Tuesday, December 15, 2015

USPS Is Gaining on FedEx and UPS in E-commerce Shipping

UPS chart shows commercial Priority Mail growth after rate cut.

The U.S. Postal Service is using low rates to muscle aside its private competitors and grab nearly all the growth in e-commerce-related shipments, according to a UPS analysis.

A round of steep, unfair price cuts in September 2014 has enabled the USPS to grab market share from UPS and FedEx, UPS charged in a recent filing with the Postal Regulatory Commission.

“The Postal Service reduced rates as much as 58% for packages shipping to zones 1-5 and weighing between six and twenty pounds, the rate cells most popular for the burgeoning e-commerce market. These deep discounts brought Priority Mail rates for the largest customers substantially below rates set by private competitors in the market.”

“Before the price cuts, the Postal Service’s market growth rate had stalled, barely registering above 0%, while UPS and FedEx were exhibiting healthy growth rates. After the Postal Service’s price cuts, the growth of UPS and FedEx Ground slowed, and the Postal Service’s commercial growth rates quickly became 10 to 20 times that of its private competitors.”

USPS’s price increases for Priority Mail next month won’t solve the problem, UPS says: “Despite an announced average increase of 9.4% for Commercial Base prices in 2016, for example, discounts ranging from 7% to 53% below pre-September 2014 rates remain for packages weighing between six and twenty pounds.”

“The Postal Service’s ability to set artificially low rates,” says UPS, also shows up in the Parcel Select rates the USPS charges the likes of Amazon, UPS, and FedEx for “last-mile delivery.”

“The Postal Service is leveraging its network to such a degree that UPS and other carriers use Parcel Select to compete because they are not able to deliver at or below the prices the Postal Service charges for this service,” UPS wrote. “Over the last year, Parcel Select experienced 26.5% volume growth, compared to 2.8% and 2.1% growth for UPS Ground and FedEx Ground, respectively.”

UPS claims that the Postal Service’s commercial parcel rates are priced too low to cover its costs, which means USPS’s e-commerce growth is being built “on the backs” of traditional mail customers: “The Postal Service is charging higher prices to captive mailers, while reducing service standards, in order to help fund its aggressive expansion into competitive product markets.”

The Postal Service counters that its methods are fair, legal, and backed by research, while UPS’s proposal is “based upon a set of ad hoc, loosely-constructed, cost measures.”

eCommerce Bytes recently provided an in-depth look at the UPS-USPS debate and what it could mean for parcel shippers.

Related articles:

Monday, November 23, 2015

Few Postal Jobs Will Be Cut in 2016

Don't look for any major downsizing from the U.S. Postal Service during the coming year: A new report indicates the postal workforce will remain stable through late 2016.

The agency is projecting a 0.6% decrease in work hours during Fiscal Year 2016, according to an annual financial plan it released Friday. That suggests this will be the third consecutive year of virtually no change in the size of the workforce, after a three-year period (2010-2013) in which the service shed one-sixth of its career employees. Work hours and the number of employees actually inched up during FY2015.

The financial report says that Phase II of Network Rationalization (the politically sensitive closing of mail-processing centers) and a 2.1% decrease in mail volume will make the slight cuts in workhours possible.

“These savings are forecasted to be partially offset by increases in training hours, growth initiatives and the impact of an additional delivery day for Leap Year,” the report says.

A change of plans
The Postal Service released a five-year plan in April 2013 that called for cutting 92,000 career employees by September 2017, then almost immediately put the brakes on more than a decade of downsizing: Since that report was released, the career workforce has hardly budged, ending FY 2015 at 492,000.

That 2013 plan projected many of the cuts would come from curtailing Saturday deliveries, but that proposal has apparently been abandoned. Five-day delivery isn’t even mentioned in the FY2016 financial plan.

“The continued growth in the number of packages -- which are much more labor-intensive than letters – and the ever-growing number of delivery points, make it increasingly difficult to capture work hour savings,” says the FY2016 plan. “We will continue to innovate to drive efficiency.”

Assuming that the 4.3% exigent surcharge on most postal rates will be eliminated early next year, the plan projects a revenue increase of only $400 million, to $69.3 billion. With an estimated $1.5 billion in additional expenses, that would mean an operating loss of $100 million. (Politicians and the news media will call it a $5.9 billion loss because they will include the supposed prepayment of retiree health benefits that postal officials wisely refuse to pay).

Other articles on the Postal Service workforce include:

Monday, November 16, 2015

Verso Warns of Restructuring, Asset Sell-Offs

Verso Corporation, the largest U.S.-based maker of magazine-quality paper, told customers this morning that "cash flow and liquidity concerns" might force it to restructure or to sell some mills.

The announcement is no surprise to Wall Street, where Verso's bonds have been trading at pennies on the dollar in anticipation of a Chapter 11 bankruptcy reorganization or other drastic measures.

Here's the text of the message emailed to Verso customers this morning by Michael A. Weinhold, Verso's Senior Vice President of Sales, Marketing & Product Development:

Dear Valued Customer, 

Verso is currently facing a confluence of external factors that negatively affect our liquidity and cash flows, including impending financial obligations, an accelerated and unprecedented decline in demand for our coated paper products, and a significant increase in foreign imports resulting from a strong U.S. dollar relative to foreign currencies.

As a result of our cash flow and liquidity concerns, we have begun evaluating potential restructuring alternatives. Verso has engaged PJT Partners L.P. to provide us with restructuring and transactional services, and O'Melveny & Myers LLP to provide us with restructuring legal advice and assistance. We have also begun discussions with certain of our creditors to explore potential restructuring alternatives.

We also are exploring opportunities to raise funds through potential sales of some of our mills and related facilities, which may include our Stevens Point, Androscoggin and Duluth mills, our recently idled Wickliffe Mill, and the hydroelectric generation facilities associated with our Androscoggin Mill.

During this evaluation process, customers can expect to receive the same high-quality products and services that originally led them to select Verso as a supplier. There should be no changes or delays in the ordering process or deliveries, and customers should continue to work with their current sales representatives. We remain steadfastly committed to running our mills safely and efficiently, reducing costs and delivering the exceptional customer experience that Verso is known for.

As always, our aim is to ensure that all customer needs are seamlessly met. Please do not hesitate to call me if you have questions or concerns.

Thank you for your continued support of Verso. 

Related articles:

Wednesday, October 28, 2015

What Is a Dead Tree Edition? 7 Ways the Meaning Has Evolved

To celebrate the seventh birthday of the “Dead Tree Edition” blog this month, here’s a look back at how the meaning of the phrase “dead tree edition” has changed since October 2008.

The "experts" concluded that the Web
had blasted a fatal hole in print.
Since the early days of the Internet, “dead tree edition” has been slang for a printed publication, but the phrase no longer carries the baggage it used to. Linguists would say that the phrase’s denotation is little changed but that the connotations are vastly different.

