Arguing that Periodicals (magazines and newspapers) and Standard flats (mostly catalogs) are money-losing products, the U.S. Postal Service’s exigent rate request includes above-average hikes for Standard flats and Periodicals – 9% for some magazines.
But if those products are indeed losing money, an industry coalition responded recently, it’s only because of “the extraordinary inefficiency and lack of economy of the Postal Service’s handling flat-shaped mail” and its "failure to manage its workforce effectively and reduce its size sufficiently.”
The “Users of Flat-Shaped Mail” – a coalition of major publishing, catalog, and direct-marketing organizations – also noted that “in the last several years, even the Postal Service has conceded the presence of excess labor.” It pointed out that a postal official admitted to the Postal Regulatory Commission that 30% of flat mail was “processed in a non-optimal fashion by manual sort” -- even though there was apparently more than enough equipment to handle it all in a more efficient, automated manner.
Citing the Postal Service’s own numbers, the coalition chided postal officials for allowing the reported cost of handling Periodicals to increase at more than double the rate of inflation from 1996 to 2009.
“Holding increases in flats cost to inflation should have been easy,” it wrote, because:
- During those 13 years, USPS transitioned to AFSM 100 machines, which can sort four times as many pieces per hour than the old FSM 881 machines.
- “The percentage of Periodicals pieces sorted to the Carrier Route level [the least costly for USPS to handle] increased from 44.1% percent in FY 1996 to 57.9% in FY 2009.”
- The proportion of Outside-County Periodicals that mailers dropshipped [resulting in lower transportation and handling costs for USPS] rose from 30% in 1996 to 65% in 2009.
- “The number of sacks [which are expensive to handle] used to mail Outside County Periodicals dropped by 65.9% from FY 2004 to FY 2009.”
“In short, handling flat-shaped Periodicals and Standard Mail has become the make-work of last resort for the Postal Service’s large and growing reserve army of underused workers,” the coalition wrote.“This busywork, not the needs of flat-shaped mail, is the reason that the attributable costs of flat-shaped mail reported by the Postal Service have risen so sharply.”
If the PRC grants the Postal Service’s request, it would remove USPS' incentive to bring its flats-handling costs into line, the coalition added.
“Why cut costs when you can recover unnecessary costs through rate increases?”
- Do Postal Execs Want To Lose Money on Periodicals? Tough Question #4 For USPS: Perhaps the Periodicals class is the Postal Service's "Washington Monument."
- Why Offer 30% Discounts on a 'Money-Losing' Product? Tough Question #3 For USPS
- The De-Automation of Periodicals Mail
- Three Goofs: How USPS Undercut Its Case for Exigent Rate Increases