Postal Reform Effects Minimized for Graphic Arts

NPES news

January 2008

multipage

Few industries engage in the kind of symbiotic relation-ship shared by the graphic arts industry and the U.S. Postal Service (USPS). Consider that, at some point, the majority of printed products are mailed. At the same time, the postal system relies on the printing industry to supply much of its mail volume. The fate of each player depends in large part on the well-being of the other.

In this context, the signing of the Postal Accountability and Enhancement Act (PAEA) in December 2006 was beneficial for the graphic arts industry. It was a move that spelled reform for the postal system that industry experts agree was long over-due. Even so, the new postal legislation has caused no small amount of anxiety for those in the graphic arts industry.

Combined with the rate increases anticipated for this year, how will the various elements of the new postal reform affect the demand for print? To find out, PRIMIR commissioned INTERQUEST, an industry consulting firm in Charlottesville, Virginia, to provide an executive overview of the postal reform legislation and recent rate case, and examine the potential impacts on the graphic arts industry. The resulting study, “Effect of Postal Reform on the Demand for Print,” provided a complete review of the legislation ele-ments plus impacts on key print products that are dependent upon the mailstream.

Financial/Transactional Printing

Work-shared financial/ transactional mail accounted for about 53% of First Class letters and cards in 2005. It is no secret that the greatest effect on First Class financial/transactional printing volume comes from electronic diversion, such as automatic debit, online banking and electronic bills. According to the United States Postal Service (USPS), in the three years leading up to 2005, approximately four billion pieces of mail were eliminated from the First Class mailstream, and another four billion pieces will be removed between 2005 and 2008. In total, the USPS estimates that electronic diver-sion has reduced First Class Mail volume by 30% since 1988. While First Class financial/ transactional workshared mail will continue to erode with a forecasted decrease of 8.6% over the next three years, there will be no apparent decline solely due to the recently enacted postal reforms. (Note: PRIMIR has launched a study to investi-gate the future of Financial/ Transactional printing; the results will be revealed during the PRIMIR Spring Meeting held during the NPES 2008 INDUSTRY SUMMIT.)

Periodicals

Modifying a structure proposed by Time Warner Inc., rather than wholly accepting USPS suggestions, the Postal Rate Commission (PRC) recommended that periodical rates be applied to pieces and pounds — the existing method — as well as to bundles, stacks and pallets. However, because piece rates vary on machineability, and container rates depend on the point of entry into the mail system, the result is a complex rate structure with at least 55 elements.