In 2003, William R. Tracey wrote succinctly that the phrase was “derogatory cyberspeak for the paper version of a periodical that appears in both paper and electronic (Internet) forms.” “Dead” highlighted what the digerati thought printed periodicals soon would be, and “tree” underscored the supposed environmental horrors of turning a renewable resource into a product.

The meaning was largely unchanged five years later when this blog was launched, at a time when a digital-only publication promoting print media was still an ironic oddity. The name was meant as a badge of honor: “Yeah, I’m a print geek; you gotta problem with that?” But some folks in the traditional publishing and printing industries were not amused. (See “Can You Trust an Anonymous Blog with an Aggravating Name?")

Not dead yet:The wound wasn't fatal. New
shoots and leaves demonstrate print's vitality.
Here are seven ways the phrase’s meaning has changed since October of 2008:

1) Books: The most obvious change is that “dead tree edition” now includes books, not just periodicals. E-books had been around in some form for years. But they didn’t start making a splash – and spurring the inevitable predictions that they would soon put Gutenberg out of business -- until the Kindle 2 was introduced in 2009.

2) Digital publications: Back in 2008, many of us ink-on-paper types worried that digital editions would soon replace printed ones. It’s not happening. Printed daily newspapers are withering away, but not because people are switching to digital newspapers. Digital magazines (as opposed to the web sites of magazines) have mostly been an overhyped bust, especially now that smartphones have largely usurped tablets. E-book sales grew exponentially for a few years, then plateaued at somewhere around 20% to 30% of the book market.

3) Human nature: Publishers used to assume that once people “went digital,” they would never go back to print. Human behavior turned out not to be so black and white. People who wouldn’t think of getting their news from a newspaper rather than their phone see nothing incongruous about leaning back with a fashion or hobbyist magazine. Consumers who load up their Kindles with novels and biographies still seem to turn to print for other genres of books. A few folks are print or digital diehards; everyone else expects digital when they want digital and print when they want print.

4) Greenwash: Consumers are far more aware these days that electronic devices host a plethora of hazardous materials and that the “coal-fired Internet” consumes massive amounts of power. Many a company has dropped its “go green, go paperless” promotions of digital alternatives, knowing that its dubious claims won’t stand up to an in-depth environmental assessment or challenges from the likes of Two Sides. And perhaps more people now realize that paper manufacturing more often discourages deforestation than causing it.

5) “Dead tree” magazines forgot to die: In 2008, magazines were widely predicted to be headed down the same toilet that was (and still is) swallowing the newspaper business. But a funny thing happened on the way to oblivion: Magazine publishers transformed into “magazine media” companies, sporting leaner and more niche-oriented print brands that acted as launching pads for successful digital ventures. Gone are the glory days of huge newsstand sales and bloated, advertising-subsidized circulation. Yet magazines have found their place in the multimedia publishing world as premium products that deliver steady profits.

6) The digital-media business is no picnic: Digital products were supposed to liberate publishers from the old evils of paper prices, postal rates, and "expect 6 to 8 weeks for delivery." But instead of a new utopia, we've wandered into a strange land full of its own ills -- low ad rates, banner blindness, ad blockers, and a continuing scramble to keep current with technology. And don't forget such lurking monsters as Google, Facebook, and Apple that can bankrupt publishers with a single change of algorithm or policy. Compared to pop-ups, interstitials, and other effluents that are desperately trying to monetize page views, the good old right-hand ad page facing a left-hand editorial page looks like pretty nifty technology.

7) Digital needs print: Publishing people used to have silly debates about print (“It’s dead”) versus digital (“turning dollars into dimes”), but find that such either/or thinking doesn’t fit the real world. Web sites that are associated with a respected print publication have a huge competitive advantage over those that don’t, especially in fields where credibility and search engines are crucial. Many publishers find that the economics of long-form journalism (what we used to call “articles”) don’t work on the web unless there’s a print publication that helps cover the costs.

Related articles:

    Monday, October 26, 2015

    Prospects Dim for USPS Early-Retirement Offers

    U.S. Postal Service employees waiting for incentives to retire early shouldn’t get their hopes up.

    “It is unclear if USPS will continue to use separation incentives to reduce the size of its career workforce,” says a new Congressional Research Service report, “U.S. Postal Service Workforce Size and Employment Categories, FY 1995-FY2014.”

    The Postal Service’s latest five-year plan, updated in April 2013, “included a goal to reduce its career workforce to approximately 404,000 employees through attrition by 2017” which would represent a 17.3% decrease (84,300 fewer employees) from FY2014 staffing levels,” the report says.

    USPS staff told the CRS this month that it’s working on a new five-year plan, which the researchers said “might contain new strategies for increasing the cost efficiency of the workforce, including the alteration or removal of workforce reduction goals.” Translation: “Postal officials acknowledged they have abandoned their impossible staff-reduction goal and therefore aren’t likely to offer early-retirement incentives any time soon."

    USPS shed about 92,000 career workers from FY2010 to FY2013, with more than half receiving such incentives as Voluntary Early Retirement (VERA) and cash bonuses of up to $20,000. But the only early outs in FY2014 involved 1,380 postmasters, and the number of career employees has actually inched up in the past year.

    An ecommerce-fueled rise in the USPS’s package business, slower decreases in traditional mail volumes, and apparent abandonment of a plan to curtail Saturday delivery have made obsolete the goal of shrinking to 404,000 careerists. After teetering on the edge of insolvency a couple of years ago, the Postal Service has recently operated on a slightly cash-positive basis despite backing off on workforce-reduction efforts.

    Related articles:



    Monday, October 19, 2015

    Two Paper Companies Convicted of Being Canadian

    Paper undergoing supercalendering
    First there were the Black Liquor Boondoggles, now there’s the Supercalendered Scam. The U.S. government’s attempts to prop up the country’s ailing paper industry once again are going to ridiculous lengths, this time with U.S. consumers, printers, and publishers footing the bill.

    Last week, the U.S. Department of Commerce imposed duties on imports of supercalendered (SC) paper from four Canadian companies, supposedly because the companies received unfair subsidies from governments in Canada

    But DOC didn’t even bother to investigate two of the companies, Catalyst Paper and Irving Paper. In a case of pure guilt by association, Commerce's case against the two basically amounts to: "They make SC in Canada; therefore, they are guilty."

    A Catalyst news release neatly summarizes what happened:

    The DOC imposed preliminary countervailing duties on imports of supercalendered paper from four Canadian paper producers – Port Hawkesbury Paper, Resolute Forest Products, Irving Paper and Catalyst Paper – on July 27, 2015. Despite its statutory obligation to examine each of the companies, the DOC refused to examine Catalyst Paper and Irving Paper individually, and instead assigned them a preliminary “all-others” rate of 11.19%, which is the simple average of the preliminary rates assigned to Port Hawkesbury Paper and Resolute Forest Products.

