4/30/2018 The magazine industry supports and needs a healthy Postal Service. Yet, the Postal Regulatory Commission is proposing rate increases for the Market Dominant segment of the mail stream as high as 40 percent. Such a move will have the chilling effect of driving away business and creating an existential threat to the Postal Service.
While USPS continually refers to periodicals being “underwater” in their cost coverage, this is completely due to USPS’ decrease in efficiency. Instead, periodicals are “over-contributing” to the efficiency of the Postal Service by taking on much more of the work themselves in an effort to keep the service viable.
That’s not the only misrepresentation of the Market Dominant segment of the mail stream. Let’s separate the myth from the fact on U.S. Postal Service’s financial situation.
MYTH 1: The United States Postal Service needs to charge magazines more money to ship their periodicals because they do not cover their costs.
FACT: The PRC’s proposal to ratchet up magazine postage ignores the fundamental fact that USPS mismanagement is to blame for magazines’ situation. The Postal Service shifted magazines from low-cost to high-cost processing, causing cost coverage to decline. If efficiency had simply remained at previous levels, even without any improvement, periodicals would be at 97-percent cost coverage. When you factor in the additional mail that publishers send in other classes – invoices, renewals, etc. – periodical mailers get to 121 percent cost coverage. The PRC needs to push USPS to fix its problems, not raise rates.
MYTH 2: USPS has improved its operation by using automation and incorporating better supply chain management practices, but it’s not enough. The USPS needs more revenue dollars and must charge customers more money.
FACT: The Postal Service has made changes in automation, but, for flat shaped mail pieces, productivities have declined anywhere from 24-percent to 52-percent for the applicable sorting machines. Meanwhile, to compensate for USPS’ falling productivities, publishers have undertaken much more upfront prep work before giving magazines to the Postal Service for final processing and delivery. More than two-thirds of magazines are sorted to the deepest sortation level before mailing, and about three-quarters are driven by private trucks to mail entry points near readers’ homes. Despite those efforts, USPS is the only partner in the magazine production/delivery ecosystem whose costs have increased in recent years. There is substantial room for cost reduction across multiple levels at USPS. USPS’ operational and sorting issues can’t be solved by simply adding more money into the equation.
MYTH 3: The advent of email and other shipping competitors is mostly responsible for USPS’s decline.
FACT: Revenues related to e-commerce continue to climb. The profit from packages keeps growing, giving the Postal Service an extra $1 billion of profit per year. Companies such as Amazon, FedEx and UPS all use USPS to deliver packages the “last mile.” By proposing only one solution – much higher postage rates – the Commission will do lasting harm to the Postal Service by either forcing businesses out of the mail or pushing them to find –or create—alternative, cheaper, and more stable distribution methods.
MYTH 4: The Postal Service’s poor finances are due to deficiencies in the rate-making system.
FACT: The Postal Service’s balance sheet lacks “balance” due primarily to the Congressionally-mandated retiree health prefunding designed to pay for the full liability for future retiree health care on an accelerated schedule. Over 90 percent of Postal Service reported losses in the last decade are due to this misguided prefunding schedule. Despite missing prefunding payments, the Postal Service is better funded for retiree benefits than the vast majority of federal, state or private sector entities. In total, more than $340 billion are already set aside in the U.S. Treasury for retiree benefits. This is enough to cover decades of retiree benefits for postal employees.
We are at a critical juncture. The Postal Service is a unique institution with a unique set of circumstances. However, there is no precedent for an organization in any industry that succeeded through exorbitant prices increases in the face of weakening demand. It is the PRC’s responsibility – and legacy – to recognize that here.
Linda Thomas Brooks
President and CEO, MPA – The Association of Magazine Media
I don’t think Ms. Brooks has heard about something called “social media”. Although Facebook, Twitter, Instagram, Snapchat, Reddit…etc.etc..are experiencing problems,they are here to stay! The printed and paper magazine is a relic of the past. Much like film cameras, CDs, VHS and other things which have been replaced by technology.
