Plan for Another Postal Increase, Cautions Expert
With publishers and mailers everywhere keeping a cautious eye on the United States Postal Service (USPS) on issues ranging from rate increases to the elimination of Saturday delivery, Publishing Executive Inbox sought out the insights of postal expert Jack Widener. Widener retired a little over a year ago from Newsweek as director of finishing and distribution after a 29-year run with the company. Today, he owns and operates Publishing Postal Consultants LLC, a Manalapan, N.J.-based transportation and postal consulting business serving publications.
Widener says that although it's impossible to predict a rate increase for periodicals next year, publishers would be smart to plan for one.
INBOX: Do you expect publishers will be faced with a postal rate increase next year?
JACK WIDENER: Yes, no, possibly.
This question is impossible to answer at this point for a number of reasons. The normal process is for the amount of the postal rate increase to be determined based on the Consumer Price Index (CPI), with the amount [of increase] not being higher than the CPI by class of mail. The way the CPI is [currently] trending, it might even be a negative number, which would mean no increase.
But … the USPS has another means to raise rates in emergency situations which is called exigent pricing. A natural disaster causing a dramatic increase in cost would be one example. Does the present financial condition of the USPS, which is mainly due to loss of volume, qualify? Some in the Postal Service think it does, but Postmaster General John Potter has been very clear that he does not want to do that. But if [the USPS does] not get relief from Congress for retiree healthcare, support for reducing expenses, or an expanded opportunity to borrow money, then they might have to do that. They can file an exigency case at any time, so the new rates could be implemented before May of 2010, which is when normal increases are implemented. If they took this action I would think they would try to implement the rate increase around the normal May timeframe, so as not to disrupt an already delicate mailing industry.
The bottom line: Put some money in the budget for it. In my opinion, there are just too many challenges at this point not to take precautionary measures.
INBOX: With all of the uncertainty surrounding the future of postal rates, how would you advise publishers remain active rather than reactive in their projecting and budgeting as they relate to postal costs?
WIDENER: To be safe, I would recommend being active and, as I said earlier, plan on an increase for next year. The $1 million question is "How much?" to which no one knows the answer. Your crystal ball is as good as anyone else's. [Planning for] a 4-percent increase might be a good middle-of-the-road approach.
INBOX: How likely is it that the USPS will nix Saturday delivery, and how should publishers expect this to affect their businesses?
WIDENER: Saturday delivery is one of the cost-cutting measures they have made a commitment to implementing due to the savings. And if the savings are accurate, which must be validated, we must give them a fair hearing on it. If this does occur, the earliest [it would happen] would be late in the fall of 2010, and probably not until 2011.
The biggest concern to publishers would be to time-sensitive publications that want their copies delivered on Saturday. How will their customers react to not getting their copies until Monday, or, if Monday is a holiday, until Tuesday? To change an edit close and/or production schedule to deliver on another day is not the easiest thing for a publication to do.
Though the Postal Service may prefer to eliminate Saturday delivery, it has to be approved by Congress. There will be strong opposition from certain parties which include the public, postal unions, some mailing customers and possibly Congress.
INBOX: What's the latest with Intelligent Mail Barcodes, and are publishers using them effectively yet?
WIDENER: Publishers are not using them effectively at this point. The main benefit with the May 18 implementation for publishers was to obtain free Address Correction Service (ACS) changes by being a full-service participant. Three months after the program went live, no publishers are utilizing this service. There are several who are close and may begin using it in the next week or so.
This has been a work in progress since the program went live on May 18. The bottom line is that the program for ACS was not ready at that time. The mailing industry and the Postal Service have been working very hard to make it a reality. But it's been like trying to do an engine tune-up on your car while cruising down interstate 95 at 70 MPH—it's made the job more difficult.
To contact Jack Widener, owner of 1st Priority Services/Publishing Postal Consultants, call 908-692-4494.