    Since August 4, 2015, based on this rate, Catalyst has deposited to the U.S. treasury approximately $1.3 million, representing sales of 17,000 tonnes of supercalendered paper to U.S. customers.

    In its Final Determination, the DOC once again refused to examine Catalyst Paper and Irving Paper individually and instead assigned them a final “all-others” rate of 18.85%, which this time is a weighted average of the final rates assigned to Port Hawkesbury Paper and Resolute Forest Products.

    Close-up of a supercalender
    If you’re an American, you may be saying, “What the heck, let the Canadians pay.” But much of the burden is actually falling on Americans in the form of higher prices for paper and an unintended windfall for Canadian printers.

    Because the duties are creating such a huge mismatch between the Canadian and U.S. prices for the same paper, some printing work that was done at U.S. plants is being shifted north of the border. SC paper, which is polished at high pressure through a series of rollers, is often used in magazines and newspaper inserts.

    Also, Catalyst and Irving are not exactly foreign companies. Catalyst employs more than 1,000 people at its two U.S. paper mills, and Irving has extensive forestry operations in Maine.

    You can blame the struggles faced by American SC manufacturers on the declining demand for magazine-quality paper. Or on the strong U.S. dollar. Or even on capitalism. But don’t automatically blame the Canadian companies that, as far anyone can tell, are merely engaging in good old American-style free enterprise.

    Related articles:

    Wednesday, October 14, 2015

    A Kick in the Listicles: 7 Reasons Digital Media Are Inferior to Print

    It's no wonder a Viagra TV ad features a press operator, not a web geek.

    In honor of the second annual International Print Day, today the Dead Tree Edition Research Institute and Tiddlywinks Club delves into why print -- specifically, printed magazines -- are better than digital media. The list is endless, but because yesterday was the Institute's seventh birthday (Here's my first blog post, from Oct. 13, 2008. It kind of sucks.), we are limiting the list to seven:

    1) Sexiness
    I have a confession to make: At my day job, those of us who work on the magazines love to throw around suggestive print terms like "blow-ins," "dot whacking," and "droop." It drives the web guys crazy because they think we're having all the fun while they can only discuss such exciting concepts as viewability and third-party data.

    Our attractive female art director really got their attention the other day when she was looking at a paper sample and shouted, "This is too limp. I need something with more stiffness and bulk!" We've even got the webbies convinced that "trim" and "bleed" are some kind of kinky print terms a la 50 Shades of Grayscale.

    Let's face it, folks: The web has listicles, but print has balls.

    2) 3-year-olds
    You can't break the screen on a magazine.

    3) Advertising
    The digital geniuses have been doing web ads for 20 years and still haven't figured out how to make any money from them without annoying the hell out of everybody and crashing our browsers.

    Magazines are now guaranteeing results for advertisers.
    Meanwhile, the good old right-hand ad page next to a left-hand editorial page performs just fine, without popups, popunders, popovers, Pop Tarts, or other digitally enhanced annoyances.

    4) Scent strips
    Ladies, here is today's money-saving tip: Instead of buying expensive perfume, just subscribe to three fashion magazines. It will probably cost you only $15 a year (Sad, but true) and provide a wide array of scented ads.

    Just open a scent strip, touch it to your body, and re-close the strip for later use. You'll have enough scents ads to keep you smelling pretty every day of the year (unless you're like the girl Mr. Tree briefly dated in high school, who didn't know the difference between "dab" and "bathe." I still get flashbacks when I get a whiff of Charlie perfume's distinctive dying-skunk scent.)

    5) Flies
    Ever swatted one with an iPad?

    6) Privacy
    If you subscribe to a magazine, the publisher knows your name and mailing address and has some SWAGs (Sophisticated Wild Ass Guesses) about your gender, age, and household income.

    But on the web, each page you visit and each link you click is fair game for the ad techies who track your every move and sell the data to the highest bidder so you can be "served" ads that are specially selected just for you. They also make it convenient for hackers to learn about those naughty web sites you've visited so they can "serve" you with blackmail attempts that are specially customized just for you.

    7) Retargeting
    If you look at a magazine ad for a pair of pants and decide not to buy, you can move on with your life. But look at those same pants in an e-store and they'll stalk you for the next two weeks in retargeted ads wherever you go on the web.

    Haunted pants really freak me out. They remind me of that awful 70s song "You Make My Pants Want To Get Up and Dance."

    Footnote: I know that some of my longtime fans (all 20 of you) were hoping for a reprise of last year's Ten Ways to Celebrate International Print Day, but this year I chose to celebrate in my own private way: Early this morning, I snuck into the bathrooms at the HQ of blatant greenwasher Capital Bank, emptied the toilet-paper holders, and plastered them with "Go Paperless, Go Green" stickers.

    Wednesday, October 7, 2015

    Judge Ridicules Change-of-Address Regulations

    News flash: Even procrastinators and the forgetful notify their electric company when they move. Sitting in the dark and lacking refrigeration have a way of moving that chore to the top of one’s to-do list. But those same people often forget, or purposely avoid, submitting a change-of-address notice to the U.S. Postal Service.

    This all seems to be a surprise to the folks who craft and enforce postal regulations, as a federal judge pointed out last week.

    Judge James E. Boasberg rejected the $7.6 million fine the U.S. Postal Service placed on Southern California Edison, in part because forcing the utility to follow USPS’s Move-Update regulations to the letter would create an “absurd consequence” that would put customers into a “Kafkaesque situation.”

    “It would be an incoherent business practice for SCE to refuse to update a customer’s address at the customer’s own request simply because USPS had an outdated and conflicting address in its NCOALink [National Change of Address] database,” the judge wrote. “Yet such a practice was precisely what USPS required."

    Boasberg had other criticisms of the Postal Service’s actions in the case, but his comments about SCE overriding USPS address data are worth quoting in full (with minimal editing):

    Plaintiff asserted in its Amended Appeal, ‘SCE ha[d] independent business reasons of its own — reasons that are far stronger than those of the Postal Service — to make sure that SCE customer bills are sent to the most current and accurate addresses possible’ — to collect payment on its bills. 

    SCE only manually overrode Postal Service change-of-address information ‘when SCE had good reason to believe that the override would make the customer more likely to receive the mail’— i.e., ‘when requested by the customer.’ This seems entirely sensible, as it would be an incoherent business practice for SCE to refuse to update a customer’s address at the customer’s own request simply because USPS had an outdated and conflicting address in its NCOALink database. 

