USPS suggests proposed structural changes could benefit direct mail in long run
David Ward, San Diego
Thursday, September 22, 2011
On the surface, the dramatic changes proposed by the US Postal Service - including the potential closure/consolidation of nearly 250 processing facilities, a 50% reduction in mail processing equipment and the additional layoffs of as many as 35,000 workers - should set off alarm bells among direct mail printers across the country.
"Changes to the network will make on-time service more reliable and easier to manage, which benefits direct mailers," she explained, adding, "Changes to the network will also allow the Postal Service to control costs and make more efficient use of transportation. Many printers should experience similar efficiencies resulting from fuller trucks and pallets."
In addition, Owens noted it could help printers specializing in the financial industry make better use of USPS programs such as Reply Rides Free that enable billers to add promotions and other messages to statements and bills and receive rebates for the additional weight provided they meet growth targets.
"The proposed changes will support specific programs like Reply Rides Free because the new network will make the Postal Service a stronger leaner delivery platform," she said.
While not quite as effusive, Bob Hackett, executive VP for sales and marketing at Chicago-area direct mail marketer/printer Lehigh Direct, suggested that whatever the changes to USPS service, the direct mail industry will have to adapt.
"Anytime anything changes, there's going to be some repercussions," he told PrintWeek. "But direct marketers tend to be pretty savvy business people and there have already been a lot of changes in recent years and most of us have figured out ways to deal with them, whether it's a postal increase or a rise in paper costs."
Hackett said the bulk of Lehigh Direct printing is inline, adding it tends to focus on large-run direct mail campaigns. "Our small runs start at 750,000 and can run up to tens of millions, though we are getting more calls these days for print-on-demand and digital print," he said.
While the USPS cuts to staff, equipment and transportation infrastructure proposed Post Master General Patrick Donohoe seem fairly dramatic, Hackett suggested the impact - at least to direct mailers - will likely be small. "What you're going to see from a logistics standpoint is that mail may have different entry points but all in all, I don't think it will have a major effect," he added. "I think you'll see the areas that they shut down will be ones that aren't being utilized to their fullest extent."
The proposed changes are the latest by Donohoe to revamp a service that relied for far too long on revenues from the once lucrative First Class mail business. Over the past decade, First-Class mail has dropped 25%, with single-piece First-Class mail - letters bearing postage stamps - off 36%, which helped push the USPS well into the red. Last year the service lost an estimated $8.5bn, though to be fair, a significant portion of that was tied to onerous pension obligations put in place by the US Congress in 2006.
"We are forced to face a new reality," said Donahoe, who took over as Post Master General less than a year ago. "First-Class Mail supports the organization and drives network requirements. With the dramatic decline in mail volume and the resulting excess capacity, maintaining a vast national infrastructure is no longer realistic. Since 2006, we have closed 186 facilities, removed more than 1,500 pieces of mail processing equipment, decreased employee complement by more than 110,000 through attrition and reduced costs by $12bn."
If the changes win the approval of Congress - and that's no guarantee given the many legislators are loathe to sign off on anything that could negatively impact mail service to their constituencies - the only major change to USPS service will likely be in how quickly First-Class Mail gets delivered. Instead of promising delivery between one-to-three business days, the new standard would become two-to-three business days.
Hackett, for one, is supportive of the proposed moves. "Everyone takes shots at the USPS, but what Donohoe has been doing is taking the bull by the horns and fixing what has been a problem for a long time," he said. "I think this will be good for our industry in the end, because it needs to be done."