May 11, 2020

Dear Members & Sponsors of the Alliance of Nonprofit Mailers:

Hello, everyone!  We hope you are doing well!

Volume getting better

Today, the Postal Service gave us the volume change numbers for last week versus the same week last year:

Mail                                  -32.6%

Packages                         +64%

Single Piece First Class   -9%

Presort First Class           -4.4%

Marketing Mail              -40%

Periodicals                       +2.6%

Flats                                  -23%

April data coming soon

These numbers represent an improvement over recent weeks, although we should use caution interpreting short periods of time.  Later this week, postal officials will give us aggregate data on volumes and revenue for the month of April, including a breakdown of the nonprofit volumes.  We will share it with our members and sponsors as soon as we get it.

USPS has plenty of liquidity

Again, we suggest that nonprofit mailers do not get caught up in the heated rhetoric on both ends of the political spectrum.  The fact is that the Postal Service has told us that they have enough cash and liquidity to continue operations at least until May 2021.  And they are making very conservative assumptions that the surge in package deliveries will subside and reverse as the economy opens up more.  That could be an overly pessimistic outlook.

As for cash, on April 30, 2020, the Postal Service Fund had $14,181,000,000 cash versus $9,852,000,000 the prior month. This is according to page 12 of the U.S. Treasury Monthly Statement of the Public Debt.  On top of the $14.2 billion in cash, USPS also has another $11 billion in borrowing capacity.  Liquidity of $25 billion will last quite a while.

USPS could be doing better than it is letting on

It is possible the Postal Service is doing better than it has been letting on.  The April data will begin to tell that story.  The financial report for the January-March quarter showed an increase in total revenue of $348 million to $17.8 billion, with only about two weeks of pandemic impact in there.  Package revenue increased by $386 million, or 7.1 percent, on a volume increase of 12 million pieces, or 0.8 percent, compared to the same quarter last year.

Some headlines chose to highlight the large $4.5 billion loss USPS reported, but this was almost entirely due to swings in the accounting for workers’ compensation caused by lower interest rates.  When interest rates go back up, the impact will reverse.  As USPS reported: “The net loss for the quarter was $4.5 billion compared to a net loss of $2.1 billion for the same quarter last year. Controllable loss for the quarter was $792 million, a slight decrease compared to the controllable loss of $806 million reported for the same quarter last year.”  The “controllable loss” actually got better; that’s what mailers should focus on.

Oversight Chair Sen. Ron Johnson (R-WI) asks for weekly revenue data

Noting that USPS revenue is doing better than widely reported, Sen. Johnson sent a letter to PMG Megan Brennan requesting weekly revenue data.

In it he observed: “Despite recent media reports suggesting that the COVID-19 pandemic has drastically hurt USPS, the revenue data provided to my staff for the first five weeks of the crisis shows a different story. From March 16,2020, through April 19,2020, revenues for USPS were down 5.86 percent  compared with similar dates last year.  That was a far cry from the 30 percent that USPS had been publicly projecting.  Although I have yet to receive official data to confirm this, my understanding is that USPS revenues have recently improved—so much so that this April’s revenues were close to equal to those in April 2019.”

USPS Governors counter media narrative on new PMG

Clearly not happy with the media narrative that the selection of Louis DeJoy as the 75^th Postmaster General, the Governors described in some detail the selection process and DeJoy’s qualifications at their virtual meeting Friday.  DeJoy will start as PMG on June 15.

Governor John Barger recounted a 7 month process: two search firms, Chelsea Partners and Russell Reynolds; 53 candidates; 14 first-round interviews by all five Governors; 7 second-round interviews lasting three hours each; 4 finalists subjected to extensive background checks and vetting; and a unanimous, bipartisan selection of DeJoy by all five Governors.

The Governors also discussed DeJoy’s experience building New Breed Logistics to 9,000 employees service Fortune 500 companies and the USPS.  DeJoy sold his company to XPO Logistics for $615 million in 2014, and served on their board for five years.  New Breed was a contractor for the Postal Service for over 25 years and won several recognition awards as an outstanding supplier.  They said DeJoy knows the USPS business model very well and will respect and involve all of the stakeholders.

At the end of the day, the truth about our national postal system will reside somewhere between the extremes that political operatives are expounding.  The Alliance will continue to remind everyone involved that nonprofit mailers are essential to our Nation, and affordable postal mail is essential to our vital missions.

Alliance signs a joint letter to Congressional leaders

Following up on our letter to Congressional leaders on April 30, we signed a joint letter on May 7 with the magazine and catalog mailers associations.  The joint letter urges Congressional help for USPS, but only in concert with evaluation of reforms needed to improve efficiency and commitment to retain the CPI inflation cap on postage:

We specifically ask that Congress enact legislation to: 1) provide funding to cover the Postal Service’s financial losses due to COVID-19; 2) enact reforms that put the Postal Service on firm footing for the future, including requiring a study of the dramatic increases in the costs of processing flats and productivity declines in recent years; and 3) sustain postal volumes and revenues for decades to come by explicitly reaffirming the current CPI price cap for market-dominant products that exists under current law and has been so critical for protecting mailers.

We will keep you posted.

Best, Steve

Stephen Kearney

executive director

Alliance of Nonprofit Mailers

1211 Connecticut Ave, NW, Suite 610

Washington, DC 20036

Tel: 202-462-5132

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