Sunday, September 28, 2014

Forever Stamps: Not a Sexy Investment

Sales of Forever Stamps spiked shortly before the 3-cent price increase in January, dropped slightly for a few months, and have now returned almost to normal.

Some people stocked up to beat the price increase but not many bought more than a few extra months' worth of stamps, numbers released Friday by the U.S. Postal Service suggest.

Thanks to the temporary "exigent" surcharge, January's increase to 49 cents was the largest since Forever Stamps went on sale in 2007. That led to speculation about people hoarding or even investing in Forever Stamps.
First Class Forever Stamp revenues were up 10% in December 2013 and 35% in January 2014 over the previous year, temporarily netting USPS more than $300 million in additional cash. Then came the drought: The number of stamps sold was down 18% in February, 17% in March, and 12% in April.

By comparison, the 1-cent increase in January 2013 caused hardly a blip -- a 5% increase that month and then a 9% decrease the next.

In the past three months, revenue from Forever Stamp sales has been essentially flat versus the previous year. With the price increase, that means fewer stamps were sold.

But the decrease wasn't much more than would be expected  from the long-term trend of declining First Class letter mail.

If the surcharge expires next summer, as currently scheduled, the price of Forever Stamps will probably decrease for the first time, most likely by a penny or two. But those who own 49-cent stamps will not receive rebates.

Despite email and online billing, people are still mailing plenty of letters: In the 12-month period from September 2013 to August 2014, the Postal Service sold more than 13 billion Forever Stamps, worth more than $6 billion.

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Monday, September 22, 2014

Postal Rates in 2015 Could Rise or Fall -- or Do Both

The outlook for changes in postal rates for the next 12 months is murkier than it's been in years.

A rate hike, a decrease, an extension of the temporary “exigent” increase, and even an increase and decrease a few months apart are all plausible 2015 scenarios for First Class, Standard, and Periodicals mailers. That uncertainty is a far cry from the past few years, when "market-dominant" postal rates inched up each January based on the rate of inflation.

The 4.3% exigent increase that was implemented in January is the source of the unusual uncertainty. That surcharge is supposed to disappear after it yields the U.S. Postal Service an additional $3.2 billion, presumably in mid-2015.

The three-judge panel considering an appeal of the exigency case seems unlikely either to eliminate the rate hike or to make it permanent, according to Stephen Kearney, executive director of the Alliance for Nonprofit Mailers. But based on the judges’ comments and questions during recent oral arguments, his reading of the tea leaves foresees a decent chance the judges will remand the case to the Postal Regulatory Commission with orders to revise it.

Big risk to mailers
“The big risk to mailers in the remand outcome would be a possible determination by the PRC that the exigent rates would need to raise more than the $3.2 billion in their original order,” Kearney wrote in a summary of the oral arguments. That could result in hiking the surcharge or in extending it.

The main issue in the case is how much revenue USPS lost as a result of the recent recession, as opposed to revenue it would have lost anyway from increased usage of email, online billing, and other digital media.

“The judges seemed to agree that the PRC was right to accept the recession as an extraordinary event under the statute as well as the need for a special rate increase to cover the recession-caused losses,” Kearney said.

However, the judges indicated that the PRC’s decision was unclear regarding how the Postal Service’s recession-related losses were calculated, Kearney wrote. And they questioned whether the PRC’s methodology fell short of counting all the losses.

Two choices
"The judges likely will decide between two choices: to defer to the expert regulating agency and let the PRC order stand, or to remand the case back to the PRC and tell them to do a better job determining and implementing methods to quantify the revenue that the USPS lost as a result of the 2007-2009 recession.”

With the judges taking one to three months to issue their order and the PRC possibly needing additional time to reconsider the case, it could be well into next year before we know the outcome. And even an order upholding the PRC decision would not completely clear up what will happen to postal rates next year.

Mailers and postal officials are still arguing over how to decide when the $3.2 billion target has been reached. One issue, for example, is whether to count the surcharge on all Forever Stamps sold during the exigency period or only on those that are actually used.

USPS officials could implement the usual inflation-based price increase – probably in the 1%-2% range -- in January. But that could mean a 4.3% decrease a few months later if the exigent surcharge expires as currently planned.

