The U.S. Postal Service Needs Financial Protection

Even in crisis, exacerbated by COVID-19, there’s not likely to be new postal reform bill any time soon. So here we are now: the U.S. Postal Service needs financial protection.

COVID-19 may have frozen ad budgets, including direct mail, but the financial woes of the U.S. Postal Service have pre-dated the current crisis. Calls for postal reform to facilitate all types of fiscal fixes have gone unanswered, despite bipartisan support to get the job done. Huge Congressional mandates from 2006 to pre-fund healthcare costs for future retirees – which do not exist to any such extent in the private sector – are just one example of how politicking gets in the way of running USPS more efficiently.

On paper, the U.S. Postal Service should be holding its own. And it had been through the end of last year.

A Formidable Job of Management Couldn’t Predict a Crash

Mix and match, but it’s been managed. In 2010, First-Class Mail volume was 77.6 billion pieces. In 2019, it was 54.7 billion – a nearly 30% decline. Marketing Mail also declined, but less precipitously – from 81.8 billion pieces to 75.7 billion. Meanwhile, as direct-to-consumer (DTC) shopping has taken hold, parcel volume has doubled from 3.1 billion to 6.2 billion package deliveries, making the USPS truly the Greatest Carpool on Earth. (Happy Earth Day.)

And though there is mail volume decline, the “mail moment” remains vital, and delivery points have increased from 150.9 million in 2010 to 160 million in 2019. Against this expanse, the USPS has shed 93,000 jobs in 10 years, maintaining 497,000 positions in 2019.

Throughout all this, USPS operating revenue has increased to more than $71 billion, from $67 billion in 2010. Rate hikes have been predictable and better managed. So why the carnage?

Yes, it’s COVID-19. Mail volumes reportedly have dropped by 30% since the crisis began. Add to this the hands-tied effects of the Congressional mandates – and it’s no wonder the USPS Postmaster General is seeking a “we need cash” bailout. This time, will Congress – and The White House – answer the call? According to The Washington Post, as of Friday, April 24, President Trump stated he would not approve of emergency aid for the Postal Service if it didn’t raise prices for package delivery immediately.

We Can Debate the Amount – But Let’s Recognize These Heroes at Work

The U.S. Postal Service is a quasi-governmental operation that answers by U.S. Constitution to the American people – but is called upon to run as a business. And it indeed tries. Yet it can’t just set rates on its own, as everyone gets a voice in rate-making and operations, even competitors.

Even in crisis, exacerbated by COVID-19, there’s not likely to be new postal reform bill any time soon. So here we are now: the U.S. Postal Service needs financial protection.

It’s hard to blame the USPS, but that doesn’t stop President Trump from calling out sweetheart deals that don’t exist. Add to the cacophony those who wish to privatize – answer to shareholders instead of the public – and sparks fly. Postal labor interests, for one, are powerful – and so are marketing mail and parcel customers. No one wants to upend the letter carrier.

But a virus might just do that.

So as I put on my mask and gloves, and go to the mailbox as part of my daily heightened ritual, I retrieve my personally addressed parcels, flats and letters. I spray them with Lysol. I open and read each piece, and I recycle each piece when I’m done (Happy Earth Day again). And I wish Godspeed, and a few billion tax dollars, to all these postal heroes who are keeping American commerce every day in movement. We need you. America needs you. Thank you.

Data Privacy Policymaking Words of Warning of Europe

Two weeks back, two hearings in Congress were held about a possible forthcoming new federal data privacy law for the United States. Some of the testimony included fascinating insight.

Two weeks back, two hearings in Congress were held about a possible forthcoming new federal data privacy law for the United States. Some of the testimony included fascinating insight.

It’s been nearly nine months since the European Union’s (EU) General Data Protection Regulation (GDPR) took effect with its tentacle effects worldwide – and it is helpful to look at what has transcribed, and to avoid making GDPR’s mistakes. That’s what one of the witnesses, Roslyn Layton, visiting scholar, American Enterprise Institute, had to say to the House Committee on Energy and Commerce, Subcommittee on Consumer Protection and Commerce, in her statement titled “How the US Can Leapfrog the EU.”

GDPR’s Early Impacts Are Foreboding

From Dr. Layton’s testimony, I found these excerpts (footnotes removed) to be particularly insightful – and somewhat frightful, though some of it predictable. She examined GDPR’s early deleterious effects which we, in the United States and elsewhere, would be wise to reject:

GDPR Is Not about Privacy  It’s About Data Flows

“A popular misconception about the GDPR is that it protects privacy; it does not. In fact, the word ‘privacy’ does not even appear in the final text of the GDPR, except in a footnote. Rather, the GDPR is about data protection or, more correctly, data governance. Data privacy is about the use of data by people who are allowed to have it. Data protection, on the other hand, refers to technical systems that keep data out of the hands of people who should not have it. By its very name, the GDPR regulates the processing of personal data, not privacy.”

