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Postal Reform -- Congress Must Deliver

June 2005
By Erik Cagle

Senior Editor

Postal reform is the rally cry for 2005 in the commercial printing industry. Though it seems the cries are strong only from a select group, as opposed to a unison shout from the industry collective.

In other words, a relatively small amount of people are making a big stink to Congress about the need for reform of the United States Postal Service (USPS), an entity that is still operating under guidelines set in 1971. Guidelines, mind you, established before the onslaught of private sector parcel delivery options and well before the invention of the Internet, both of which have consumed a hunk of USPS volume.

Let us suppose that you, the reader, are not among the masses rallying for postal reform. Ask yourself some basic questions:

Do you provide any mailing services for your customers?

If not, does what you produce still end up in the mail stream?

Commercial printers do not exist in a vacuum. Even if mailing is not your thing, a lack of meaningful postal reform could have dreadful consequences for your customers and suppliers.

Nearly Half Hits the Mail

The PIA/GATF estimates that roughly 45 percent of the dollar volume of printing ends up in the mail stream. That amounts to about $72 billion in annual printing shipments delivered through the USPS. Ronnie Davis, PIA/GATF chief economist, has factored a scenario where the proposed 5.4 percent postal increase could mean a reduction in mail-related printing shipments of half that amount, 2.7 percent, which would equal a $1.9 billion reduction in printing shipments over a 12-month period.

The 5.4 percent increase requested by the USPS to the Postal Rate Commission—which would likely take effect in 2006—could pale in comparison to future hikes. And the increase doesn't even reflect a rise in the cost of doing business.

OK, we'll back up for a second and relate the riveting tale of the civil service retirement system (CSRS) account. In 2003, the USPS learned that it was slated to overpay the retirement fund for its employees by a mere $80 billion. The U.S. government rectified the situation (sort of), but tacked a two-headed monster onto the so-called correction: the retirement fund overpayment amount was shifted into an escrow fund. Additionally, the postal service was mandated to pick up the portion of retirement annuities based on their employees' military service. The 5.4 percent increase request only addresses the pension escrow.

Without reform that addresses the escrow issue, future USPS increases could become an annual event, prompting major advertisers—the printers' customers—to look at cheaper, alternative mediums for delivering their message. And even if there is a hint of Chicken Little cynicism involved here, there are tangible ramifications if the USPS is not allowed to get its house in order.


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