    Yet such a practice was precisely what USPS required, and despite the incomprehensible nature of this expectation, SCE recognized that its manual-override practices were in violation of the Move Update standard. As Plaintiff pointed out in an internal memorandum, this led to the absurd consequence that ‘customers that want to override the mailing address must discuss the details with the USPS directly and we cannot take action until the USPS notifies us through the monthly update process.’ 

    Recognizing the Kafkaesque situation customers could find themselves in, the SCE memorandum also stated, ‘[W]e need to develop some responses to use when customers inquire about our inability to comply with their requests.’ 

    Such inability to accommodate customers’ requests could potentially raise new problems for those people who — despite affirmatively contacting SCE to update their mailing address — would be unable to obtain billing statements in a timely fashion. Having to deal with the USPS change-of-address system and wait for the Service to notify SCE ‘through the monthly update process’ could even risk customers’ getting stuck with late fees and potential harm to credit reports if their bills were delayed in delivery through no fault of their own. 

    Related articles:

    Saturday, September 12, 2015

    10 Ways E-Commerce Is Reshaping the USPS

    The E-commerce Revolution is reverberating throughout the U.S. Postal Service, but not in the destructive manner of other digital disruptions like email, online news, and electronic bill payment.

    Largely, if not solely, because of online merchants, the agency’s “Shipping and Package” revenue is growing at a 10%-plus annual rate – no doubt a surprise to the digerati who for years have been predicting that the USPS would wither away into obsolescence.

    One expert estimates Amazon now turns to the USPS to ship 40% of its U.S. sales, and that doesn’t even include packages that are handled by FedEx and UPS and then turned over to the Postal Service for final delivery.

    The rapid growth and favorable prospects for such products as Priority Mail and Parcel Select are bringing about extensive changes to the agency’s operations, plans, and even how it thinks about itself.

    Here are some of the ways the E-Commerce Revolution has already changed the U.S. Postal Service:

    1) Endangered no more: “Postal worker” still appears near the top of nearly everyone’s list of occupations most likely to go the way of buggy-whip makers, but the lists are out of date. In response to declining mail volumes, the Postal Service endured year after year of downsizing, including 155,000 workers from 2007 to 2012. But the surge in e-commerce deliveries has derailed plans for further cuts, keeping employment levels steady the past three years.

    2) Newbies: During the downsizing years, new hires were a rarity, but these days a retiring worker usually has to be replaced, typically by a non-career worker. The USPS’s hiring rate has tripled and its workhours devoted to training have doubled in the past four years. The agency has struggled to recruit new workers and bring them up to speed, acknowledging that the newbies are leading to more mis-delivered mail and on-the-job injuries.

    3) Parcel-only routes: I haven’t seen any official statistics on the subject, but anecdotes indicate the USPS is delivering more parcels-only routes rather than the usual approach of having the same letter carrier deliver parcels, letters, and flat mail to the same addresses. One reason is that the agency’s aging fleet of LLV delivery vehicles is not designed for today’s heavy mix of parcels.

    4) Renting vehicles: Another sign that the postal delivery fleet is overloaded: The Postal Service is in the process of lining up minivans and cargo vans that are “up to 2 tons capacity for delivery of packages and to fill in for vehicles out of service.” Exact numbers apparently have not been determined, but “during the holiday season one can anticipate that a single location may have a demand level of 50 to 100 vehicles.”

    Concept for wifi-enabled cluster mailbox
    5) Mailboxes: The USPS recently revised its standards for new residential mailboxes, shifting to a larger size that can accommodate more packages. It’s also trying out new designs for cluster boxes that can handle package deliveries, including ones that are wifi enabled. (In the near future, maybe your mailbox will send you a text saying “You’ve got mail – and a package too!”)

    6) Financial strength: The headlines still say the Postal Service is losing money. But take away the Congressional accounting gimmicks and the agency has gone from the verge of insolvency to better-than-breakeven status in recent quarters, with growth in the Parcel Select and Priority Mail products playing a major role.

    7) New delivery vehicles: With its stronger cash flow, the Postal Service has been able to accelerate the much-needed replacement of its aging delivery fleet. The new vehicles will have more space devoted to the growing flood of packages from Amazon, eBay, and other online sellers.

    8) Non-mail: In the past year or so, letter carriers have been delivering an increasing variety of items that bypassed the usual postal network – such as groceries, cut flowers, fresh seafood, and bottled water. The volumes are generally small and limited to a few test markets, but the trend is toward letter carriers delivering more items that don’t have a stamp, meter mark, or postage label. 

    9) Less focus on letters and flat mail: Mailers grumble that postal executives talk and think about nothing but packages these days, even though letters and other boring-ass traditional mail still bring in three-fourths of the USPS’s revenue. They say it’s no coincidence that First-Class Mail delivery has suffered – or that the most recent USPS annual report shows 14 photos of packages and only one that (barely) shows letters. 

    10) Sunday: Just five years ago, postal officials were clamoring to shut down all weekend deliveries, though they eventually amended the proposal so that Saturday delivery of parcels would continue. But now Postal Service LLVs are a common site on Sunday in scores of cities, as 7-days-a-week delivery for Amazon has swept across the country since a market test early last year. And postal officials are talking about providing Sunday service for other merchants as well.

    Related articles: 

    Monday, August 31, 2015

    Standard Mail Flats: Ending the Controversy Without Fixing the Problem

    The long-standing controversy over the U.S. Postal Service’s money-losing “Standard Flats” mail is apparently being tamped down in true Washington fashion – not by raising prices, cutting costs, or solving a problem, but by changing a definition.
    Flat mail that was sorted on an FSS machine.

    By USPS accounting, Standard Flats have been losing money for years, leading to charges that the agency is unfairly subsidizing certain mailers. Last year, the USPS supposedly spent more than 49 cents while earning barely 40 cents on the sub-class’s average mail piece, partly because of a suspiciously large 9% increase in per-piece costs.

    But a few days ago, postal officials told the Postal Regulatory Commission that the mail-processing portion of Standard Flats costs will decline by nearly 4 cents because of new requirements regarding mail that is sorted by the Flats Sequencing System.

    “Mail destinating in FSS zones . . . that had previously qualified for Standard Mail Carrier Route rates migrated to FSS rates in the Standard Mail Flats product,” the USPS explained. Translation: What had been called Standard Flats hasn’t become more efficient; it’s just that the definition of Standard Flats has been broadened to include lower-cost mail that is sorted on the huge FSS machines.

    Because of the FSS change, “roughly 20 percent of Standard Mail Carrier Route flats shifted into the Standard Mail Flats product,” the USPS wrote. “The migrated mail would tend to have different cost causing characteristics than the existing Standard Mail Flats, as the migrated Standard Mail Carrier Route mail tends to come from higher density mailings with more finely presorted containers.”