GDPR Has Only Concentrated Big Digital Since Taking Effect

“To analyze a policy like the GDPR, we must set aside the political pronouncements and evaluate its real-world effects. Since the implementation of the GDPR, Google, Facebook and Amazon have increased their market share in the EU.”

GDPR Has Decimated Small- and Mid-Sized Ad Tech

“One study suggests that small- and medium-sized ad tech competitors have lost up to one-third of their market position since the GDPR took effect. The GDPR does not bode well for cutting-edge firms, as scientists describe it as fundamentally incompatible with artificial intelligence and big data. This is indeed a perverse outcome for a regulation that promised to level the playing field.”

GDPR Raises Costs, Prohibitively Acting as a Trade Barrier

“To do business in the EU today, the average firm of 500 employees must spend about $3 million to comply with the GDPR. Thousands of US firms have decided it is not worthwhile and have exited. No longer visible in the EU are the Chicago Tribune and the hundreds of outlets from Tribune Publishing. This is concerning because the EU is the destination of about two-thirds of America’s exports of digital media, goods and services. Indeed, the GDPR can be examined as a trade barrier to keep small American firms out so that small European firms can get a foothold.”

GDPR Denies Valuable Content to European Citizens

“Of course, $3 million, or even $300 million, is nothing for Google, Facebook and Amazon (The Fortune 500 firms have reportedly earmarked $8 billion for GDPR upgrades.), but it would bankrupt many online enterprises in the US. Indeed, less than half of eligible firms are fully compliant with the GDPR; one-fifth say that full compliance is impossible. The direct welfare loss is estimated be about €260 per European citizen.”

What if the US Enacted GDPR Here … Oh, the Costs

“If a similar regulation were enacted in the US, total GDPR compliance costs for US firms alone would reach $150 billion; twice what the US spend on broadband network investment and one-third of annual e-commerce revenue in the US.”

Dr. Layton, in her testimony, also questioned the California Consumer Privacy Act, which may create even more enterprise requirements then GDPR. She suggested more pragmatic paths need to be forged.

A Better Way Privacy by Design

“Ideally, we need a technologically neutral national framework with a consistent application across enterprises. It should support consumers’ expectations to have same protections on all online entities. The law should make distinctions between personally identifiable information which deserves protection, but not require same high standard for public data, de-identified, and anonymized data which do not carry the same risks. Unlike the GDPR, the US policy should not make it more expensive to do business, reduce consumer freedom or inhibit innovation.”

Data ‘Seat Belts and Air Bags’ for Privacy

In a second hearing, before the Senate Committee on Commerce, Science and Transportation, Interactive Advertising Bureau (IAB) CEO Randall Rothenberg provided a spirited statement of data’s role in the U.S. economy and the benefits that continue to accrue. He, too, drew from an another industry’s history which he believes offers a helpful analogy and cooperative blueprint:

IAB CEO Randall Rothenberg | Credit: Photo: Chet Dalzell

Internet’s Profound Communication Power

“The Internet is perhaps the most powerful and empowering mode of communication and commerce ever invented. It is built on the exchange of data between individuals’ browsers and devices, and myriad server computers operated by hundreds of millions of businesses, educational institutions, governments, NGOs, and other individuals around the world.”

Advertising’s Essential Role Online Much of It Data-Driven

Advertising has served an essential role in the growth and sustainability of the digital ecosystem, almost from the moment the first Internet browsers were released to the public in the 1990s. In the decades since, data-driven advertising has powered the growth of e-commerce, the digital news industry, digital entertainment, and a burgeoning consumer-brand revolution by funding innovative tools and services for consumers and businesses to connect, communicate and trade.

The Indispensable Ingredient: Trust

“Central to companies’ data-fueled growth is trust. As in any relationship, from love to commerce, trust underlies the willingness of parties to exchange information with each other; and thus, their ability to create greater value for each other. The equation is simple: The economy depends on the Internet; the Internet runs on data; data requires trust. IAB strongly believes that legislative and regulatory mechanisms can be deployed in ways that will reinforce and enhance trust in the Internet ecosystem.”

Universal Truth: Consumer Data Is Good

“We recommend Congress start with a premise that for most of American history was self-evident, but today seems almost revolutionary: consumer data is a good thing. It is the raw material of such essential activities as epidemiology, journalism, marketing, business development, and every social science you can name.

