Publishers Have Been Hit By Postal Rate Hikes Of 47.8% Since 2021: News/Media Alliance (mediapost.com)

The United States Postal Service announced it will soon publish a Notice of Intent to supplement its environmental impact statement (EIS) related to its Next Generation Delivery Vehicles (NGDV) plan. The decision comes as the Postal Service accounts for expected changes following a recently announced plan to improve the Postal Service’s delivery network. The plan to modernize and aggregate delivery operations will make delivery routes more efficient, which may affect the appropriate mix of vehicles to be procured for the Postal Service’s delivery fleet, including NGDV. “As I noted when we placed our initial NGDV delivery order, the Postal Service would continue to look for opportunities to further increase the electrification of our fleet in a responsible manner, as we continue to refine our operating strategy and implement the Delivering for America plan,” said DeJoy. “A modernized network of delivery facilities provides us with such an opportunity. This is the right approach —operationally, financially, and environmentally.”

In FY 2021, the Postal Service had a net loss from operations of $2.7 billion, a $0.9 billion improvement from FY 2020. The decrease in net operating losses for FY 2021 was primarily due to $4.0 billion more revenue than in FY 2020. When non-operating expenses are included, the Postal Service had a total net loss of $4.9 billion in FY 2021—an improvement of $4.2 billion compared to FY 2020. While the Postal Service realized an overall improvement in total net losses in FY 2021, continued losses have expanded the gap between the Postal Service’s assets and liabilities. Total assets at the end of FY 2021 were $46.4 billion versus total liabilities of $122.1 billion. A significant portion of the Postal Service’s liabilities was driven by unpaid retiree health benefit (RHB) liabilities totaling $57.0 billion at the end of FY 2021. The recent enactment of the Postal Service Reform Act removes this $57.0 billion liability of past due RHB obligations and eliminates annual payments for the RHB normal costs and the Retiree Health Benefits Fund amortization. Market Dominant revenue decreased in FY 2021 by $97 million or 0.2 percent from FY 2020. Increases in revenue per piece for overall Market Dominant products were not enough to offset declines in volume and fluctuation in mail mix and signal the severity of the effects of the pandemic during that time. In FY 2021, Market Dominant volume declined while package volumes rose as a result of continued growth in e-commerce that included record holiday volume. These changes in volume affected overall revenues and cost in addition to workforce and workhour changes in response to pandemic-related labor costs.

The postal price increases for marketing mail are driving down volume and, more importantly for the USPS, driving down profits. The postal price increases need to be rolled back. Basic economic principles apply to the pricing decisions for catalogs and direct mail: Catalogs (and direct mail) are very sensitive to the cost of mailing. Catalogers decide how much to mail based on their breakeven cost. Catalogers track their breakeven costs very closely and make circulation decisions based on their costs. Catalogers have been decreasing their mail volumes because of postage cost increases. Mailing volume correlates directly with costs for catalogs and direct mail.