    Undercharging and overcharging
    The mail that “migrated” from the highly profitable Standard Mail Carrier Route sub-class, which now constitutes perhaps a quarter of Standard Flats, is also likely to have lower delivery costs than traditional Standard Flats. And, given the Postal Service’s tendency to overcharge for low-cost mail (such as pieces that are sorted into carrier-route bundles) and undercharge for high-cost mail, the FSS pieces are likely to be profitable for the USPS and therefore to help Standard Flats profitability.

    Coupled with the USPS-PRC agreement that Standard Flats undergo higher-than-inflation rate increases the next couple of years, Standard Flats could be on its way to breakeven status.

    A note of explanation is in order for neophytes who expect postal rates to be logical: You might assume that “Standard Mail Flats” means all advertising or marketing mail that is too large to be an envelope too flat to be a parcel – such as catalogs, flyers, and non-subscriber publications. But it actually is only the portion of such mail that isn’t sorted into carrier-route bundles, which require a minimum of 10 pieces per bundle.

    A typical Standard Class mailing of flat pieces contains a mix of both carrier-route and non-carrier-route pieces. So the references to “subsidies” are off base. The real issue is that the same mailers are paying too much for carrier-route mail and not enough for non-carrier-route, non-FSS mail.

    Changing the definition of Standard Flats does nothing to solve this fundamental problem. In fact, by bringing Standard Flats closer to breakeven, it will reduce pressure on the Postal Service to make the needed adjustments in postal rates.

    Both mailers and the Postal Service would benefit if postal rates provided greater incentives for Standard mailers to shift more flat-shaped mail into carrier-route bundles, which can be accomplished via co-mail, address-list management, add-a-name, and other techniques.

    Related articles:

  • Why Offer 30% Discounts on a Money-Losing Product? 
  • A Decade of Postal Mismanagement Is Costing Publishers and Catalogs 
  • USPS Cost Cutting Ain't Cuttin' It, Mailers Group Says 
  • Sunday, August 9, 2015

    Why RR Donnelley Is Splitting Into 3 Companies

    After hearing the U.S.’s largest printing company talk for years about the synergies among its various divisions and acquisitions, securities analysts were dumbfounded last week when the company announced it would split into three.

     “So I thought part of the reason that the conglomerate made sense was that you could share a lot in terms of back office and operations and transportation and that kind of stuff,” Doug Wooden of Fort Warren Capital said to RR Donnelley’s executives during the company's quarterly earnings call. “Is it going to be difficult to separate into these three businesses given sort of integration that I thought was in the business?”

    His fellow analysts (and some of my publishing colleagues) seemed especially surprised that RRD’s logistics arm would not end up in the same company as the publication-printing plants. They understand that, when everyone has basically the same presses, dropshipping and other logistics services are a major competitive battleground and point of differentiation for printers of catalogs and magazines.

    Like Tuesday’s press release announcing the break-up, the explanations of Donnelley executives were barely intelligible except to native speakers of Corporatese. But amidst such happy-talk phrases as “more focused brand strategy” and “greater flexibility to execute tailored business strategies,” a few important clues to the break-up emerged:

    Stock Price
    Do you think of Donnelley as a high-tech company? No? Well neither does anyone else, including Wall Street. That’s why RRD wants to spin its “financial communications” ventures off into a separate firm that for now is being referred to as FinancialCo.

    FinancialCo brings in about $1 billion annually from managing data, generating complex financial reports, translating documents, and providing similar services to the financial sector. But Wall Street still associates it with the dying business of printing prospectuses, quarterly reports, and other ink-on-paper reports than with its services like Edgar, a popular online repository of corporate financial filings.

    “You look at FinancialCo and you think about what some of their trading comps might be,” said CEO Thomas Quinlan. “I mean some of those comps are trading at two plus times where we trade today as one entity.”

    Translation: Though it represents less than 10% of Donnelley’s annual revenue, the equity value of a spun-off FinancialCo might exceed the value of all current RRD’s.

    Today, FinancialCo venture is locked up inside what Wall Street views as a print-centric manufacturing company where “successful year” means “no decrease in revenues.” But as a separate company, FinancialCo would be able to attract money from investors willing to make risky bets on high-tech companies with strong growth prospects.

    Besides FinancialCo, the other company that will be spun off has the sexy temporary moniker of PRSCo, for Publishing and Retail-Centric Print Services Company, which will print and distribute “periodicals, catalogs, inserts, books, office products and directories.”

    “PRSCo is going to grow through making the supply chain more efficient for publishers, merchandisers and retailers and through acquisitions,” said CFO Daniel Leib.

    Consolidation is a textbook strategy for gradually shrinking industries, but Donnelley has a problem: As by the continent’s largest printing company, acquisitions of other printers are likely to face increasing scrutiny from and interference by federal regulators.

    But though it would still have a sizable presence in certain corners of the publication-printing industry, a spun-off PRSCo would be less of a target for the antitrust police, who don’t necessarily understand that there are a wide variety of printing markets rather than a single market.

    Debt and Pensions
    Donnelley has more than $3 billion in debt and estimates its pension and other retiree benefits are underfunded to the tune of $677 million. Those obligations will stay with the company that will remain after FinancialCo and PRSCo are spun off, which will be known as CMCo (Customized Multichannel Communications Management Company).

    That means that, like its high-tech peers, FinancialCo won’t be weighed down by debt or defined-benefit pension obligations. And PRSCo will be able to take on a lot of new debt to pursue acquisitions.

    Strange bedfellows
    Through aggressive acquisitions, Donnelley has brought a wide array of printing ventures into its tent. It prides itself on providing a one-stop shop that can – and does -- meet diverse printing needs of the most complex organizations.

    But like many other producers of direct mail and short-run commercial printing, the “CMCo” part of Donnelley has branched out into offering email marketing, website management, and other services that don’t involve ink on paper. Some of CMCo’s competitors in the commercial printing arena have even dropped the “printer” moniker and call themselves "marketing service providers."

    FinancialCo has morphed even more radically from its printing roots. It’s not even clear whether what’s left of Donnelley’s financial-printing plants will be part of FinancialCo or will instead go with one of the more print-oriented sister companies.

    With both shopping-mall-sized printing operations that produce millions of copies and living-room-sized pressrooms with print orders of 1, having such a wide variety of printing operations in one company has always been a bit of a stretch.

    And now that they are they becoming less about printing and more about “omnichannel,” the various parts of RR Donnelley are finding they have even less in common – and fewer benefits from being under the big Donnelley tent.

    “Printing conglomerate” is no longer a logical organizing principle for a multichannel communications company.

    Other articles about R.R. Donnelley:

    Saturday, July 11, 2015

    Is the Postal Service Primed for Amazon Prime Day?

    Next Wednesday is Amazon Prime Day, a huge promotion that one postal expert predicts will overwhelm the U.S. Postal Service.

