| Did You Know?? |
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The USPS is the second-largest employer in the United States with nearly 685,000 career employees.
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| Postal Rates Increase Expected |
 The USPS is currently operating in the red with a $2 billion loss, and the word on the street is that losses are expected to be closer to $2.3 billion by year's end. Among the reasons for the loss is a decline in volume of first class and standard mail. These two classes make up 94% of the aggregate mail volume and are showing a decline of 5.5% as compared to the same time in 2007. Inefficiencies resulting from the processing of UAA mail (Undeliverable As Addressed) are also contributing to the deficit. The USPS is tackling this issue by implementing new Move Update Standards, which take effect on November 23, 2008. The goal of the new standards is to cut UAA mail volume in half by 2010.
Looking ahead, Production Solutions is anticipating a postal rate increase announcement in February 2009 with the projected increase going into effect in May 2009. By law, the increase must be based on the Consumer Price Index (CPI): CPI is currently at 4% but is expected to increase to 5% by the close of this year. (See chart below for an overview of postal rate increases from Jan 01 - May 08.) Industry colleagues working closely with the USPS in various capacities estimate a 5% aggregate postage increase for May 2009, but the increase percentage is not certain.
Production Solutions expects standard and first class mail rates to increase a minimum of 2.5% - 3% with individual categories/subcategories experiencing higher increases, resulting in an overall average increase of 5%. Non-automated mail pieces may be hit with an even higher percentage rate increase as the USPS moves to penalize mailings that are incorrectly addressed or non-compliant with Move Update Standards or CASS requirements.
It is important to keep in mind that the USPS believes increased postage rates will not cover their current, or future, operating deficit-they must continue to gain efficiencies that will decrease operating costs. Eighty percent of current overall operating costs are tied to labor, so the wave of automation postal customers have been experiencing is likely to continue.
Lastly, the exigency clause that is part of the Postal Reform Act of 2006 allows the USPS to increase the average postage rate above CPI in the event of extenuating circumstances. One thing is certain; the USPS must take full advantage of each scheduled increase in an attempt to get out of the red.
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