Postal officials have indicated they might postpone a January rate increase in hopes of building up enough rate-increase authority to keep rates level when the surcharge expires. However, if the PRC order is upheld and inflation continues at a tortoise’s pace, USPS's rate authority would probably fall a couple of percentage points short, leading to price decreases.

But remember that, in Washington, “temporary” measures to increase government revenue have a way of becoming permanent. For mailers, there’s a danger that Congress will let the Postal Service keep the extra surcharge in place to keep the agency solvent, to preserve Saturday delivery, to stop some postal facilities from closing, or to finance new delivery vehicles.

Or just because.

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Saturday, September 20, 2014

A Lesson in Magazine Printing from the Ghost of Robin Williams

Surprise, surprise, there were no takers for the copy of TIME magazine purporting to show the ghost of Robin Williams.

Despite the Dead Tree Edition article being picked up by the Naples (Florida) Daily News and several web sites, no one could scare up $10,000 and enough gullibility to bid in the eBay auction that ended Friday.

But those of you with more dollars than sense and a passion for printing errors need not despair: Almost immediately, the Kennewick, Washington-based eBay seller "warnecathe" relisted it, again with a minimum bid of 10 Gs.

Williams' ghost reportedly showed up at his mansion a month ago, but the scores of printing and publishing geeks who commented on the TIME cover were not fooled. The consensus was that the cover, along with the back cover, was simply printed without enough black ink.

A few correctly pointed out that I was wrong in saying the cover could not have been printed shortly after the press started up. Newsstand copies of TIME are bound before the subscriber copies, but the covers are printed at the same time.

Several commenters guessed that the copy was printed just after a blanket wash, a process for cleaning debris off a press in the middle of a printing job.

A blanket wash causes paper going through the press to get little or no ink, so the paper coming out of the press is supposed to be diverted to the waste stream until the color returns to normal. But in this case "the pressman was just a little too quick in deciding where the waste stopped and the good sheets started," wrote Tom Kenny of Pictorial Corporation, on the LinkedIn group Print Production Professionals. "We wouldn't be discussing this if the error didn't produce such a metaphoric image. It's the ghost in the machine."

In the blink of an eye
Another one of the 34 comments in the PPP group provided more detail: "The black ink is way way down, the magenta and yellow are down a bit, the cyan a hair more than the magenta and yellow," wrote Eric Eliel of e2 Communications. "Looks very much like they just washed the blankets and the press was coming back to color."

"Keep in mind, the speed at which modern heatset [press] webs run, at 2000+ feet per minute, translates to about 17 copies per second at speed. The presses should come back to color after a washup in about 50 to 100 copies, which is about 3 or 4 seconds. This 'color' issue could occur in a blink of an eye, literally."

Sandra Jones of Best Version Media explained why the faulty cover couldn't have been noticed and pulled out during the binding process: "Being a subscriber copy, it would have come off the stitcher already buried in a postal bundle."

And no one disagreed with the assessment offered by Grace Savides of Independent Printing: "Wow, that eBay seller is quite the opportunist. It's amazing how little shame some people have. Glad no one's put a bid on it yet."

Tuesday, September 16, 2014

Is This the Ghost of Robin Williams -- Or Just a Printing Error?

Please see the follow-up to this article, Ghost of Robin Williams Is Haunting eBay Again.

A cover of TIME magazine purportedly showing the late Robin Williams as a ghost is being offered on eBay at a starting bid of $10,000.

There are no bidders so far in the auction, which ends Friday.

"After Robin Williams' tragic death, Time Magazine honored the beloved actor/comedian in the August 25, 2014 issue," says the description provided by "warnecathe," a newbie eBay seller. "This particular copy bears a mysteriously misprinted cover that features a ghostly Robin Williams. During his life, Robin Williams was known for his practical jokes, so it is typical of him to continue his jestful ways by appearing as a ghost on the cover of Time Magazine."

The ghostly copy was mailed Periodicals class to a U.S. address. The design is exactly the same as a regular cover except what is black on the regular cover is gray on the haunted cover.

I'm calling on my fellow printing geeks for an explanation, but I'd say it was a simple case of the black ink missing. It's not unusual at press start-up for some of the colors (the other inks used in four-color printing are cyan, magenta, and yellow) to start appearing before others do, though pages that are missing colors are supposed to be discarded.

