In response to declining mail volume and deteriorating financial circumstances, the Postal Service has announced plans for new price incentives for major mailers.
One proposal, which is designed to increase volume during the time of year when mail volume is typically lowest, is being called a “Summer Sale.” The plan calls for large mailers to be granted rebates of 20 to 30 percent for increasing their Standard mailings between June 15 and Sept 15.
The Summer Sale follows on the heels of another discount bonanza, the Saturation Mail Incentive Program, which proposes a rebate of 2.2 to 4 cents per piece on “incremental business” during the 12-month period beginning May 11.
Although the Postal Service did not issue a press release or make a public statement about the proposals until they were disclosed on mailing-industry Web sites, the USPS is now describing them as attempts to increase volume.
In fact, the new price incentives represent a further erosion of uniform rates.
Does anyone remember the noble principle that every mailer should pay the same amount? According to the concept of “universal service and uniform rates,” no matter where you live or who you are, postage rates should be the same.
That principle is now history, and I expect that Postmaster General Potter is proud of the role he has played in its demise.
The model of uniform rates has been turned on its head with workshare discounts, drop-ship discounts, Negotiated Service Agreements (NSAs), and now the Summer Sale and Saturation Mail Incentive Programs. Each of these giveaways was portrayed as an effort to reduce postal costs or increase volume.
Why then, when the giveaway programs are at their zenith, are we suffering the lowest mail volume in a decade? How does one justify giving away more money for lower volume day after day?
I will give PMG Potter the benefit of doubt: I assume he truly believes that price drives volume and that cheaper rates will lead to increased volume. But a review of the facts reveals the opposite.
The record shows that as rates have been artificially reduced, volume has continued to drop — and at an unprecedented rate. So, if volume does not increase as rates fall, one is left with the conclusion that these artificial rate reductions have another purpose, such as rewarding large mailers in order to maximize their profits.
Our Own Experience
The APWU uses the services of a printing company for mailings to our membership. We design the letter, pamphlet, or flyer, and instruct the firm about distribution. The company prints the material, addresses envelopes, and inserts the completed product in the mail stream with the appropriate postage, including discounts. The union is subsequently billed for the mailing, including printing, preparation, and postage costs.
If postage discounts save the union $20,000 compared to full postage rates, we would apply those savings to other union activities. Under no scenario would the discount result in additional mailings. Why would I convert the savings to an additional mailing if I have don’t have an urgent message?
In this example, the Postal Service has been denied $20,000 for processing, transporting and delivering mail to the home of each APWU member, but will receive not one additional piece of mail. That is because the decision to communicate with each member is not based on cost.
When was the last time you considered the cost of first-class postage when you mailed your mortgage payment? You probably had already made the decision to mail the payment or to use EFT — and the cost of postage had nothing to do with your choice.
When we decide to mail a message to each APWU member, we consider other means of delivering the message — including posting information on the APWU Web site, deferring the release of the information until the next issue of the union magazine, or producing an APWU News Bulletin. The savings generated by the rate discounts are not determinative in the decision to mail.
This same decision-making process is applied by commercial entities that utilize the mail. Seasonal mailings are designed to promote the purchase of goods or services at a specific time of the year; sales notices are intended to attract interest and stimulate buying; bills and other financial matters are mailed in order to generate payment; political mailings are sent to share information and encourage an action. For these purposes, postage discounts are rarely determinative in the decision to use mail as the vehicle.
Costs are considered in determining the forum to be used in conveying information, but it is not the only factor. When comparing costs, one compares the Internet, television, radio, newspapers, e-mails and hard-copy communication. Some of the forms, such as e-mail and the Internet, have significant cost advantages, but cannot compete with mail in garnering the attention of the recipient. Television, radio, and newspapers cannot target a specific audience as effectively as the mail.
So, major mailers, including the APWU, that benefit from postage discounts appreciate any and all means of reducing costs — especially during these times of economic turmoil. But the mailers’ appreciation for discounts does not translate into any benefit for the United States Postal Service.
I am sure the officials and shareholders at Pitney Bowes, National City Bank, LL Bean, and other major mailers appreciate the savings generated by reduced postage, but the United States Postal Service is the loser. Perhaps they will nominate PMG Potter for Man of the Year; but I nominate him for _______________. You fill in the blank.