    Amazon is celebrating its 20th anniversary on July 15 with a one-day online shopping event that will offer “more deals than Black Friday” to members of Amazon Prime, including those who sign up for a free 30-day trial membership.

    “It will be interesting to see how USPS handles what is sure to be a major onslaught of Amazon package deliveries, with Amazon Prime two day shipping after the one day sale,” writes Lisa Bowes of Intelisent, a company that advises direct mailers. “Will Prime Day impact delivery for other classes of mail? My guess is – probably so…”

    A look at the numbers indicates she is correct – that the Postal Service will struggle to handle the surge of Amazon packages without hurting delivery of other types of mail, even with massive overtime.

    In a filing this week with the Postal Regulatory Commission, Amazon said it had 15 sortation centers at the end of 2014, with more on the way, that each prepare “tens of thousands” of packages per day to be handed off to the USPS for final delivery. That indicates that USPS delivers several hundred thousand “Parcel Select” packages to Amazon customers on a typical day. 

    The e-commerce giant uses a variety of package-delivery services, but clearly the Postal Service is the favorite because of its ability to deliver to residential customers seven days a week at relatively low cost. Amazon has built an extensive logistics network that bypasses most of the Postal Service’s own network and delivers packages early every morning directly to the USPS’s destination delivery units (DDUs), where letter carriers pick up mail to be delivered later that day.

    Membership: 30 million-plus and growing
    An RBC Capital analyst estimated 10 months ago that Amazon had 30 to 40 million Prime members in the U.S. The numbers have probably been growing since then, and Prime Day seems likely to boost the membership roster.

    Suppose that about 20% of existing U.S. Prime members take advantage of Prime Day and are joined by another 5 million who get a trial membership to take advantage of the deals. And suppose each Prime Day participant orders an average of two items, with half of them destined for “last-mile delivery” by the Postal Service.

    That would mean letter carriers would handle 12 million packages, roughly 20 times their normal Amazon volume and more than double their normal daily volume for all Parcel Select packages. (That 12 million number is what we statistical experts call a SWAG, a Sophisticated Wild-Ass Guess. The actual numbers may be much higher or much lower, but with some reasonable – to me – assumptions, you can get a ballpark ideal of how Prime Day might affect postal operations.)

    Amazon will have its own logistical challenges but also has opportunities to ease the pain. If the items likely to be hot sellers are spread throughout its network of distribution centers, it can probably hand off many of them to the Postal Service on Thursday, the day after Prime Day, rather than hitting the agency with one big wave on Friday the 17th.

    It can also pull other levers, such as making exceptions to the two-day guarantee for certain items, especially those ordered late on Prime Day. And it can highlight deals on digital downloads (e.g. movies, music, e-books) instead of those requiring physical delivery.

    The Postal Service has limited ability to handle a huge one-day surge, especially at what is usually a slow time of year when many career employees are on vacation and there are fewer temporary and part-time workers than during the Christmas rush.

    Amazon Prime Day and its aftermath may be a challenging test of the Postal Service’s efforts to play in the e-commerce big leagues while still providing traditional mail delivery.

    Related articles:

    Saturday, June 20, 2015

    USPS Grocery Delivery Coming to the Big Apple

    Postal workers may begin early-morning delivery of groceries for Amazon in the New York metropolitan area by the end of this month.

    Amazon grocery totes awaiting USPS delivery
    The U.S. Postal Service filed a statement with the Postal Regulatory Commission on Thursday saying it “intends to expand the Customized Delivery market test to the New York City metropolitan area, on or shortly after June 29, 2015.” The USPS market test of grocery delivery on behalf of Amazon started last fall in the San Francisco area and spread to San Diego early this year.

    Amazon’s “AmazonFresh” delivery service is already available in parts of New York City, with a fast-delivery promise: “Place your order by 10am and have it by dinner, or by 10pm and have it by breakfast.” And it already has an apparent pricing advantage in the Big Apple, undercharging three rival grocery-delivery ventures by at least 17%, according to a Nomura Securities International study.

    The Postal Service will presumably take on some of those early-morning deliveries. It has told the PRC that its market test involves having non-career city carrier assistants deliver to a customer-designated location between 3 a.m. and 7 a.m. “without disturbing the recipient.”

    The agency is already testing or about to test other rapid-delivery services in New York involving fresh fish, bottled water, and cut flowers.

    Despite some objections about unfair competition with private enterprise, the PRC in October authorized a two-year test of Customized Delivery. But it has not acted on the Postal Service’s request to remove a $10 million annual revenue cap on the program.

    Related articles:

      Monday, June 8, 2015

      USPS's Court Victory Could Cost Mailers Billions

      July 30, 2015 update: The PRC went with the Postal Service's minimum -- $1.2 billion (or $1.191 billion, to be exact). The USPS will collect that amount from mailers via an extension of the exigent surcharge. That means the surcharge is slated to expire somewhere around April 2016 instead of August 2015. But remember that, in Washington, "temporary" taxes tend to become permanent.

      Despite news reports to the contrary, the only thing clear about Friday’s appeals court decision on postal rates is that the U.S. Postal Service won and mail-dependent industries lost.

      Worth 49 cents -- or 47?
      Sure, the Postal Service didn’t get everything it asked for – namely, making the 4.3% exigent surcharge permanent. But a ruling that is likely to bring in more than a billion dollars, at the expense of mailers, can hardly be called a loss for the USPS.

      As detailed in an article I wrote today for Publishing Executive (See Get Ready for Roller-Coaster Postage Rates.), the one thing the federal judges didn’t like about the current surcharge is the “count once” rule for determining how much the recent recession cost the Postal Service.

      They court sent the Postal Regulatory Commission back to the drawing board to come up with what could be called a “count multiple times” rule.

      Minimum cost: $1.2 billion
      If the count-once rule is transferring “only” $2.8 billion from mailers to the Postal Service via the surcharge, we can only imagine what the “count many times” rule will do given that the recession lasted several years.

      The Postal Service said today the additional amount is a minimum of $1.2 billion. That's the equivalent of about 8 months of the current 4.3% surcharge. And postal officials will argue for a much larger amount.

      Some writers assume that, instead of allowing the surcharge to expire this summer, the PRC will just leave it in place until it brings in enough money to satisfy the “count many times” rule. Or that, as the Postal Service requested today, the PRC will at least leave the surcharge in place until the new revenue target and surcharge are approved.

      But it’s not necessarily so simple. Unlike the appeals court judges, the PRC commissioners are no doubt aware that canceling the surcharge and then reinstating it weeks later would be disruptive for both the Postal Service and for mailers. (Just think of the public’s confusion if the price of Forever Stamps drops to 47 cents and then bounces back to 49 cents only a few weeks later.)

