear focus recently by a transaction with a young lady I have met at church, but whom I have never seen previously at the Post Office.
Like many college students, she had completed her courses for the term and had sold (via eBay or similar) one of her used textbooks. According to the Sales Script, I was to offer her Express Mail (which, priced around $35, was almost surely inappropriate for such a transaction), and if/when she declined that, to offer her Priority Mail. In this instance, Priority Mail for that heavy textbook would have been in the range of $15 – $20, still far more than was warranted by the situation. Still according to the Sales Script, only when she specifically asked if there was anything less expensive was I allowed to tell her about Parcel Post, priced around $9 or $10. I have been explicitly instructed NEVER under any circumstances to offer Media Mail unless the customer specifically requests it, even if it seemed obvious that this was the best option for the customer’s needs.
By this point in the transaction, my conscience was literally screaming at me to tell her that there was a less-expensive option; to do otherwise would be a lie of omission. Here is a parallel example from another industry (http://www.wwdmag.com/Straight-Talk-About-Ethics-article3354):
If what you are saying or doing may harm the customer, it is unethical. Also, remember that we owe it to our customers to place their needs over ours. For example, Bob is two months behind in his car payment. His boss told him that if he doesn’t sell something tonight, he is fired.
He goes out on an appointment. The customer has a broken softener that could be repaired for $75.00. If Bob sells that client a new softener instead of telling them it can be repaired, that would be unethical, as it puts Bob’s need ahead of the client’s. It is a lie of omission not to disclose the situation to the customer. It does harm to the client. No one will ever know what Bob did if he unethically sells that softener, but doing right when it hurts and when no one will know is the mark of character.
In this instance, despite the knowledge that it was a direct violation of the official Postal policies that had been given to me, I told the young lady about Media Mail (priced around $4), which she gladly chose to use. I could not have done otherwise. But ALL of our customers deserve this same honesty, not just the ones we might happen to know personally. It is also unethical to show favoritism by telling some customers about better prices while withholding that information from others. Many of our customers are quite limited in their understanding of postal polices and pricing; they are dependent on us to inform them of their options. This is especially true of the elderly, young adults, and those for whom English is a second language. It is just plain wrong for us to take advantage of their ignorance; and we owe it to ourselves to resist this dishonesty.
Threat to shutter N.Y. post offices is pushing the envelope
Sunday, June 7th 2009, 4:00 AM
There’s no reason the United States Postal Service should be going broke – but it could end up that way if its managers, including politically motivated members of Congress, don’t wise up.
Countless stories have reported a $6 billion deficit at the postal service, usually ascribing it to the skyrocketing cost of fuel, the increased use of e-mail and the effects of a weakening economy.
There’s no question that the economy is taking a heavy toll. In a recession, it’s natural that businesses – the main users of the mail – send out fewer sales promotions and ship fewer goods. And the national wave of foreclosures means hundreds of thousands of addresses have become vacant places that don’t send or receive mail.
The growing gap between revenues and expenses is cited to explain 25,000 recent layoffs and a shrinking of the mail network that could include 20 shuttered branches in New York City alone. Even with the recent 2-cent increase in the price of a first-class stamp, postal officials still talk about the need for more layoffs, and keep floating the idea of reducing delivery to five days a week.
The doomsday talk is premature. Even though more people use e-mail, the postal service delivered a record high 213 billion pieces in 2006, well into the digital revolution. Even online shoppers have to get physical goods delivered to them, and that usually means a visit from the postman.
In reality, the $6 billion deficit is a burden dumped on the postal service by Congress. By law, the postal service must use current dollars to pre-fund future employee health and retirement benefits, a financial shackling that turns what ought to be a surplus into a deficit.
Before the pre-funding law was passed in 2006, the postal service had fallen behind on paying benefits. That problem, however, has been fixed. A bill currently before Congress can – and should – be passed to eliminate the deficit by relaxing its benefit payment schedule.
But that may not happen. Congress has been horribly slow at correcting problems like the benefits snafu – yet adamant about imposing tough, expensive mandates on the postal service.
Take universal service, the congressionally imposed mandate that mail get delivered six days a week. Despite polls showing that most Americans are willing to live with weekday-only service, a key congressman – Rep. Jose Serrano of the Bronx, who chairs the powerful Appropriations subcommittee that funds USPS – has declared that universal service is here to stay.
“People depend on regular mail delivery and would be greatly inconvenienced by missing a day’s delivery,” he told the Washington Post. “The Postal Service must manage its operations in ways that will not cause consumers to miss out on mail service.”
If only that tough approach were applied to other parts of USPS, like the outrageous salaries paid to top management.
By law – in yet another congressional mandate – the postmaster general’s pay is capped at 20% more than the salary paid to the vice president of the United States. But Postmaster John Potter got around that by adding performance bonuses and other benefits to his $265,000 salary, so much so that his true 2008 compensation was worth $850,000. Deputy Postmaster Patrick Donahoe did pretty well, too, taking home more than $600,000 on a base salary of $238,654.
The lavish packages were approved by Congress, before public outrage led to vows of an investigation by the very same lawmakers.
Potter defends the high pay as appropriate for executives running a $70 billion corporation. That would hold more water if he and his team weren’t so committed to slashing jobs and service levels.
America needs a reorganized postal service that either operates like a truly independent corporation or returns to its roots as a government agency. Today’s hybrid arrangement might satisfy Congress and the postal top brass, but it isn’t working for anybody else – especially the public.
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