Postal Service Inefficiency Drives Up Periodicals Costs

The U.S. Postal Service is missing out on an opportunity to reduce its costs of handling Periodicals mail, a postal expert says.

Declining mail volume has left the USPS with “a great surplus” of flats-sorting machines, but a large portion of magazines and newspapers are still undergoing more expensive manual sortation, according to Halstein Stralberg. That’s part of the reason that the cost of handling Periodicals supposedly rose 6% in the previous fiscal year even though average copy weights were lighter.

“The tendency of Periodicals flats to be sorted manually . . . is a major contributor to the excessively high Periodicals costs and the inability of the class to meet its attributed costs,” Stralberg said in a report presented to the Postal Regulatory Commission this week by Time Inc. “The likelihood of a Periodicals flat being diverted to manual sorting, even when there is a machine that it could have been sorted on, is considerably greater than for a Standard flat.”

Each year, the Postal Service concludes that publishers are paying less and less of the cost of delivering Periodicals mail. That is increasing pressure to increase Periodicals postage rates to close the gap. Time and other publishers have been presenting evidence to the PRC that the Postal Service’s methods of handling Periodicals and of calculating their costs are both flawed.

Postal officials have acknowledged that Periodicals are frequently diverted to manual sorting, sometimes for “service related” reasons, Stralberg wrote. Others have been less kind, citing the manual sortation of Periodicals as a sort of make-work program for “automation refugees” – postal employees who have become unnecessary because of automation.

The Postal Service acknowledges that it has more employees than it needs. But it has not been able to implement an effective early-retirement program, and Congressional and public opposition have prevented it from closing most of its redundant facilities.

For further information:

• For Periodicals, The Postal Service’s Math Doesn’t Add Up: Why does the alleged cost of handling Periodicals keep rising so fast when publishers are mailing more efficiently than ever?
  
• Postal Accounting Snafus Might Be Bad News for Publishers: The USPS calculates that the Periodicals class covered only 76% of its costs in 2009.
• What the Postal Service Left Out of the Early-Retirement Deal: Two reasons, besides the meager incentive, that response was low to the latest early-out program.