      But the commissioners have to proceed cautiously and allow for due process, especially given the propensity of both postal officials and mailers groups to appeal PRC decisions regarding exigent rate hikes. They will have to wade through reams of mind-numbing econometric analyses before arriving at a revenue target for the new surcharge.

      They may not be able to finish their work before the current surcharge expires. And even a perfectly reasonable assumption – that the USPS will not be overcompensated if the current surcharge is left in place until the details of “count many times” are worked out – may be open to legal challenges.

      Nothing, by the way, says that the new “count many times” surcharge has to be 4.3%: The PRC could decide to make it higher so that the Postal Service is fully compensated for its recession losses in a timely manner.

      And when the new “temporary” surcharge is supposed to expire, Congress might decide to make it permanent as a way of dodging real postal reform. I’m reminded that, back in January, my fortune-telling friend Madame Marie predicted that the surcharge would not disappear this year, adding this gem of political science: “What, you think I have crystal ball or something? All I know is, don’t ever bet on government getting rid of a temporary tax or fee.”

      Wednesday, May 20, 2015

      When 30 Equals 33: America's Bizarre Methods of Calculating the Weight of Paper

      My fellow Americans mostly seem allergic to anything having to do with the metric system. Can’t remember how many teaspoons go into a tablespoon? Is our country falling behind in science because we’re handicapping our kids with the “English” measurement system. Doesn’t matter.

       “WAM: We ain’t metric!” my countrymen kneejerk. After all, if you give those socialist, one-world-government Europeans 2.54 centimeters, they’ll take 1.60934 meters.

      But when it comes to specifying the weight of paper, even some red-blooded Americans throw up their hands and say “What’s that in GSM?”

      There’s never been a better time for U.S. buyers of graphic paper to understand what GSM (grams per square meter) means – and how messed up our own system of basis weights is.

      Publishing Executive just published a piece I wrote noting that U.S. prices for magazine-quality paper are at record high levels in comparison with European prices. That means it’s a great time to look overseas for paper, especially since North American mills are gearing up to raise prices again in July. But to get the best deals, you might need to understand how the rest of the world talks about paper weight.

      I’m reminded of a colleague’s story about buying 33# SCB paper (lower quality than coated paper but better than newsprint) from a non-U.S. mill. When the shipment arrived at a U.S. printing plant, the printer notified my colleague of an error: The rolls were marked “30#” (pronounced “30 pound”), indicating the paper was about 9% lighter and thinner than intended.

      The mill’s sales office had correctly translated the order from 33# to the more universally understood 48.9 gsm. But the mill was only used to making newsprint for U.S. customers, so it thought 48.9 gsm translated to 30# in Americanese. The paper was OK; the label was just wrong.

      From Catalyst Paper's "How We Make Paper"
      A page of 30# newsprint, you see, weighs the same as a 33# page of magazine-quality paper (and of other publication grades that use the “book, text, offset” method of calculating basis weight).But two same-sized sheets of 48.9 gsm always weigh the same, regardless of whether one is copy paper and the other wallpaper or tissue or newsprint.

      The U.S. has 11 different systems for calculating the basis weight of paper. Standard resume paper is 20# bond – generally a nice stiff, opaque sheet. It’s also more than 2½ times the weight of 20# coated paper, which is an extremely thin, translucent paper that is likely to be used in dictionaries or Bibles.

      Confused? Wait, it gets worse. When magazine publishers refer to 80# cover stock, they usually mean something that, logically enough, is double the weight of the 40# coated paper they might use on their internal pages. The rest of the world would say the publisher is using 59 gsm text stock and 118 gsm cover stock.

      But “80# cover” can also refer to paper that is measured based on the “cover” method of calculating basis weight rather than the “book, text, offset” method. It weighs 216 gsm. Thus, even when Americans are speaking to Americans, a request to use 80# cover stock can easily result in the pressroom printing covers that are too heavy for the saddle stitchers that are supposed to bind the publication and too expensive for the publisher's budget.

      Many overseas mills are accustomed to making paper for U.S. customers, knowing, for example, that 40# coated paper should be 59.26 gsm. And if they make a lot of paper for U.S. customers on a steady basis, they might actually make a “true 40#” that is indeed targeted at 59.26 gsm.

      But rather than manufacturing a special batch of paper for the U.S. market, many mills will just make 60 gsm, which is a common weight for European magazine papers that comes out to 40.5# in Americanese. That results in using more paper and having higher postage and freight costs versus true 40#. But it’s not a reason to avoid overseas paper.

      For my fellow American buyers of magazine grades like coated and supercalendered papers, as well as for book papers, here’s the key formula: 0.675 gsm is equivalent to 1# of basis weight. European mills typically offer weights that are about 1.3% above the U.S. equivalents – e.g. 45 gsm (30.38#) in place of 30#, 51 gsm (34.43#) in place of 34#, or 60 gsm in place of 40#.

      A good rule of thumb is that such weight differences will cost publishers about 2%, a bit more if the copies are mostly mailed, a bit less if many are sent via the newsstand system. So if I’m buying 40# coated #5 paper for 40 cents per pound, I might consider a price of 39.20 cents for 60 gsm to be competitive, but not a bargain.

      And since that 60 gsm was recently selling for something like 33 cents in Europe, I know the manufacturer has plenty of incentive to be more than just competitive in the U.S. market.

      A footnote about Canadian paper: Canadians have pretty much converted to the metric system, but their mills sell so much paper into the U.S. that they usually spec it to U.S. standards and practices. Thus, Canadian paper is pretty much like U.S. paper except that it occasionally throws in a random “Eh?” at the end of a sentence.

      Sunday, May 3, 2015

      Does the Postal Service Have Too Many CCAs?

      The U.S. Postal Service is pushing its ability to hire low-paid City Carrier Assistants to the limit – and apparently beyond the limit.

      The agency had 3,300 more CCAs in April than allowed in its labor contract with the National Association of Letter Carriers, a report USPS issued last week indicated.

      The 2011 contract that created the non-career position capped the number of CCAs in each district at 15% of the total number of full-time career city carriers -- plus another 8,000 nationwide to allow "flexible windows which may be necessary to develop and provide new products and services."

      The report shows that USPS had 164,582 City Carriers on its rolls in April. Adding 15% of that number plus another 8,000 yields an apparent cap of 32,687 CCAs. But the same report says the Postal Service had 36,074 CCAs.

      It could be argued that the Postal Service is following the spirit of the labor agreement because career carriers are not being harmed. None have been laid off, and on average they are getting about as many overtime hours as they did four years ago (though some individual carriers have seen drastic changes in their overtime).

      The average base pay for CCAs was recently reported as $15.80 per hour, versus $27.52 and much better benefits for full-time city carriers.

