Thursday, February 10, 2011

Bad Quarter for the Post Office...But what does that mean to us?

Frank Washkuch’s article “Postal Service fiscal Q1 net loss hits $329M, posted on February 9, 2011, in the online issue of Direct Marketing News article outlined some serious fiscal issues facing our beloved Postal Service. Here is a summary of the salient issues:

• net loss of $329 million in its first quarter, which ended December 31, 2010.

• Revenue from mailing services decreased 3.3% year-over-year to $15.3 billion.
• Revenue from shipping services improved by 1.7% to $2.6 billion compared with the same period.
• Shipping volume increased 2.4% year-over-year in the quarter to 422 million pieces.
• First-Class Mail volume was down 5.6% year-over-year to 20 billion pieces.
• Standard Mail volume improved by 8.7% to 23.8 billion pieces.
• Periodicals mail was steady in the quarter at 1.9 billion pieces.
• However, the USPS said it would have seen income of $226 million in fiscal Q1 if not for the cost of prefunding retiree healthcare benefits and noncash adjustments to the workers' compensation liability.
• The USPS lost $8.5 billion in FY 2010.
• The organization also warned that, without reform, it could default on some financial obligations to the federal government by the end of this fiscal year.

What does this mean to membership association professionals who count on the postal service as a channel to deliver member acquisition, engagement and renewal material?

For one thing, the services we mostly use – Standard Mail and Periodicals Mail - seem to be the ‘honey holes’ (using my Arkansas bass fishing reference) for the Postal Service. Very good! They won’t want to impede those channels with further restrictions or more complicated paperwork. This is also good for the mail houses and merge-purge vendors who help us prepare the lists and materials.

Shipping service revenue is also up. They may want to expand this which could open up new ways to deliver our material, possibly moving some of the Standard Mail here and maybe even fostering creative new printing products to help deliver that messaging.

On the other hand, if revenues in First-Class continue to sink (as many believe it will do), that lost revenue needs to be acquired from somewhere. Sure, they are implementing savings programs, you can save your way to profitability but you can’t save your way to growth…and like all ventures, if you don’t grow, you die.

Over the next 18 months I think that we’ll see some interesting new developments at the Post Office. New products, expansion of Standard Mail and contraction of First-Class Mail, new requirements to make mailing easier &/or less costly as we see basic rates increase.

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