October 11, 2022

Nonprofit mailer updates

USPS files January rate hikes at PRC, using full 4.2% authority

Yes, the Postal Service just raised rates in July and it’s doing it again in January. And yes, the FY 2023 rate increases could equal or exceed the record hikes of FY 2021 and 2022. The first salvo for next year was filed on Friday, using the full 4.2% rate authority based on 6 months of Consumer Price Index increases, as recalculated by the Postal Regulatory Commission. As the agency eloquently stated:

“The Postal Service has available approximately 4.2 percentage points
of pricing authority for each class. The Governors have determined to use virtually all of this authority. The Postal Service’s Delivering for America plan sets forth a balanced array of initiatives to achieve financial sustainability and service excellence, and price cases are an integral component of that plan.”

Thus far, the Delivering for America plan has delivered rate increases for Market Dominant (monopoly) mailers ranging between 20% and 25%, with some individual increases far exceeding the class averages. USPS cash holdings have generally exceeded $22 billion during this time frame.

All nonprofit members and commercial sponsors of the Alliance received detailed spreadsheets on Saturday, showing the before and after postage rates for all relevant categories. We also provided the differences between commercial and nonprofit rates in each relevant category. If anyone has questions, please send us an email.

Postal Regulatory Commission formally proposes the Alliance of Nonprofit Mailers’ suggestion that nonprofit mail service be reported separately

We previously reported that the Postal Regulatory Commission expressed support for our suggestion that the new USPS service dashboard should provide data on service for nonprofit Marketing Mail separately from commercial. We also suggested that election (ballots) and political (ads) mail which is usually mailed as nonprofit Marketing Mail be reported separately.

The PRC now has taken the idea a step further by including it in a formal notice of proposed rulemaking in the Federal Register. The regulator proposed:

“The Commission also proposes that the Postal Service report several other categories of mail on the dashboard: (1) political and election mail; (2) Reply Mail within the First- Class Single-Piece Mail category; and  (3) nonprofit mail (specifically USPS Marketing Mail mailpieces that qualify for reduced rates pursuant to 39 U.S.C. 3626(a)(6) and the regulations promulgated thereunder and Periodicals mailpieces that qualify for reduced rates pursuant to 39 U.S.C. 3626(a)(4) and the regulations promulgated thereunder).”

The Alliance will file comments supporting the proposed rules that align with our recommendations. We also will consider suggesting some clarification and enhancement of the PRC proposal.

Is rate shock having an impact on volume?

The preliminary reports that USPS files with the regulator include the change in mail volume for each month as well as year-to-date (YTD). This fiscal year, volume was way down at the beginning, probably because 2021 was not an election year. The October decline also followed the August 2021 rate hikes. Volume clawed back to YTD breakeven by May.

The advent of July rate increases with the prospect of more to come every six months could be contributing to the volume falloff this summer. Summer political mailings did not push volume into positive territory. The following months will be interesting.

USPS proposes to make USPS Local Connect Mail a permanent product

The new mail service would allow customers to enter First-Class Mail close to their final destinations at certain Destination Delivery Units (DDUs) or equivalent facilities or, in select locations, to arrange pick-up of mailpieces by their USPS carrier on their route. Documents accepted by the Postal Service at participating DDUs by 7 a.m. each day will be eligible for same-day delivery, while those received after 7 a.m. would be delivered the following day for a flat rate of $2.95.

The Postal Service declared the market test a “success” that generated $51,000 in revenue and moved to make the service permanent. The description of the test’s coverage and results raises doubts about the definition of success:

“The Postal Service initially introduced its test of USPS Connect™ Local Mail in Texas to align with its nationwide rollout of the corresponding packages product, USPS Connect™ Local. By the end of the second quarter, which ended March 31, 2022, USPS Connect™ Local Mail was offered as a market test product in 11 states. Another 16 states, plus Washington, D.C., were added in the third quarter; 23 more were added in the fourth quarter. Once the initial phased national rollout was complete, USPS Connect™ Local Mail was offered in all 50 states and the District of Columbia.”

“At the close of FY 2022, Quarter 2, the USPS Connect™ Local Mail market test, then limited to 11 states, received $191.75 in revenue. At the close of FY 2022, Quarter 3, the most recent quarter for which data has been reported, the USPS Connect™ Local Mail market test, then expanded to 27 states, received another $908.60 in revenue. Through September 9, 2022, USPS Connect™ Local Mail accounted for over 17,500 mailpieces delivered and over $51,000 in revenue.”

Postal Service suspends Marketing Mail delivery to parts of Florida

Many nonprofit mailers have been evaluating how they should alter their mailings to the parts of Florida recently hit by Hurricane Ian. The Postal Service announced ten ZIP Codes that will not receive delivery of Marketing mail indefinitely.

USPS suspended Marketing Mail delivery to ten 5-digit ZIP Codes in the Ft. Myers and Naples, Florida areas due to the long-term impacts of Hurricane Ian. They are:

Office Name                                   ZIP Code           Post Office Address

Bokeelia PO                                          33922             15980 String Fellow Rd, Bokeelia, FL  33922-9998

Captiva PO                                            33924              14812 Captiva Dr SW, Captiva, FL 33924-9800

Fort Myers (Downtown)                    33901              1350 Monroe St, Fort Myers, FL 33901-9998

Fort Myers Beach PO                          33931              200 Carolina Ave, Fort Myers, FL 33931-9998

Fort Myers Beach PO                          33932              200 Carolina Ave, Fort Myers, FL 33931-9998

Pineland PO                                          33945              7450 Pineland Rd, Pineland, FL 33945-9800

Placida PO                                             33946              8601 Placida Rd, Placida, FL 33946-9998

Saint James City PO                            33956              4480 Stringfellow Rd, St James City, FL 33956-9998

Sanibel PO                                             33957              650 Tarpon Bay Rd, Sanibel, FL 33957-9998

Everglades City PO                              34139              601 Collier Ave, Everglades City, FL 34139-9800

Naples (Downtown)                             34102              860 6th Ave S, Naples, FL 34102-6706