Philadelphia Post Office
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.
Advertising Will Change Forever
From Advertising Age July 20, 2009
By Josh Bernoff
Digital Spending Will Nearly Double in 5 Years, But Ad Budgets Won’t
Here’s one of the things we do at Forrester Research: we interview as many marketers as we can about their plans, identify trends and project future likely conditions, and then we put together some numbers to make a projection. If you’ve ever seen a Forrester projection, it comes from a process like this.
This means that inside every projection is an idea or ten about the future. Those ideas can be powerful, and they come from research with marketers and consumers.
My colleague at Forrester, Shar Van Boskirk, just published our five-year interactive marketing forecast. The idea inside it is the real kicker.
In this recession, marketers have learned that interactive marketing is more effective, and advertising less effective, per dollar spent. While budgets for online have decreased, they decreased less than other budgets. Six out of ten marketers we surveyed agreed with the statement “we will increase budget for interactive by shifting money away from traditional marketing.” Only 7% said “we have no plans to increase our marketing budget.”
Unlike the last recession, digital marketing is no longer experimental. Now it looks more like advertising is inefficient, relative to digital. More than half of the marketers we surveyed said that effectiveness of direct mail, TV, magazines, outdoor, newspapers, and radio would stay the same or decrease within three years. In contrast, well over 70% expected the effectiveness of channels like created social media, online video, and mobile marketing to increase.
The result is that digital, which will be about 12% of overall advertising spend in 2009, is likely to grow to about 21% in five years. Along the way overall advertising budgets won’t grow much.
This is huge.
It means we are all digital marketers now, since digital is at the center of many campaigns anyway.
It means media is in trouble, or at least in the middle of a transformation. For example, online video ads, which will be about $870 million this year, will grow to over $3 billion in 2014. What will this do to networks plans to put more of their shows online in places like Hulu. How will it accelerate some newspapers plans to become more and more centered around online?
And it means that social “media,” which will account for $716 million this year between social network campaigns and agency fees, will generate $3 billion in five years. And this doesn’t even count displays ads on social networks (which are in the display ads category.) Of all the parts of digital marketing, social network marketing one is poised for the most explosive growth.
Pundits have been declaring the end of mass media and advertising for years now. From my 14 years of experience analyzing this stuff, I’ve learned that things die very slowly, but there are real trends you can see. If you’re in advertising, you’d better learn to speak digital, because that’s the way the world is going.
Reporter learns what it’s like to be a letter carrier
You know you’ve always wanted to know what it’s like to be a mail carrier, well now you can find out, just click on the link below!
Reporter learns what it’s like to be a letter carrier
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.
FedEx (FDX) Comments On 2010; Sees Continued Softness in Demand and Flat Shipping Volumes in 1st Half
From the StreetInsider.com
July 15, 2009 3:37 PM EDT
In its 10-K, FedEx (NYSE: FDX) gives some guidance for 2010. The company sees continued softness in demand and flat shipping volumes in 1st half of 2010. Sees 2010 revenues hurt by lower yields. Sees 2010 earnings hurt by lower revenues. Sees 2010 Capex of $2.6B.
FedEx’s Comments on its Outlook for 2010 in 10-k:
We expect continued softness in demand for our services in 2010, as shipping volumes are expected to remain relatively flat as the global recession persists, particularly in the first half of 2010. Our results for the first half of 2009 included the benefit of significantly stronger economic activity and rapidly declining fuel costs, creating difficult year-over-year comparisons. The timing and pace of any economic recovery is difficult to predict, and our outlook for 2010 reflects our expectations for continued challenges in growing volume and yield in this environment. Revenues in 2010 are expected to be negatively impacted by lower yields resulting from lower fuel surcharges due to more stable fuel prices and an aggressive pricing environment for our services. We anticipate volume growth at the FedEx Ground segment due to continued market share gains and flat volumes at the FedEx Express segment for 2010. Further, we expect LTL shipments to decrease for 2010 due to the continued excess capacity in this market. However, if excess capacity exits the LTL industry in 2010, we have the network, resources and capabilities to manage any resulting incremental volumes. Despite the benefit of numerous cost-reduction activities in 2009 (described above), earnings in 2010 will be negatively impacted by lower revenues as a result of the yield and volume pressures described above. If economic conditions deteriorate further, additional actions will be necessary to reduce the size of our networks. However, we will not compromise our outstanding service levels or take actions that negatively impact the customer experience in exchange for short-term cost reductions.