I don’t think Ms. Brooks has heard about something called “social media”. Although Facebook, Twitter, Instagram, Snapchat, Reddit…etc.etc..are experiencing problems,they are here to stay! The printed and paper magazine is a relic of the past. Much like film cameras, CDs, VHS and other things which have been replaced by technology.
Well Mr. Buy UPS/ FDX/AMZN, I see you want the Postal Service to over a buy out and if the postal Service goes under and your fellow workers become unemployed, you could care less. In the past workers stuck together. Not anymore. Don’t worry your Mr. Fabulous will take care of you, and only you! And as for your fellow workers,it’s every man for themselves. Like Herbert Spencer said ” The survival Of The Fittest”. Maybe your great leader will guide you to the unemployment line. Go Donald go.
The billion dollar FSS boondoggle didn’t help matters.
All these clowns that screwed up are finally going to be held accountable after Trump gets done with the review.
Elephant Plaza is on suicide watch now.
music to my ears………………you heard of that broadway show Death of a Salesman…….well move over and watch the new show…….Death of the Postal Circus……….that whats happens when you try and run a company with mismanagers who only have GED’s………..bring on the BUYOUT……see everybody run for the exit. should have bought UPS/FDX/AMZN like I told you……..time has caught up with this dump. even our clerks union changed their name…..Dewey. Cheatem, & Howe LLP !!!!!!!! $1582.26 AMZN stock price for one share. I Smell A Buyout. Go President Trump…..set us free!!!!!!!!!!!
When was the last time the PO paid the Prefunding?…NOT THE REASON !!! BRING BACK CARVIN MARVIN!!!!!
2014?
Myth 2 should also include under fact that automation has caused unlimited overtime for clerks and mail handlers. The cost of running those machines is astronomical because of it. Once again, mismanagement steps front and center. The postal service has a team of so called efficiency experts trained to find these cracks, haven’t seen any in Boston. They don’t seem to care, even the mailing requirements and BMEU clerks and supervisor make their own overtime….It’s crazy….If the mailing industry ever knew the truth …wow! $$$$$$$$… Employee’s here are laughing all the way to the bank at managements inability to run operations seamlessly!
Follow the money
I think the Postal Service has achieved full diversity so lets lay off the diversity specialists and replace them with people who are actually useful.
How do all of the diversity specialists or real estate specialists or any number of the other specialists we have help to contain costs for our customers? Way too many chiefs and not enough indians. Trump will dump on these do nothing paper pushers.
Not too hard to see who is behind this article. Of course they are going to squak if they actually have to pay more so the USPS can cover their costs on this stuff. I say let them go to Fed Ex or Ups and let me know how that turns out for them. It’s about time we charge what it costs us to deliver. The pre funding has nothing to do with it anymore. That has been over for a few years.
Fact,the last two(2) of the four(4)USPS”Myth vs.Fact”,have nothing to do,with magazine deliveries. What totally lazy and asinine journalism.
After reading the above mumbo jumbo about periodicals paying to much be honest they are on a serious decline. Daily newspapers cost 2 dollars. The online shopping catalogues are going strong and making money. They get dropped in your mailbox at home, which makes it perfect for them to sell you things. The rate increase is phased in over years after many years of cheapo prices. This increase is needed because the post office cost of everything has gone up and they pay a living wage which is hard to find these days.
Mismanagement is abundant in the PO. These so called
managers/supervisors are some of the most idiotic, immoral,
unethical, lying unhuman beings going. They can’t manage
their way out of a paper bag with openings on both ends. The
dedicated craft employees are basically running the show and
getting the job done as best as possible despite the presence
of these so called management tools.
you are right, the rank and file are the true hero’s. Without them it would
be the blind leading the blind. Management does have some good leaders but they have to carry the load of so many people that are lost
in management.
The truth is these companies get better and better
service through the PO on a daily basis yet they want
to pay less to have the PO sort to addresses and deliver.
The price on everything(gas, oil, heat, food, travel, etc etc etc
has gone up(not to forget health care for employees). Time
to pay your share and good luck if you can find another source
to deliver your goods.
You are so right. The “ business mail” industry cries about pricing, but they never tell you their profits. They fee, delivery charge, list clean up, sort their ways to huge mark ups.