Distributors, It's Time to Go Postal
DMA calls on distributors to speak up on USPS issues.
By Sarah Lerow
On June 30, The U.S. Postal Service (USPS) raised its rates for the third time in 18 months. Undoubtedly, this increase was felt throughout the printing industry, but perhaps the first place one would experience the impact is in the realm of direct mail.
The biggest problem for distributors, according to Ed Gleiman, a Washington-based consultant to the Direct Marketing Association (DMA), New York, is that the rate increases have exceeded the rate of inflation. "It is troublesome for any businessperson to have one of his or her major costs of doing business go up. Postage has become an increasingly larger portion of total overall budgets in recent years," he said.
However, the reach of the USPS, which generates nearly $70 billion a year and employs more than eight million people, extends beyond the offices of distributors. "There are more than 8 million people who depend upon the USPS to operate their businesses, including direct mail companies, ad agencies, publishers, printers and printing equipment and paper manufacturers. Even companies like UPS and FedEx rely upon the Postal Service to deliver catalogs and solicitations so that people will buy the products that they deliver.
"According to a study conducted by the Mailing Industry Task Force—a group of private sector executives and senior post office officials—this adds up to about $900 billion in revenue, which is 8 percent of the gross national product," said Gleiman.
As such, Gleiman considers the USPS to be a significant aspect of the economy that is currently being threatened by some very weak financial underpinnings. "The USPS has a substantial amount of debt and some unfunded liabilities facing it over the next decade," he said.
Thus far, the solution has been to increase rates. However, increasing rates doesn't necessarily solve the long-term problem. "When rates go up, companies cut catalog pages, or trim sizes are adjusted. They'll do anything to keep within their budgets. But, if the cataloger puts a lighter piece in the mail stream, the post office gets less revenue. Even if it raises rates it will wind up no better off than it is now," said Gleiman.