The Auto Industry Offers Us a Proactive Model

“We believe our goals align with the Congress’ decision to take a proactive position on data privacy, rather than the reactive approach that has been adopted by Europe and some states. We believe we can work together as partners in this effort with you to advance consumer privacy. Our model is the partnership between government and industry that created the modern concept of automotive safety in the 1960s. Yes, the partnership began as a shotgun wedding. Yes, the auto industry resisted at first. But an undeniable consumer right to be safe on the highways met well-researched solutions, which the Congress embedded in well-crafted laws that were supported by the states.

Auto Safety and Digital Wellness

“The result has been millions of lives and billions of dollars saved. We believe the analogy holds well here. Americans have a right to be secure on the information superhighway. Well-researched solutions and well-crafted laws can assure their ‘digital wellness.’ We should be thorough, practical and collaborative. Our goal should be to find the three or five or 10 practices and mechanisms the seat belts and air bags of the Internet era  that companies can implement and consumers can easily adopt that will reinforce privacy, security and trust.”

Notice and Choice Bombardment Or Predictable Rules of the Road

“Together, based on our members’ experience, we can achieve this new paradigm by developing a federal privacy law that, instead of bombarding consumers with notices and choices, comprehensively provides clear, even-handed, consistent and predictable rules of the road that consumers, businesses and law enforcers can rely upon.

One Federal Standard in Harmony

“Without a consistent, preemptive federal privacy standard, the patchwork of state privacy laws will create consumer confusion, present significant challenges for businesses trying to comply with these laws, and ultimately fall short of consumers’ expectations about their digital privacy. We ask the Congress to harmonize privacy protections across the country through preemptive legislation that provides meaningful protections for consumers while allowing digital innovation to continue apace.”

It is worth reading the testimonies of the privacy advocates present at these two hearings, as well. These GDPR fans have many sympathetic voices in the media and Congress, and truly need to be part of any conversation where consensus ought to be built. It is my hope the right federal legislation will result. The early evidence from Europe where advocates won over reason portends the punitive risks of getting it wrong.

Why Your Postage Rates Could Go Down in April

Since postage is the most expensive part of direct mail marketing, any postal rates changes are big news. Usually, the USPS announces a pending rate increase. On Feb. 25 the USPS filed a notice with the Postal Regulatory Commission that would reduce postage rates.

direct mail postalSince postage is the most expensive part of direct mail marketing, any postal rates changes are big news. Usually, the USPS announces a pending rate increase. On Feb. 25 the USPS filed a notice with the Postal Regulatory Commission that would reduce postage rates. Within the filing, the USPS stated:

“… It intends to remove the exigent surcharge on Sunday, April 10, absent action by Congress or the courts to make the existing exigent surcharge for Market Dominant Products and Services part of the rate base or to otherwise extend it.”

In this filing, the USPS also noted that while it “… recognizes that daily revenue fluctuations could result in a one or two day variation on when the revenue limitation is reached, our current estimate is that the revenue limitation will be reached some time on Saturday, April 9, 2016.”

The end of the 4.3 percent increase surcharge has been anticipated for some time, though the rate of collection left the actual date hard to determine. The reason there was a 4.3 percent increase was because the post office was granted an exigency rate case that allowed it to try to recoup some of the funds lost during the great recession. The court ruled that the rates could not be permanent and must be rolled back after the allotted amount was reached. That means that on April 10 we will see an overall decrease in postage by 4.3 percent.

The post office has been hoping for either legislation or court action to allow the higher rates in order to help offset the losses the post office has suffered for the past several years. The Postal Service worries how it will replace the 4.3 percent of revenue that’s been essential to keeping it in the black for the past two years. These rates have been in place since January 26, 2014, so it will be good for marketing budgets to have more money for the rest of 2016.

So let’s take a look at what some of the most common new postage rates will be:

  • First class single piece letter = $0.47
  • First class single piece postcard = $0.34
  • First class single piece flat = $0.94
  • Presorted automation first class letter mixed rate = $0.419
  • Presorted automation first class postcard mixed rate = $0.272
  • Presorted automation first class flat mixed rate = $0.75
  • Presorted automation standard letter mixed rate = $0.291
  • Presorted automation standard flat mixed rate = $0.539
  • Presorted automation nonprofit letter mixed rate = $0.176
  • Presorted automation nonprofit flat mixed rate = $0.40

As you can see, these amounts will add up over time to marketer’s postage savings. This means you may be able to mail more pieces or add additional design elements that would not have been affordable under the current postage rates. There is still a chance that action could be taken by either the courts or Congress to change the rates, but as of now, it does appear that we will have a postage reduction starting on April 10. What will you do with your postage savings?

