The Postmaster General is moving forward to consolidate mail processing centers. He closed 47 earlier and now he will move forward in January to close and/or consolidate the remaining plants, about 112 in all. In addition, the USPS is modifying the hours of retail post offices and or consolidating post offices. That process has begun and it involves a wide number of communities. The USPS wants to make sure that citizens are heard from and they do the right thing. Some rural post offices will only be open a minimum number of hours per day, others will be merged with post offices that are close by. There is not a great deal of savings here but as the staff compresses, the number of facilities that need staffing will also compress. Did you know that 39 percent of the USPS’s retail revenue now comes from alternative access, not a retail post office? It is one of the reasons the USPS can get away with consolidating and closing retail Post Office without losing customers. You may not realize that the USPS made money in October, net operating income. A great deal of the cost-cutting and promotion activities are starting to have an impact.
The USPS has had several early out programs for postal workers and postmasters. We were told about 4,000 postmasters took advantage of early out and about 100,000 postal employees will take early retirement. The numbers are still sketchy because all of this is in process.
On the positive side, the HQ staff clearly gets the fact that raising rates beyond inflation is a nonstarter. In addition, certain classes of mail that do not recover their costs are also a challenge. The USPS wants to retain as much mail as possible and does not want to lose business. One of the issues we have is that of rates for flats. The Postal Regulatory Commission has rejected the portion of the USPS rate case that deals with standard flats saying that the rate request does not fully recover costs. The USPS has reworked the numbers and has re-presented the flats issue back to the PRC but we don’t have a word back right now.
The USPS is also testing Metro Post in the San Francisco Bay Area which is a small package delivery service that links local businesses with their customers. This might have some very interesting envelope applications for Bay Area companies. Basically, the local pharmacy can offer same day delivery of a pharmaceutical order in the Bay area. Same for clothing, books and a host of other items. The USPS would not disclose the retailer that they are working with but we will find out more right after the first of the year. I will cover this in later updates as I have more information to share.
The USPS has a very active mailing services promotional calendar next year. You can go to http://ribbs.usps.gov/mobilebarcode/upcoming.htm. All of these promotions are designed to link the envelope with the mobile phone including a Reply Mail promotion from April 1 through June 30th and Picture Permit this summer. For years we have asked for new value opportunities on the envelope and they are now right in front of us.