USPS move to end Saturday delivery leaves direct mail sector in limbo

By David Ward, San Diego Thursday 07 February 2013

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This week's US Postal Service announcement that it is ending Saturday mail delivery - without the direct OK of Congress - leaves direct mail and commercial printing industries in limbo.

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US Postmaster General Patrick Donahoe

"There are questions as to the legality of the move by the Postal Service to unilaterally cut Saturday mail - and that raises some concerns for the DMA," Jerry Cerasale, senior VP of government affairs for the Direct Marketing Association (DMA), told PrintWeek.

"Uncertainty over the legality of the move causes confusion for mailers as they try to plan campaigns - and that confusion and uncertainty is not good for direct mailers and it’s not good for the Postal Service."

The legal limbo over the USPS move to five-day delivery is a result of how the Postal Service is being currently funded. The US Congress traditionally has mandated that Saturday delivery be continued as part of its annual appropriations bill.

But because the Postal Service is currently operating under a temporary spending measure - a byproduct of the political stalemate in Washington, DC - US Postmaster General Patrick Donahoe claims the agency is within its legal rights to make the move unilaterally.

Donahoe is also asking Congress not to re-impose the Saturday delivery mandate when the temporary spending measure expires 27 March.

"The American public understands the financial challenges of the Postal Service and supports these steps as a responsible and reasonable approach to improving our financial situation," he said at a Wednesday news conference. "The Postal Service has a responsibility to take the steps necessary to return to long-term financial stability and ensure the continued affordability of the U.S. Mail."

However, printers and mailers just want a definitive 'yes' or 'no' on whether Saturday delivery will still be going after August, when Donahoe said five-day delivery would commence.

"The legality question has to be settled very, very quickly," Cerasale said. "I think many companies in the mailing industry are waiting to see exactly what the Postal Service legal position is on this and how they can do this within the letter of the law. Hopefully it’s strong enough to avoid some the legal uncertainty - but I don’t believe that is the case."

Last fall, the USPS announced a $15.9bn net loss for fiscal 2012, though $5.5bn of that was because Congress required them to pre-fund their retiree pension and benefit program. Nevertheless, the parlous state of USPS finances has caused some to question its motivation in bypassing Congress.

"The Postal Service is doing this out of financial desperation," Arthur Sackler, coordinator of the advocacy group, Coalition for a 21st Century Postal Service, told PrintWeek. "They had hoped to get help from Congress last year - but despite a lot of progress they ran out of time and didn’t close the deal. Meanwhile the clock keeps ticking on the Postal Services finances - they’re losing $25m a day, so they had to do something."

Sackler said it remains to be seen what the political reaction will be to Donahoe’s unilateral move, but noted he has gone some way in trying to transition the USPS into a leaner and profitable agency.

"The Postal Service has cuts costs in a really unprecedented fashion - they’ve dramatically reduced their head count, they reduced overtime and other expenses - but they can’t keep up and they’re still being overwhelmed by the decline in business," Sackler said.

"And if they’re not going to get help from Congress in time, they have to do something. Last fall they were down to about three days of operating capital, so it’s not like their making this up out of whole cloth."

Donahoe did note that the USPS will still deliver packages on Saturday, just not mail. The USPS also stressed that most post offices would remain open on Saturdays so that customers can drop off mail, buy postage stamps or access their post office boxes.

Most direct mailers have long since come to accept that end to Saturday delivery was eventually going to happen - and no one is deluding themselves into thinking that it won’t have some impact on the direct mail and commercial printing industries.

"At the DMA our position has always been the Postal Service should cut a day of delivery only as a last resort," Cerasale said. "We have members that could face some significant hardship and other members who may only have to make a small adjustment."

Cerasale added some members are even in favor of the move to five-day delivery because they feel any cost cutting done by the Postal Service reduces the chance their rates will go up.

"This is a major change, but it’s not going to solve all their problems," Cerasale continued. "The Postmaster General said that this saves $2bn annually, but they need to cut $20bn. So this is a call to action to put the pressure back on Congress to move forward with some postal reforms."

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