Extended Coverage: USPS – Will It Disappear?

When your editor makes a decision to defend you in the comments section below a feature article, then the article must have hit a nerve! I talked to several mailers, and association leaders who represent them, in a feature this month in the magazine … as I should: mailers have a lot to say about goings-on at the Postal Service

When your editor makes a decision to defend you in the comments section below a feature article, then the article must have hit a nerve!

I talked to several mailers, and association leaders who represent them, in a feature this month in the magazine … as I should: mailers have a lot to say about goings-on at the Postal Service (and not-goings-on in Congress) leading some mail marketers to re-evaluate the medium. I’d say it is a timely premise—particularly with the recent exigent postage hike on top of the inflation-indexed hike.

Far more was offered than I could include in the feature. However, “Marketing Sustainably” has a bit of room and—with my editor’s permission—allow me to share a few more observations.

Let me be clear, every mailer I talked to wants the Postal Service to succeed. The prescriptions may vary. What may be unclear is how it will succeed…

Always the Postologist, Charley Howard of Harte-Hanks had these points to share on a future path:

“If the Postal Service is allowed to manage its own healthcare, get the pre-retirement funding relief from Congress that it is due, and get Congress to back off on leaning in on operations, I believe that we would have a USPS that is both viable and competitive. We should close post offices that only see 1.5 people a day, limit some mail delivery to five days (keep the parcels moving) and have the USPS become more sensitive to pricing. These outcomes require enabling legislation—and that’s a big ‘if’ and certainly not likely in an election year, never mind by 2020 or 2025.”

“I believe the leadership of the USPS, Postmaster General Patrick Donahoe in particular, has made the right decisions to try and save the post office,” says Paul Ercolino of U.S. Monitor. “Cost cutting, Network Rationalization and five-day delivery are all controversial decisions, but they are essential if the Post Office is to survive in the coming years.”

Hamilton Davison of the American Catalog Mailers Association spoke about innovation—but still sees challenges because of the process of oversight:

“Innovation on the revenue side, or improvements to [the Postal Service’s] cost structure, will only occur if it is given the freedom to experiment free from regulatory or political concerns. While it is right and proper that the enormous market power of the Postal Service not be unchecked, it should be given greater freedom in advancing markets or improving its cost structure without undue concern about these regulatory and political pressures. Management today is handcuffed in too many areas. Barriers to experimentation on a modest scale must be removed so the USPS can demonstrate pathways for greater innovation that can then be rolled out system-wide under the review of a regulator. Getting the regulator involved in early stage exploration of potential innovation is much more cumbersome.”

And Joel Quadrucci of Quad-Graphics spoke to mail’s role in a multichannel, digital-savvy world:

“We live in a multichannel media world, and print is—and will continue to be—a critical marketing and communications channel,” he said. “Print is especially powerful when connected with other channels. Direct mail is a critical channel because of its ability to drive action to numerous other media channels. Direct mail and digital marketing channels will move forward hand in hand, with direct mail creating a compelling call to action and digital marketing channels giving consumers a way to act.”

“The entire world of logistics is evolving along with retail,” Quadrucci continued. “More and more consumers are opting for the convenience of shopping online. We already see it with Amazon building distribution centers all over the country with the goal of facilitating same-day delivery of its products. The USPS could play a pivotal role in this evolving world of logistics; it is has many strengths. But in order to be competitive with alternative delivery systems, it must address its current challenges head-on.”

Clearly marketers must stay engaged with the Postal Service—and with Congress—as we tackle these challenges together. The Postal Service clearly has my support, too. Now if I could only sate Denny Hatch.

5 Hopes for the USPS New Year

October 1 marked the New Year—that is, the 2014 fiscal year of the U.S. Postal Service. But it’s the same old (sad) song, delivered by a dysfunctional Congress. Thanks to our elected Senators and Representatives, we not only have to endure not just another year of postponed reforms, but also an exigent rate case on top of a regular Consumer Price Index-capped rate hike slated for January.

October 1 marked the New Year—that is, the 2014 fiscal year of the U.S. Postal Service.

But it’s the same old (sad) song, delivered by a dysfunctional Congress. Thanks to our elected Senators and Representatives, we not only have to endure not just another year of postponed reforms, waiting longer still for a reprieve from mandates of Congress from years past, but also an exigent rate case on top of a regular Consumer Price Index-capped rate hike slated for January.

