• on Sep 30th, 2013 in Products & Services | 6 comments

    This is the time of year when retailers, nonprofit organizations, and other mailers step up their holiday advertising mailing campaigns. Volume spikes in this period, known as the fall mailing season, which then gives way to the even-busier holiday mailing season, when personal correspondence and packages spike. The U.S. Postal Service makes most of its money for the year in the period between Labor Day and Christmas.

    Commercial mailers work closely with the Postal Service to help it prepare, but the fall mailing season has always presented operational challenges. In some ways, it is highly efficient because facilities are staffed for busy times. But postal equipment, including mail tubs, trays, mail transporting equipment, and pallets, have to be in the right places at the right times. In past years, commercial mailers have complained about shortages of mail equipment. Ideally, mail sorting equipment should run at optimal throughputs for maximum efficiency, and the online system mailers use to set up mail entry appointments should work seamlessly. Still, mail delays can occur for a variety of reasons, including mail processing errors, inefficient use of automation equipment, congestion on the facility floor, and working from incomplete operating plans.

    The Postal Service’s fall mailing season plan attempts to eliminate roadblocks to swift processing and delivery. This year, it has ordered extra mail transport equipment and looked at ways to shift volume from heavily used equipment to under-used processing equipment. The Postal Service is also relying on the increased visibility from the Intelligent Mail barcode as a diagnostic tool to uncover bottlenecks. These tools helped it reduce mail delays in fall 2012 by showing “pinch points” and helping managers act on that information to reduce mail cycle times.

    This year, however, could prove especially challenging as the Postal Service continues with its network consolidation implementation. It has completed more than 150 facility consolidations and has moved more than 700 pieces of equipment in support of the consolidations. With the late date of Thanksgiving this year, the end of fall mailing season pushes right into the peak mailing season for the holidays.

    Mailers, what have your experiences been like so far this fall mailing season? Are there noticeable improvements in mail equipment availability, mail delivery times, and appointment opportunities? Has network consolidation posed any unexpected challenges?

  • on Sep 26th, 2013 in Pricing & Rates | 9 comments

    The U.S. Postal Service’s governing body, the Board of Governors, voted this week to request permission to raise postage prices above the inflation-based price cap to generate $2 billion in revenue in 2014. It is asking the regulator, the Postal Regulatory Commission (PRC), to allow the Postal Service to raise the price of a stamp by 3 cents (to 49 cents), which is 2 cents more than the annual inflationary increase. Prices on other single-piece and commercial mail products would also increase. This request is known as an “exigent” price increase because it will exceed the statutorily mandated price cap that is tied to growth in the Consumer Price Index (CPI).

    By law, the Postal Service can only raise prices on its market-dominant products, such as First-Class Mail, advertising mail, and magazines, by the annual growth in inflation. The law allows it to ask the regulator for a price increase above inflation for “exceptional or extraordinary” circumstances. In a public letter to customers, Board Chairman Mickey Barnett described the “precarious financial condition” of the Postal Service and the “uncertain path toward enactment of postal reform legislation” as primary reasons for seeking price changes above inflation. Barnett said if comprehensive postal reform legislation were to pass, the Postal Service would reconsider its pricing strategy.

    The Postal Service filed for an exigent price increase in July 2010, saying the economic recession was an exceptional circumstance that threatened its viability. The PRC rejected the proposal and the Postal Service challenged the rejection in federal appeals court. The court remanded the original case back to the PRC, but at that time, the Postal Service did not pursue it.

    If the PRC were to approve this current request, the Postal Service would raise prices on January 14, 2014. On average, postage rates would increase 5.9 percent – or 4.3 percent above CPI. Mailer groups are expected to oppose the exigent price increase. The PRC has 90 days to issue an opinion on the Postal Service’s exigent price increase proposal.

    What do you think? Share your thoughts on the proposed exigent price increase.

  • on Sep 23rd, 2013 in Products & Services | 22 comments

    Until the early 1970s, citizens applying for passports had to wait in long lines at one of 10 U.S. Department of State passport offices or at a federal or state court. The traveling public was not happy about the inconvenient locations of these offices or the hours’ long wait to submit an application, and they let their elected officials know. The solution allowed post offices to accept and process passport applications on behalf of the State Department. The passports were then mailed directly to the applicants.

    This arrangement has proven to be a highly successful marriage of government services. With many post offices offering passport services, it has become far more convenient for citizens. Today, customers can go online to find the nearest post office with passport services and also find the number to call to make an appointment. (Most post offices require customers to make an appointment for passport service.)

    The execution fee for a passport is $25. In fiscal year 2012, the U.S. Postal Service processed 5.7 million passport applications for revenue of $142 million. With the additional services it offers, such as passport photos and return postage, the Postal Service’s total revenues from passport services in 2012 was $182 million. It is a nice chunk of change for a service the Postal Service does not need to market aggressively. Still, the Postal Service has seen a significant decline in passport revenue over the past 4 years. In 2008, it earned $283 million from passport services.

    The decline in passport revenue could be attributed to a few things. First, the weak economy has undoubtedly reduced international travel over the past 4 years. It could also be that 2008 was an especially strong year for passport revenue because changes taking effect in 2009 required a passport to return to the U.S. from travel to Mexico, Canada, and the Caribbean. However, postal staff reduction and facility closures could also be playing a role. Customers have complained about waiting too many days or weeks for a passport appointment at their Post Office or about being directed elsewhere for service.

    Why do you think passport services revenue has declined so dramatically in the past few years? Is there a way the Postal Service could improve the process? What changes could it make to maximize passport revenues?

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