Postal Service Follies: It’s No Laughing Matter –Michelson
But, even that is likely not enough, in light of permanently shrinking First Class mail volumes due to a shift to electronic banking and e-mail communications, as well as reductions in other classes of mail, including direct marketing pieces, printed magazines and catalogs. The volume of First Class mail fell from 108.7 billion pieces to 87.2 billion pieces from 2007-2010. And Standard mail reportedly nose dived from 103.5 billion pieces to 78.9 billion pieces during that same time frame. Couple those shrinking mail volumes and subsequent revenue stream losses with the fact that, according to the Government Accounting Office, 30 percent of all postal revenues get eaten up by pension, health care and workers’ compensation payments alone. Like our country’s massive federal budget deficit, costly entitlement programs and future retiree social security obligations, the USPS’ business model, as currently structured, is an unsustainable one.
In what could end up being a devastating blow to the printing, publishing and direct marketing industries, the Obama administration is said to be in favor of an exigent (emergency), higher-than-inflation increase in postage rates. Periodical class mail rates reportedly would rise by as much as 9 percent, and increase by 5.8 percent for Standard mail, which includes catalogs and other types of direct mail. How ironic, since even the USPS itself had backed off recently on a similar rate hike request it made earlier, this time noting the razor-thin operating margins that these industries are already facing.
The Postal Service realizes that such large rate increases, in today’s harsh economic climate, would drive more magazine publishers, catalogers and direct marketers to reduce their mail volumes, potentially even putting some of them—and the printers and mailers that serve them—out of business. It pushes its largest-volume customers to disband print and pursue cheaper, electronic alternatives, which many are doing already.