For Standard Mail, that means:

  • Letter Mailings CPI-capped rate increase of 1.55%
    But now with the Combined CPI and Exigency, that increase jumps to 6.09%
  • Flat Mailings CPI-Capped Impact 1.66%
    But now with the Combined CPI and Exigency, that increase rises to 6.32%

As Charley Howard of Harte-Hanks correctly surmised, the only exigency here is “continued inaction by Congress.”

What are the chances?

  1. Congress will get its act together and pass a new formula for prefunding retiree healthcare costs that are more in line with … say, sanity?
  2. Such a reform bill will pass—and leave in place the most hard-fought, cherished centerpiece of the 2006 postal reform bill—the CPI-index cap?
  3. That USPS current cost-cutting discipline—and network consolidations—will continue as management had planned, with “right sizing” the infrastructure achieving its intelligent end?
  4. That universal delivery remains intact—in six days, or five—take your pick?
  5. That certainty and predictability is restored to the Postal Service’s financial picture—providing the assurances marketers crave?

Let’s put it this way—if the “right” postal reform gets deep-sixed (again) in the coming election year, then will we pass the point of no return, with marketers taking their integrated marketing dollars elsewhere? If postal reform passes, but the most important mechanism of fiscal discipline—CPI caps—are undermined, or worse removed altogether, will we pass that same point?

By this time a year from now, will the crises be solved—or compounded? The clock keeps ticking.

PMG Fights Congress on Postal Reform

The U.S. Postal Service reiterated this past week—in hearings before the House Oversight and Government Reform Committee—just how crucial it is that Congress undertake reforms that are necessary for the USPS to accrue the savings to restore its fiscal state. There should be no “half measures,” Postmaster General (PMG) Pat Donahoe stated

The U.S. Postal Service reiterated this past week—in hearings before the House Oversight and Government Reform Committee—just how crucial it is that Congress undertake reforms that are necessary for the USPS to accrue the savings to restore its fiscal state.

There should be no “half measures,” Postmaster General (PMG) Pat Donahoe stated.

First, PMG Donahoe questioned draft “discussion” legislation being devised by Rep. Darell Issa (R-CA) to enable USPS management’s bold efforts to “right size” Postal Service costs and infrastructure to volume trends. As Direct Marketing News reported on July 17:

“The draft did not appear to meet the full approval of the PMG, however, who is adamant that any new legislation remove the U.S. Postal Service’s obligation to prefund employee health and retirement programs. Issa’s plan calls for future payments to be made on an actuarial calculation that will reduce the Postal Service’s annual $5.7 billion prefunding payment, which it defaulted on last year.

“‘We are seeking the authority under the law to control our healthcare and retirement costs. We can completely eliminate the need for Retiree Health Benefit prefunding if we can move to our proposed solution,’ Donahoe said, addressing Issa directly.”

The Postmaster General maintains that being allowed to set up its own healthcare coverage for retirees programs would lower premiums paid by employees, while delivering up to $8 billion in savings annually. Donahoe also is asking Congress to return $6 billion in USPS “overpayments” to the Federal Employees Retirement System (FERS).

At this juncture, Rep. Issa’s discussion draft does not include provisions for enabling these savings in full, and the Postmaster General says time is running out-or more defaults will be in the offing. (The next default on payments likely will occur this September, Reuters reports.)

Next, the Postal Service is seeking Congressional approval—and likely Postal Regulatory Commission approval as well—on a five-day delivery plan for residential mail delivery, and the estimated $2 billion in savings it estimates it would achieve there. The false start earlier this year—USPS unilaterally announced its five-day delivery intent beginning August, and Congress promptly shot those plans down the following month—doesn’t mean that five-day delivery is dead. On the contrary, USPS management believes such savings are crucial toward keeping delivery costs in line with volume and revenue: First-Class Mail volume, in particular, continues its decline, despite an improved U.S. economy.

Some of my contacts in the mail industry say that five-day residential delivery is probably (1) inevitable, (2) something direct mailers can adapt their production and transportation schedules to live with, and (3) perhaps necessary for long-term USPS viability, as the PMG reports. While postal unions—and their supporters in Congress—are still not for it, the need for cost-cutting and right-sizing USPS delivery infrastructure remains. Alternate proposals for achieving $2 billion in savings (or revenue from new and existing product lines) so that six-day Ddelivery can remain so far remain elusive.

All in all, PMG Donahoe wants that $20 billion onto the USPS bottom line to come from somewhere—and he knows it can’t come from higher postal rates, not at least until the Postal Service is more lean.