But these probably aren't start-up copies because TIME presumably prints its time-sensitive newsstand copies before the mailed subscriber copies. So maybe a mischievous spirit from the planet Ork snuck into the printing plant while the press was at full speed and stole the black plate.

Or perhaps Williams was doing one final impression -- of what Time Inc. looks like after Time Warner recently sucked out all the cash and jettisoned the former subsidiary. Or maybe the socially conscious comedian was showing us what will happen to Time Inc.'s reputation if it keeps blurring the lines between journalism and advertiser-friendly content.

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Saturday, September 13, 2014

Rate Cut Has Shippers Switching To USPS

The Postal Service’s recent price cuts for big businesses that ship packages are already trickling down to the small fry, like eBay seller Joe Strader. And based on Strader’s reaction to the rates that took effect on Sunday (Sept. 7), a lot of other small shippers will be switching their business to the U.S. Postal Service as well.

The proprietor of the eBay store Joe’s Surplus and Salvage noted a change he made this week on an item he ships frequently.

“In the past this would have been all FedEx but Priority Mail beats them with the discount. In addition, it gets there on Saturday rather than Monday. For small items, I get free boxes, not an insignificant saving.”

"Yes, that is a 49% discount off of retail,” Strader says of the USPS shipping quote of $9.14 for sending a 20-pound package.FedEx would have charged $10.86 for the same shipment, and United Parcel Service would have been even higher, he adds. Before the rate change, Strader used the Postal Service almost solely for items weighing less than 6 pounds.

“This is going to get ugly,” he says of the heightened parcel competition among the Postal Service, FedEx, and UPS. The new Priority Mail rates are slightly higher for retail customers who drop off a package at a post office but up to 55% lower for medium-weight packages sent by large business mailers.

Extra bonus for eBay merchants 
EBay sellers have an additional reason to like the new Priority Mail discounts: “When a customer of eBay calculates shipping, it gives the rate before the discount. The seller gets the difference,” explains Strader, who offers most of his eBay merchandise with free shipping. “For those that charge shipping on transactions based on calculated rather than flat rate, it is a significant difference” (and additional profit).

He even finds the much-maligned Postal Service often beating its private-sector competitors on customer service. He described what happened with a recent USPS shipment that was supposed to be next-day service but took two days:

“I filled out the simple form, took my receipt and paperwork to the post office and handed it over. After a few strokes on the computer, I had a cash refund, that day, no waiting. I was shocked that I did not have to wait a few weeks like FedEx or UPS only to find out it was my fault for some reason. I asked and the agent said that since it was delivered and obviously the wrong date, the refund is automatically processed.”

“Admittedly, mine is a small town post office and much more convenient than most. However, the service is great, they have picked up as many as a dozen small packages at my door (UPS and FedEx Ground charge by the package), and a lot of stuff I just put in the mailbox with the flag up. They have a few goofy employees, they are often slow at the window, and there are occasional lines (don't go at 8:30 or 3:30). But, I ship 90% of my items USPS.”

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Monday, September 1, 2014

USPS Employment Levels Have Stabilized

After years of massive downsizing, the U.S. Postal Service’s workforce has stopped shrinking, at least temporarily.

USPS recently reported having 616,025 active employees, just 362 fewer than a year ago. The number of full-timers actually inched up by 1,464, to 467,844.

That’s a far cry from the previous six years, when the annual workforce reductions ranged from 13,000 to nearly 53,000. Automation, facility closures, declining mail volumes, and a series of early-retirement offers reduced the number of postal workers by 183,000 from 2005 to 2013.

In presenting USPS’s “Plan to Profitability” to Congress in March 2012, Postmaster General Pat Donahoe testified, “The Postal Service projects a further reduction of the equivalent of 155,000 full-time career employees by 2016, which we plan to achieve largely through attrition as half of our career employees are eligible for optional or early retirement.”

But USPS employs only 34,000 fewer full-timers than it did when Donahoe presented that plan. Congress has blocked or slowed such postal “right-sizing” proposals as curtailing Saturday delivery, consolidating the mail-processing network, and closing unprofitable post offices.

Downsizing of the postal workforce seems likely to resume soon, however. USPS is moving forward with a plan to close about 80 processing centers in the next few months, which could lead to a reduction of 15,000 jobs. A recent effort to block the plan in Congress has apparently fizzled out, as have numerous proposals to reform the laws that have pushed the agency into the red.

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