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.
Can This Life Ring Save the Postal Service?
Editors note: I want to say I am in favor of the 5 day a week delivery. We absolutely still need an efficient postal service and since part of the operating deficit is caused by the decline in mail volumes, it follows suit to reduce the amount of deliveries, in this case, the number of days that delivery occurs. There was a time when the postal service delivered mail twice a day, which was discontinued in 1950 and the world did not come to an end! Indeed, I would say this is a natural evolution and we will adapt, perhaps even finding new opportunities!
By Joe Davidson of the Federal Diary
Tuesday, July 14, 2009
A House committee has thrown the U.S. Postal Service a lifeline, but it won’t be substantial enough to allow the agency to fully escape the financial quicksand pulling it under.
The Oversight and Government Reform Committee advanced legislation Friday that would allow the USPS to pay for the health benefits of current retirees out of its Retiree Health Benefit Fund instead of from its operating budget. That would save about $2 billion a year.
That figure sounds good until you realize that the Postal Service — which is funded by customers, not tax dollars — lost that amount in just the second quarter and expects to lose $6 billion this fiscal year. Changing the funding source of retiree benefits will help, but it won’t stop the recession from sucking revenue from the agency.
Postmaster General John E. Potter says that while he is grateful for the relief the bill would provide, “it’s quite simply not enough.”
The recession has cut deeply into mail volume, damaging the financial stability of the Postal Service. Officials there say a more drastic remedy is needed than what the retiree funding bill provides. Cutting delivery from six days a week to five is the fix they have in mind.
Changing the way the agency funds retiree health benefits, however, does allow officials the ability to continue to fight for the bigger change they insist is necessary.
“Without this legislation, the Postal Service will reach its mandated debt ceiling and could very well have to — inconceivably — end operations,” Bill Krejci, the National League of Postmasters’ legislative co-chairman, said in a message to the organization’s members. The measure, H.R. 22, “would help provide relief for three years, at which time the economy hopefully will be on road to recovery along with the mailing industry. Keep in mind, H.R. 22 alone will not save the Postal Service, but it does provide some ‘breathing room’ and in effect could also be considered a jobs bill as well.”
The current retiree funding mechanism eats up about 10 percent of USPS operating revenue and has become prohibitively expensive, according to Potter. “The Postal Service is the only public or private entity required to prepay health benefit premiums at these extremely high levels,” he told Congress in March.
In fiscal 2007, the first year of the current retiree funding structure, the Postal Service delivered more than 212 billion pieces of mail, and its operating revenue was at its highest point ever: $75 billion, Potter said.
This year, the men and women who haul the bags, push the carts and drive the trucks will deliver only 180 billion pieces. That 15 percent drop in volume resulted in USPS losing $12 billion in income since 2007, William Galligan, a USPS senior vice president, told the committee in May. Yet, while the number of pieces of mail has plunged, the number of addresses served by postal workers has grown by about 2 million.
“In virtually any other industry, this type of income gap could be addressed through price increases, offering new product lines, strict inventory and production controls or changes in service availability,” Galligan said. “For the Postal Service, with a legal requirement to maintain six-day mail delivery, with significant limits on our authority to develop new products, and with price caps that apply to 90 percent of our products, these are not options that are available to us.”
Five-day delivery also is not an option, at least not for the moment. But there is greater willingness in Congress to consider a cut in service that a few months ago was unthinkable for many members.
The agency’s worsening financial picture and polling data indicating that the public can accept five-day delivery “have created a situation where people are more open-minded about moving from six- to five-day delivery,” Potter said in an interview yesterday. A Rasmussen poll in February indicated that 69 percent of Americans would rather cut a delivery day than pay more in postage. A Gallup poll last month found a similar result — 66 percent of those polled favor cutting a delivery day to save the Postal Service money, while 33 percent oppose it.