As the PMG told Congress this past week, “The Postal Service continues to face systemic financial challenges because it has a business model that does not allow it to adapt to changes in the marketplace, and it does not have the legal authority to make the fundamental changes that are necessary to achieve long-term financial stability.” (Reuters, July 17).

Harte-Hanks has published an informative discussion of current postal reform efforts, and I encourage interested readers to take a deeper dive: http://www.harte-hanks.com/postology/Harte-Hanks_PostologyReport_2013_July.pdf

We’ve been waiting for Congress to act in a serious manner on postal issues since 2006-if not before. How much longer?

Postal Delivery: Which Will It Be—5 Days or 6 Days?

I just had a great exchange with my letter carrier while at my mailbox today. Of course, I brought up the likelihood of five-day delivery come August, to which she gave a candid response, “Well, we’ve been losing money.” That’s why it’s easy to be indignant when some members of Congress, perhaps predictably, jumped onto the current appropriations bill with mandates for six-day delivery. Yet, one has to ask, where are the means for real relief from some of the costliest demands of the 2006 postal reform law?

I just had a great exchange with my letter carrier (as I sometimes do) while at my mailbox today, and I wonder how many times a day my carrier is interrupted in her work, as I interrupted her, to politely chit-chat. Of course, I brought up the likelihood of five-day delivery come August, to which she gave a candid response, “Well, we’ve been losing money.”

Most Americans—and maybe even some carriers—don’t know the full story—or any story—about how the United States Postal Service endures pre-funding retirement benefit mandates from Congress, as well as other cost-drivers that have nothing to do with the digital age, electronic bill payments and multichannel communication trends. Nor do they know that both The White House and Congress spend these mandated monies on their own programs, even as the federal deficit spirals.

That’s why it’s easy to be indignant when some members of Congress, perhaps predictably, jumped onto the current appropriations bill (a continuing resolution to fund the government beyond March 27) with mandates for six-day delivery. Yet, one has to ask, where are the means for real relief from some of the costliest demands of the 2006 postal reform law? Making the Postal Service stick with Saturday delivery isn’t the action we need Congress to take.

Is it really enough, or correct, to just counter USPS management efforts to cut costs and right-size the network? Why not delve deeper into the ills that Congress and the Administration—both parties involved here—have heaped onto the Postal Service’s bottom line? Why not revisit real postal reform? How many more years must the Postal Service get squeezed, and default on payments, before Congress and the Obama (or next) Administration take seriously its cause, its future, its sustainability?

Late last month, National Public Radio discussed, in a piece regarding postal services around the globe, how these services are coping with lower demand of an increasingly electronic society: http://www.npr.org/templates/story/story.php?storyId=172932914

It’s funny how much of “Socialist” Europe already has privatized its posts (not that citizens or businesses are the better for it). On the other hand, it’s very serious to say our quasi-public U.S. Postal Service still runs the most efficient ship of all, universal delivery at a fair price, despite its tethers to political whims …

… and despite my “stealing” of expensive carrier street time! five-day or six-day delivery is a concern for many mailers—but it’s really not the most important postal operations issue that needs to be addressed.

5-Day Delivery: Cost Cutting or Congressional Gambit?

As a citizen and a close follower of postal goings on, I realize the United States Postal Service and Postmaster General Patrick Donohoe ultimately are not to blame for the 5-Day Delivery announcement which transpired on February 6. Postal customers, labor unions, direct marketers and Americans in general have reasons to be angry—or at least very concerned—as to what is really going on here

As a citizen and a close follower of postal goings on, I realize the United States Postal Service and Postmaster General Patrick Donohoe ultimately are not to blame for the five-day delivery announcement which transpired on February 6. Postal customers, labor unions, direct marketers and Americans in general have reasons to be angry—or at least very concerned—as to what is really going on here.

We all know that it is Congress and the White House—as a whole, not any lawmaker in particular—that largely caused the Postal Service’s recent default and current fiscal mess. Their inability or unwillingness to stop the mandating of 75-year pre-funding of USPS retiree benefits, and the subsequent raiding of those funds for the federal government’s own spending sprees elsewhere, deserves much of the blame.

Cost-cutting and diminishing services to U.S. citizens have been forced on the Postal Service, because a “fiscal cliff” already has arrived at L’Enfant Plaza.

Yes, there are other macroeconomic issues in play at the Postal Service—the digital migration of First-Class Mail, electronic payments and the Great Recession’s most recent effects and after-effects, for example. All the same, forcing such draconian budget mandates on the Postal Service is a serious miscalculation that was (unfortunately) included in the 2006 postal reform law. No other federal agency is held to the same pre-funding benchmark, and even fewer responsibly financed and accountable private pension schemes (there are still a few around) ever look to seven decades to the future.