      A key to new ventures
      USPS is certainly capitalizing on the "flexible windows" and "new products and services" that the NALC contract envisioned. Relying on lower-paid CCAs has been a key to the Postal Service’s rapidly expanding Sunday deliveries for Amazon and its hopes of competing with private businesses on delivering a variety of "non-mail" items from groceries to fresh flowers.

      The growing pool of CCAs has also helped USPS serve an increasing number of delivery points and grow its labor-intensive parcel business.

      Amazon grocery packages awaiting delivery by CCAs
      But the Postal Service will be hard pressed to grow further without increasing the ratio of CCAs to career carriers even more.

      Accounts of 60-hour workweeks for bedraggled CCAs are already legion. Since October, CCAs have worked an average of one hour of overtime for every five hours of straight time, and at times during December the ratio was one to three.

      The wage savings from using CCAs have also come with some costs. Turnover is high, straining the Postal Service’s ability to hire and train new CCAs. And the new hires are reportedly more prone to injuries and to missed deliveries than are long-time carriers who know their routes well.

      Related articles:



      Thursday, April 23, 2015

      Flushed With Success: This Print-Based Ad Campaign Is an Extra-Base Hit

      Maybe pine tar would help
      I’m glad that great celebration of greenwashing known as Earth Day is finally over.

      Bad turned to worse when my bank even urged me to “go green” (i.e. put more green into its CEO's wallet) by switching my statements and payments from mail to the coal-fired Internet.

      But instead of getting pissed off, we here at the Dead Tree Edition Research Institute decided to take the offensive (some would say “very offensive”) and highlight yet another example of what print can do that digital media can’t.

      Today’s edition of “Just Try That With an iPad” comes to you courtesy of a longtime Dead Tree Edition reader, who apparently has the unusual hobby of shooting photos in crowded public restrooms. He leaked news to us of a clever print campaign, placed in the urinals at a minor league baseball park in Trenton, New Jersey, that simply cannot be replicated via digital media.

      O, say can you pee?
      From what he observed, the campaign had what the web geeks would call “high reader engagement” and 100% “viewability.” Some reputable web sites struggle to achieve 70% viewability.

      When was the last time you saw a digital ad that actually got guys thinking about whether their trouble with “balls and strikes” merited medical attention? And note that the marketing wizz behind this wee print campaign got the target market’s attention without even resorting to any high-tech tricks like HAUBs.

      Yeah, you know, HAUBs – heat-activated urinal billboards. Sure, it sounds nuts (sorry), but that really is a thing.The message on these little billboards isn’t revealed until some “P” is added to the H-A-U-B, thanks to the magic of heat-activated inks.
      Basketball has lots of dribblers. Just sayin'.

      Can e-ink do that?

      Nor did the urologists’ campaign take advantage of the latest paper breakthrough -- urine-activated origami distress signals. (I swear I am not making this up.)

      A team of researchers recently announced it is coating sheets of standard copy paper (“uncoated freesheet” to us print geeks) with special microbes that get excited in the presence of “golden showers.”

      After a few well-placed folds to make a tetrahedron, plus what polite baseball fans would call a visit to the dugout, a single sheet of the paper will broadcast a distress signal. Probably something like: “Alert! This dude needs serious help – can’t tell a tetrahedron from a toilet!”

      Target market: Guys who can't hit the target.  
      With advances flowing so fast in print and paper technologies, pretty soon we’ll have HAUBs that will sense when a guy has been “at bat” too long or is having trouble "hitting the strike zone."

      Then it will send out a distress signal that schedules an appointment for him to see a urologist the next morning.

       You got an app that can do that?

      Further thoughts on Earth Day and print media:

      Monday, April 20, 2015

      Why Letter Carriers Are Not an Endangered Species

      “Mail carrier” was recently named as one of the 10 worst careers in the U.S., largely because of a supposedly bleak employment outlook.

      “Hiring of mail carriers has been on a steady decline with the proliferation of email and text messaging,” CareerCast said in ranking mail carrier #191 out of 200 careers. “Of all careers tracked in the 2015 Jobs Rated Report, mail carrier has the worst 10-year growth outlook.”

      CareerCast’s jobs outlook was based on a U.S. Labor Department projection that the number of mail carriers would shrink by 28% from 2012 to 2022. That’s no surprise: Just about everyone knows that digital technology is making letter carriers an endangered species.

      There’s just one problem with this scenario: “Just about everyone” is wrong.

      The number of people delivering mail for the U.S. Postal Service is actually growing slightly.

      It's true that since the end of 2012, the number of career USPS employees involved in mail delivery has dipped slightly, from 243,000 to 237,000. But the shrinkage all occurred during 2013; recent statistics show the number has stabilized or is rising slightly.

      And when non-career employees like city carrier assistants (CCAs), are included, mail delivery looks like a growth field. That, plus the high turnover among CCAs, is why “We’re hiring!” signs are popping up at many post offices.

      USPS statistics don’t provide apples-to-apples comparisons of non-career employee counts, but the numbers on hours worked are a good proxy. So far this year, the straight-time hours worked by all (both career and non-career) “city delivery carriers” are up 5% from two years ago, while the hours for all “rural carriers” have increased nearly 3%.

      Digital technology taketh away, and . . . 
      What “just about everyone,” including the Labor Department, seems to miss is that digital technology – specifically, online purchasing – is adding work for the Postal Service’s carrier force. When stuff is bought online, someone has to deliver it.

      And when that delivery is to a residential address, chances are that the “final mile” is handled by a USPS letter carrier even if the package was sent via UPS or FedEx.

      The Postal Service is doubling down on its unique ability to reach every residential address. It has slashed some Priority Mail prices for frequent shippers and is testing rapid delivery of everything from fresh flowers to groceries.

      Outgoing Postmaster General Pat Donahoe hinted late last year that Sunday delivery of packages would soon become the norm, not just something USPS does for Amazon in select markets.

      So all indications are that the number of packages delivered by letter carriers will continue growing, which is why specs for USPS’s new delivery vehicles call for more storage space. Those packages are far more labor intensive than traditional mail; Priority Mail boxes don’t end up in nice walk-sequenced trays or carrier-route bundles.

      And even the labor savings from the gradual shrinkage of traditional mail mostly get canceled out by continuing growth in the number of delivery addresses.

      The big threat
      The big threat to employment levels for USPS carriers is possible curtailment of Saturday delivery of letters and flats. But that would put only a sizable dent – nowhere close to a 28% reduction – in letter-carrier employment levels.

      And it continues to face rough going in a reluctant Congress, where members have recently been getting an earful from constituents about slow delivery.

      So don’t put letter carriers on the endangered-species list just yet. (There may be good reasons to put “mail carrier” on the list of 10 worst jobs, as I'm sure some postal workers would be happy to explain, but employment prospects are not one of them.)

      The moral of the story: Beware of projecting past trends into the future, especially when the recent past runs counter to those projections.

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