But while the public largely has no problem with that option and members of Congress are more willing to consider it, the postal unions are determined to fight it.
“NALC will fight any attempt by the Postal Service to convince Congress to make this radical change,” the National Association of Letter Carriers said in a statement. “NALC will proceed professionally and vigorously to oppose the elimination of six-day delivery on its merits.”
But there may be no other choice.
Contact Joe Davidson at federaldiary@washpost.com.
Gay pride display fails to get postal stamp of approval
Jim Stingl from JS online
Maggi Cage was thrilled when she was asked to help set up a gay pride display in the lobby of Milwaukee’s downtown post office.
The organization she leads, the Milwaukee Lesbian Gay Bisexual Transgender Community Center, alerted its members to head down and check out the photos of famous gay people, historical information and a giant AIDS awareness stamp in glass cases.
“I started getting calls saying, ‘I can’t find that exhibit at the post office,’ ” Cage said. “I sent some of my staff down there, and the cases were empty.”
The display had lasted less than four hours. It was created the morning of June 1, the very day President Barack Obama proclaimed LGBT Pride Month in America, and came down that afternoon.
Marge Oehlke, spokeswoman for the U.S. Postal Service in the Milwaukee area, said she removed the material.
“It did not fit our qualifications,” she said.
Cage smells intolerance at the post office.
“I think it’s plain and simple homophobia,” Cage said. “I really do think it’s a case of discrimination.”
Letter carrier Dale J. Schuster resigned last week from his position as chairman of the post office diversity team.
Postal rules say he can’t talk to the media, but in an e-mail to Cage he said, “In light of the controversy over the pride month display being taken down, I had no other recourse than to resign. I believe it is important that everybody is treated with dignity and respect, and that nobody should feel excluded.”
It was Schuster who had approached Cage with the idea of collaborating on a gay pride exhibit.
He had written permission from the post office’s diversity manager, so long as the display didn’t contain anything too controversial or political.
That’s not high enough up the chain of command, Oehlke said. The postmaster needs to give an OK.
Plus, she said, the post office operations manual spells out that these exhibits must be “revenue related,” meaning something about stamp purchases, stamp collecting, packaging, new products and such. The AIDS stamp isn’t for sale anymore, and therefore doesn’t count, she said.
Oehlke, who serves on the diversity team, denied the removal was because of the gay theme, and said she did not know of any citizen complaints about the display. I asked Friday to be put in touch with Postmaster Charles Miller, but that never happened.
It’s not surprising that the gay community would take offense.
Black history displays have appeared at the same post office in the past, and those weren’t pulled down. Same with exhibits about veterans.
Why bother having a diversity team if they can’t spread a little diversity around?
Feeling the Squeeze
By DAVE GATHMAN dgathman@scn1.com from The St Charles Sun
CAROL STREAM — It’s hard to sound hip and cutting-edge when your two biggest products go by the nicknames “snail mail” and “junk mail.”
Some things you never knew about the U.S. Postal Service:
• Share of all mail in the world handled by the United States: 46 percent
• Percentage of the Postal Service’s budget that comes from tax dollars: zero.
• The smallest American post office: is in Ochopee, Fla. It measures 8 feet 4 inches wide by 7 feet 3 inches deep.
• Bring your passport to apply for your passport: The post office in Point Roberts, Wash., can’t be reached by car or on foot without going through part of Canada.
• If it were a private company, the Postal Service would rank 26th in annual sales on the Fortune 500. If it were broken up into three private businesses based on the kind of mail carried, the First Class Mail Co. would rank 61st in income, the Advertising Mail Corp. would rank 119th and Shipping Services Inc. would rank 310th.
• A rural route delivery car is a “post office on wheels,” able to sell stamps and receive incoming mail as he or she drives along.
• You can recycle used cell phones, PDAs and ink cartridges using mail-back envelopes available at local post offices.
• USPS has the world’s largest civilian fleet of vehicles and the nation’s largest network of retail outlets.