This needed fixing five years ago, when the economy started to teeter and such rosy views of postal finances quickly began to sour. Here we are in 2013, and we’re still waiting for Congress to act.

The White House hasn’t been helpful either.

Now we’re faced with five-day delivery come August—and we’re left wondering if it can be stopped, reversed, prevented or mitigated, even if Congress and the White House were able and wished to intervene.

Will the reported $2 billion in said-savings really transpire—and make a difference? Has anyone considered the economic trade-offs? We all know many weekend advertisers that relish a spot in the mailbox on Saturdays—and this generates a lot of commerce. Can it all be simply pushed to a Friday?

The reality is that the Postal Service, as much as it seeks to manage itself as a business, remains a quasi-public institution, a part of our Constitution, and subject to both cycles of Congressional meddling and Congressional relief, the latter now being in short supply.

It’s quite amazing that the Postal Service is as efficient and as affordable as any postal service in the world, public or private—delivering communications to our homes six days a week. Still, it must deal with political representation that well may be intended, but which only seems to punt from crisis to crisis—or worse, after each crisis has rendered its most devastating effects.

Here we are in a downward cycle … again. This time our daily mail—and direct mail advertising along with it—is being expedited, by Congress, to the dilemma faced by dying daily newspapers in stagnant metropolitan markets—going, going, gone, at least on Saturdays.

Except this is our Postal Service, belonging to the citizens of the United States on paper. Is this squeeze on hardcopy communication inevitable—and our only choice? Or will some in Congress and the Obama Administration wake up to the fact that the Postal Service is a secret weapon for many brands (and political candidates), as well as a service to its citizens, and, therefore, do all their Constitutional best to ensure a viable future here?

By the way, I LOVE this recent piece in Esquire—required reading for our lawmakers: http://www.esquire.com/print-this/post-office-business-trouble-0213?page=all.

USPS ‘Green Teams’ Net $58 Million – If Only Government Postal Policymakers Were So Innovative

Amid the doom and gloom of overall postal finances—where members of Congress and the White House probably have more to do with the current woes of the U.S. Postal Service than all the email in the world—came a timely press announcement from the USPS’s sustainability officer. Posted Feb. 24, I include the full text of the press release here, followed by some commentary: Green Teams Help Postal Service Save Millions

The Postal Service recycled 215,000 tons of material, which saved $14 million in landfill fees and yielded $24 million in new revenue. Employee lean green teams were key to helping the Postal Service achieve the savings and revenue, part of which included more than a $20 million decrease in supplies spending from the previous year.
—USPS Press Release (February 24, 2012)

Amid the doom and gloom of overall postal finances—where members of Congress and the White House probably have more to do with the current woes of the U.S. Postal Service than all the email in the world—came a timely press announcement from the USPS’s sustainability officer.

Posted Feb. 24, I include the full text of the press release here, followed by some commentary:


Green Teams Help Postal Service Save Millions

WASHINGTON, Feb. 24, 2012 /PRNewswire-USNewswire/ — The U.S. Postal Service saved more than $34 million and generated $24 million in 2011 by reducing energy, water, consumables, petroleum fuel use and solid waste to landfills, conservation efforts encouraged by the Go Green Forever stamps. The Postal Service recycled 215,000 tons of material, which saved $14 million in landfill fees and yielded $24 million in new revenue. Employee lean green teams were key to helping the Postal Service achieve the savings and revenue, part of which included more than a $20 million decrease in supplies spending from the previous year.

“Across the country, postal employees are participating in more than 400 lean green teams. Motivated by our sustainability call to action, ‘leaner, greener, faster, smarter,’ they are producing significant results in energy reduction and resource conservation,” said Thomas G. Day, Chief Sustainability Officer.

Lean green teams are another way the Postal Service fosters a culture of conservation, and builds on the agency’s long history of environmental and socially responsible leadership. The teams help identify and implement low- and no-cost sustainable practices to help the Postal Service meet the following goals by 2015:

— Reduce facility energy use by 30 percent,

— Reduce water use by 10 percent,

— Reduce petroleum fuel use by 20 percent, and

— Reduce solid waste by 50 percent.

According to Day, the Postal Service plans to deploy lean green teams nationwide in 2012 to help achieve these goals.

“With more than 32,000 facilities, a presence in every community, and the largest civilian fleet in the nation, we know how important our efforts are to make a positive impact on the environment,” Day added. “Our lean green teams are an important part of our conservation culture, and the effort to reduce our carbon footprint.”

