Business Costs
Goodbye, Saturday Mail
That's not the only twist mailers will face in 2011. Rates will rise, too.
By Jim Ostroff, Associate Editor, The Kiplinger Letter
March 2, 2010
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It’s true. Saturday mail delivery will be history come 2011 or so. As we forecast last September, the rising red ink faced by the U.S. Postal Service isn’t giving it much choice. The USPS will need the $3 billion or so that cutting delivery back to a Monday-to-Friday schedule will save. Postal officials see axing mail pickup and delivery and other postal services on Saturdays as being least disruptive to operations. Saturday mail volume is lower than that of other days -- around 11% of a typical week’s total.
Congress will hold its nose and OK the proposal made by Postmaster General John Potter, though it won’t do so until after the 2010 elections. Both Republicans and Democrats are grudgingly coming to the same conclusion as Potter: Declining mail volume means that cost cutting and higher postal rates aren’t enough to dig the USPS out of the hole it’s in. The USPS’ deficit this year is expected to exceed last year’s $4 billion.
Businesses that continue to rely on mail will simply have to cope. Retailers, auto dealers and others that now use ads delivered on Saturday to generate weekend sales will make the switch to Fridays, for example. Limited service, such as Saturday morning post office hours for allowing businesses to pick up mail and for maintaining Express Mail boxes in lobbies, is likely to continue, though outgoing mail won’t be processed until Monday.
Chances are that the move will bring more business to some companies, such as firms that analyze the best times to mail everything from bills to product and service promotions. With one less day to work with, it’ll be more important than ever for businesses to maximize the bang they get for their mailing buck.
Don’t expect Congress to go along with calls by some conservative think tanks to privatize postal operations. But the USPS will, on its own accord, close more post offices and offer limited services, such as stamp sales and parcel shipping from kiosks staffed by postal workers, in supermarkets, pharmacies and office supply stores.
Odds are that the price of first-class stamps will go up 2¢, to 46¢, in 2011. Though the USPS will hold the line on postal rates this year, the Postal Regulatory Commission is likely to give USPS the nod for an increase next year that will exceed the inflation rate for the previous 12 months. Postage paid by business mailers probably will rise around 5% on average, or double the expected amount, despite the likelihood that the jump will accelerate the decline in mail volume.
And starting this month: A slew of changes for business mailers, aimed at trimming the USPS’ costs. On March 14, the USPS will end a costly service that allows companies to electronically monitor the performance of mail consolidators -- companies that bundle mail and drop it at mail processing centers. Consolidators’ customers now rely on the Electronic Mailing Data system to check that bills, catalogs and offers are getting in the mail in a timely manner and to analyze the effectiveness of their mail solicitations.
On March 15, the USPS will require that, for businesses to get a discount, at least 90% of mail they send must be read automatically by bar code scanners. That’s up from the 80% level required for the past two years. Missing the mark after March 15 will be especially costly: For companies that fall short, postage charged on all mail left for delivery that day will jump to about 33¢ per piece, a 40% hike. A boost to 95% bar-code-readability scores is likely to be made within a year.
Then, starting in May 2011, the USPS will mandate the use of Intelligent Mail bar codes to receive volume mail discounts. That’ll require more upgrades to mailing systems, though at least the Intelligent Mail system will provide new benefits to customers, permitting companies to individually track each piece of mail. As a result, it’ll be easier for business mailers to determine the effectiveness of promotional mailing campaigns. And it’ll tip them off earlier to deadbeat customers that don’t pay their bills, helping companies decide when to initiate bill collection or legal proceedings.
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Reader Comments (11)
Posted by: B.Barrett at 03/03/2010 11:13:50 AM
Since the post office profit volumes are down (for various reasons) and cutting service by eliminating the lowest delivery volume day would save hundreds of millions of dollars, why do they also want to stop funding the retirement of their employees?
Posted by: Joe Honick at 03/03/2010 11:55:58 AM
Jim, we are a spoiled population of people who want to complain about government spending but don't want to give up on any of the rewards. It's the theme of the old Black preacher who appropriately said "Everybody wants to go to heaven, but nobody wants to die." Giving up Saturday mail is hardly a punishment for keeping the USPS in operation and not having to let those folks who do find a way to everyone's mailbox and office despite the realities of the weather usually commented upon. Fact is, had there been no competition from Fedex, UPS, DHL etc, there might be no problem. But we are theoretically at least a free economy and they are entitle to compete. Meanwhile giving up Saturday delivery will be a minimal pirce to pay.
Posted by: Bruce Allen at 03/03/2010 12:17:39 PM
Why doesn't the USPS try downsizing? The rest of the nation, except big government, has been forced to accept downsizing as a way of keeping companies going. Why not USPS? Lay off some employees and make the rest work harder and faster. That's the American Way.
Posted by: eddie at 03/03/2010 09:58:41 PM
2 or 3 days less a month to get your bills on tine. More late fees? Take away fees one way give it right back another way. Thanks politicians.
Posted by: Jim Ostroff at 03/05/2010 01:52:42 PM
Cease funding of employees' retirement? No. USPS is the only federal agency/group that's required to 100% pre-fund retirement accounts through mid-century. USPS has "downsized" significantly, but it limited by union contracts in unilaterally reducing its workforce; by law in the type of products & services it can offer; by lawmakers who prohibit facilities' closings.
Posted by: bobby at 03/09/2010 07:10:45 PM
this means my Sat. will not here until Monday.
Posted by: cb at 03/10/2010 09:53:19 PM
Why doesn't the public know about the 100 billion dollars that the postal service recently found due to the miscalculation of the prefund retiree health care payments? I typed that correctly. 100 billion dollars was overpaid to the fund. Seems like the postal service isn't in as bad shape as everyone thinks. I wonder if the postal service will get that money back.
Posted by: Jim Ostroff at 03/11/2010 11:16:32 AM
The Office of Management and Budget several years ago recognized the USPS has overpaid to the tune of around $100 bil. into its retiree health care fund. A congressional mandate that the USPS pre-fund this account well into this century requires it to pay several times the amount of "found money." The pre-payment, not required of other federal agencies, goes to Treasury, which effectively issues an IOU.
Posted by: James at 03/13/2010 09:31:01 PM
Talking about reducing postal employees...the Postal Service just allowed about 25-30 thousand employees to retire if they were 55yr old and had 20 yrs of service and gave them a $15,000 incentive to do it. Any new workers that are hired are part time and have no benefits.
Posted by: mojo at 05/22/2010 06:42:05 PM
Ummm..... as of 5-22-10 Congress has not approved cutting Saturday delivery and will likely not cut Saturday delivery since it's finding that USPS is not as bad off as they say they are. the house committee on oversight and government reform did an examination that showed that if congress didn't help the USPS, and the USPS did absolutely nothing to cut costs that the debt in a 10 year period would be not 230 billion, but instead a much smaller number, closer to 150 billion. and that is with nothing being done. Since there have been steps to cut costs such as closing some offices, reducing work hours and offering early retirement options USPS has stepped on it's own toes proving that the 230 billion is a bogus number, making it highly unlikely that congress will approve cutting Saturday delivery, the president is also against it as well so even if it does get through congress the president will have to sign off on it. What I'm getting at is DON"T BELEIVE THE HYPE.
Posted by: mj mickel at 07/07/2010 01:45:35 AM
What everyone is missing is the fact that U S Mail is the only free service anywhere. Thats right I said FREE. It costs zero to recieve mail. It only costs when you send mail, making it in fact free. Internet, cable, all utilities charge a SERVICE FEE each and every month. Post office---FREE. If you move, free forwarding. What else do you Americans want ,tell me