Source: U.S. Postal Service press releases and www.usps.com.
Americans receive more and more of their bills online and even pay them that way — instantly, and without a 44-cent stamp.
They send love letters via e-mail. Or heck, why not just Tweet or text one’s devotion?
Even greeting cards are starting to be replaced, though in a only a minor way so far, by purchased-online “e-cards.”
Add in a recession that has cut down on advertising mail and the decline of magazine subscriptions, and you get a painful squeeze on the postal service.
The neighborhood mailman is not about to go out of business. But the amount of mailing (and postage income) is plummeting. The service is losing money by the bucketful. Work forces are being cut, everything from stamp sales to letter sorting is being mechanized, up to a tenth of the nation’s post offices could be closed this year, and Saturday delivery could become a thing of the past.
Zapped further by the recession, the service reported recently that in the Jan. 1-March 31 quarter, it had a net loss of $1.9 billion nationwide. People sent 14.7 percent fewer pieces of mail in that quarter than in the same quarter a year ago.
Next time you complain about that 2-cent raise in the price of a stamp, realize that the postal service spent more money than it took in during 10 of the past 11 quarters.
“We have seen an unprecedented decline in mail volumes and revenue that continued to accelerate during the second quarter,” Postmaster General John Potter said in May.
Cuts being made
Ratliff said the service is fighting back by cutting its work force and work hours, mainly by offering early-retirement deals and not replacing employees who leave. By year’s end, the service expects to reduce its number of paid work hours by the equivalent of 57,000 full-time workers.
Though it still employs 650,000 career employees (down from a high of 800,000 a decade ago), more and more workers are being replaced by machines, such as the address-reading sorters at the Carol Stream processing center that can go through 36,000 pieces of mail an hour instead of the 1,000 that used to be sorted by a human clerk at the Elgin post office. Businesses get a discount on postage for sorting their ads or bills before they even get to the post office.
With 1,400 workers, the Carol Stream distribution center that sorts mail from the northern Fox Valley and the Hampshire-Burlington area is huge. But in 1992, it had 3,000 employees.
Recognizing that, as Ratliff puts it, “We have more facilities than we have mail,” the service also announced last month that it is thinking about closing 3,200 of the nation’s 34,000 post offices. Most of those are metropolitan branches or stations, according to an article in MSN Money. And in March, the postmaster general asked Congress for the right to stop delivering on Saturday.
True, some trends are heading in the mailman’s favor. One reason newspapers, magazines and local radio stations are in a sorry state is that advertisers who want to reach an entire town’s population increasingly have moved to direct-mail ad campaigns. But the recession has hit this field as well, and the genre’s nickname of “junk mail” reminds that it is especially easy for a recipient of such ads to dodge them.
Shoppers are doing more and more buying online instead of down at the corner mall. And once they order something from eBay or amazon.com, it has to be shipped to them somehow. “You can’t send packages electronically,” Ratliff notes.
Delivery competition
But lots of that growing parcel business is being grabbed by private competitors like FedEx, UPS and DHL. And the recession is cutting into sales online as well as in stores.
To fight back, Ratliff said, “We are trying to make it easier to mail packages, with new products like the Flat Rate Priority Mail Box. Anything that can fit into that box, you can send for one low rate. That has become very popular with eBayers.”
The service’s Web site, www.usps.com, has gotten into the interactive age by providing ways for someone to design their own greeting cards or even print up postage stamps bearing the face of their high school graduate.
Still, Americans depend on and perhaps even love their mail system like no other people on Earth. The United States accounts for 46 percent — practically half — of all mail sent anywhere in the world, even though our country has just 5 percent of the world’s people. No. 2 in the world, Japan, accounts for just 7 percent of the sent mail.
“Even though mail volume has gone down, mail will always be an important part of American life,” Ratliff believes. “It’s become such an important part of the economy. We will adapt and respond to the changing world.”
Mail Truck full of undelivered mail towed from McDonalds parking lot!
You’ve gotta check this out!!!
Mail Delivery Van full of mail towed
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