July 29, 2011

US Post Office Closures Unlikely to Impact Direct Mail Volume

By David Ward, PrintWeek

The USPS said the closures would help it close an $8.3bn annual loss. Some of that loss is tied to a decline in mail volumes — especially first class mail — in recent years, though onerous pension requirements mandated by the US Congress in 2006 are also adding billions in red ink to the Postal Service bottom line.

Click here to find out more!“Our customers’ habits have made it clear that they no longer require a physical post office to conduct most of their postal business,” postmaster general Patrick Donahoe said in a statement announcing the plan. “The Postal Service of the future will be smaller, leaner and more competitive, and it will continue to drive commerce, serve communities and deliver value.”

The announcement has triggered some hand-wringing in many of the small rural communities likely to be affected. But even if all the closures take place, it should have very little impact on mail volumes or the direct marketing industry, Jerry Cerasale, senior vp for government affairs at the Direct Marketing Association (DMA) told PrintWeek.

“The service standard might change because of the loss of postal offices and so some mailings might take a day longer to get there,” he added. “But as long as they let our members know we don’t see that having an effect on volumes – and hopefully it will also save the Post Office some money and get them out of their financial straits.”

Arthur Sackler, chairman of the Coalition for a 21st Century Postal Service, agreed, adding, “They have very few options. And many of the postal services in those communities losing post offices will be handled by independent contractors, such as stores, that will be convenient and will have longer hours – and they won’t be dropping zip codes so the community identity will still be there.”

Of course, the big concern is that the closures are just the first of many USPS shoes to drop in the near future, with the next one likely to be an aggressive effort to end Saturday mail deliveries.

Sackler, whose coalition includes not only the DMA, but also organizations representing magazines, printers and printing equipment suppliers, told PrintWeek that such a move would have an impact on some major mailers. “We have whole industries such as small newspapers that are totally dependent on Saturday delivery,” he added. “There are also a lot of periodicals, greeting cards and other that are very dependent on Saturdays.”

Sackler noted the end of six-day delivery wouldn’t just impact standard mail. “There are also a lot of first-class mailers, who if the USPS ends Saturday delivery, are going to take their mail out,” he continued. “So there are a lot of folks for whom the loss of Saturday will be a substantial hit.”

The DMA has not really taken a public stance on the end of Saturday delivery and Cerasale said, “We have members who are both sides of moving to five days. Clearly there are some marketers who will have to adjust their mailing if they go from six- to five-day delivery and again we just have to make sure we have the right notice so they can adjust the entry day of their mailings.”

Given the billions in annual losses and the decline in mail volumes, there are even some – primarily in conservative circles – who have begun floating the idea of shutting the USPS entirely, arguing that private businesses such as UPS and FedEx could do a better job of home delivery. But any move in that direction is likely to trigger huge opposition from mailers, simply because of fears that costs would skyrocket.

“If you look at the pricing, what we have to pay for UPS and FedEx is far greater than the 24 cents we pay the postal service for a mail piece,” Cerasale said.  “And they don’t go to every house every day.”

News, Print Marketing ,
About ASI

Advertising Systems Inc.’s experienced team works hard to help our clients realize the business growth they are looking for.

Advertising Systems, Inc.
Houston, TX
Phone: (281) 889-9575