Graphic Media Alliance

03/13/2024

Mailers Hub February Summary

Source: Mailers Hub, March 1, 2024

Finger-pointing Follows Withdrawal of PCH NSA

As the saying goes, “Success has many parents while failure is an orphan.” To a degree, this may apply to the stillborn negotiated service agreement with Publishers Clearing House that the Postal Service had filed last August 11. That filing was different from other NSAs in that it was for market-dominant mail, not competitive products. 

Because it was in barely charted territory – there have been only a handful of NSAs for market-dominant products (First-Class Mail and/or Marketing Mail), including agreements with Bank of America, Bradford Group, Bookspan, HSBC North America, Discover Financial Services, and PHI Acquisitions. Most expired over a decade ago; the last was PHI’s that ended in 2018.

USPS Service Performance: Far From the Targets

Suffice to say that PQ I/FY 2024 service performance was terrible; the Postal Service’s own data reveals very few districts or areas achieved service targets. The Postal Service lowered service standards for First-Class Mail and some Periodicals effective October 1, 2021. In FY 2023, the Postal Service also revised the geographic units used in its reports, basing performance data on the four areas and 50 districts established in 2020 rather than the preceding seven areas and 67 districts. The USPS announced its FY 2024 service targets in a November 22, 2023, letter to the Postal Regulatory Commission.

January Financials: A Familiar Story

As the first month of the second fiscal quarter, January did little to alter the preceding month’s downward trends in volume and revenue.  Volume for the four market-dominant classes was lower – again – while competitive product volume which, according to the PMG’s 10-Year Plan, is to grow as a source of needed revenue, was up – but less than planned.

After Five Months, CPI Impact on Prices Remains Low

As commercial mail producers and their clients prepare for the next planned rate increase in July, the impact of the Consumer Price Index will be less than that of other factors.

Following release of the January CPI on February 13, the Postal Service’s annualized CPI-based pricing authority was 3.847%. However, because of the semi-annual frequency of rate hikes under Postmaster General Louis DeJoy’s 10-Year Plan, the effective CPI-based authority was only 1.360%.

Over the past five months, that figure has increased about ¾ of a percentage point monthly, meaning that, if the trend continues, the net CPI-based rate authority available to the USPS after six months will be just over 1.6%.  The USPS had earlier projected CPI-based rate authority of about 2%.

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