The Postal Service buys sustainable materials and works to reduce the amount of supplies it purchases. The agency first developed a “buy green” policy more than 13 years ago, and has a goal to reduce spending on consumables 30 percent by 2020. Additionally, the Postal Service is working to increase the percentage of environmentally preferable products it buys by 50 percent by 2015. Environmentally preferable products are bio-based, contain recycled material, are eco-labeled and are energy and water efficient.

In its shipping supplies, the Postal Service uses post-consumer recycled content materials, which are diverted from the waste stream, benefiting the environment and helping customers go green.

The Postal Service has won numerous environmental honors, including the U.S. Environmental Protection Agency’s (EPA) WasteWise Partner of the Year award in 2010 and 2011, the EPA’s National Partnership for Environmental Priorities award in 2011 and the Climate Registry Gold award in 2011.

USPS is the first federal agency to publicly report its greenhouse gas (GHG) emissions and receive third-party verification of the results. For more information about the Postal Service’s sustainability initiatives and the Go Green Forever stamps, visit usps.com/green and the usps green newsroom.

USPS participates in the International Post Corporation’s Environmental Measurement and Monitoring System, the global postal industry’s program to reduce its carbon footprint 20 percent by 2020 based on an FY 2008 baseline.

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

A self-supporting government enterprise, the U.S. Postal Service is the only delivery service that reaches every address in the nation, 151 million residences, businesses and Post Office Boxes. The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations. With 32,000 retail locations and the most frequently visited website in the federal government, usps.com, the Postal Service has annual revenue of more than $65 billion and delivers nearly 40 percent of the world’s mail. If it were a private sector company, the U.S. Postal Service would rank 35th in the 2011 Fortune 500. In 2011, the U.S. Postal Service was ranked number one in overall service performance, out of the top 20 wealthiest nations in the world, Oxford Strategic Consulting. Black Enterprise and Hispanic Business magazines ranked the Postal Service as a leader in workforce diversity. The Postal Service has been named the Most Trusted Government Agency for six years and the sixth Most Trusted Business in the nation by the Ponemon Institute.

SOURCE U.S. Postal Service

Thank you very much Thomas Day and thank you to each member of the 400 lean green teams at USPS.

Further, the $58 million in bottom-line gains were an improvement over the $27 million in such benefits reported by USPS a year ago. That’s more than double the financial improvement.

As a blueprint for other businesses, many with “green teams” of their own, this USPS announcement offers item-by-item suggested areas of operation companies might focus on to accrue bottom-line gains: facility energy use, water use, fuel use and solid waste generation and diversion.

Perhaps too many business leaders and marketing practitioners still equate sustainability initiatives with “do-good, feel-good” activities that are nonetheless costly or associated with premiums. They best start thinking otherwise. The more quickly brands can leverage green teams for operational gain, and incorporate sustainability as the next great wave of business cost-savings and innovation, the better off their bottom lines will be.

USPS is proving to all of us that there is a “lean” in “green,” and that waste and inefficiencies are cost centers that must be managed. The environmental gains that are driven by such successful management are numerous, and very well may engender good will among employees and customers. Nothing wrong—and everything right—with that, particularly when the financial bottom line benefits are so demonstrable.

Some skeptics might still say, with billions in deficits, USPS cost-savings announcements tied to sustainability are akin to rearranging deck chairs on the Titanic. I believe, however, that USPS management does have a business-like approach to fixing its finances in a digital age, has put forth a credible path to do so, and Congress and The White House need to be facilitating these decisions instead of standing in the way.

Unfortunately, Congress and The White House happen to be two U.S. institutions that are very challenged by balancing budgets.

The Congressional cry of “not in my backyard” over post office closures is part of that symptom, particularly when the USPS has proposed many retail outlet alternatives that are more convenient to citizens, and far less costly to postal ratepayers. The recent Congressional moratorium until May 15 toward consolidation of mail processing facilities is another cog in the cost-savings wheel. Meanwhile, the White House just can’t seem to let go of forcing through a 2010 “exigency” postal rate increase (in its current, proposed federal budget) that, in effect, undermines the entire rationale and integrity of indexed rate caps built into the 2006 postal reform law.

Perhaps there needs to be “lean green teams” at work inside the policymaking offices of Congress and the White House, too. Certainly, sustainability concepts—environmental, social and financial—could work to extraordinary effect inside government, just as it’s doing in forward-thinking businesses everywhere, and trying to do with great success inside the U.S. Postal Service.

Helpful Links:
USPS Press Release covering Green Teams in 2011

USPS Press Release covering Green Teams in 2010