The Latest Challenge to USPS Finances

The following is a perspective by postal commentator Gene Del Polito for Direct magazine. The views are those of the author's and do not necessarily constitute policy of the Advertising Mail Marketing Association.

Despite a year of record mail volume, postal revenue has fallen way below the Postal Service's projections for fiscal year 1999. The Postal Service originally had presented its Board of Governors with a budget that predicated a $200 million profit. There are many reasons that might be contributing to this turn of events. Some of them are alarming, and some are no surprise at all.

While the past four years of unprecedented advertising mail volume and revenue growth had been a godsend for the Postal Service, expecting this aggressive pace to accelerate couldn't be squared by what mailers' 1999 mailing plans. Mailing industry told the Postal Service they would be cutting back, not growing, their mailing volumes.

While mail volume has grown modestly thus far this year, Postal Service net revenues have hit the skids. The Postal Service, as it turned out, was unprepared to accommodate the change in mail mix mailers had predicted would result from mail classification reform. Consequently, costs that should have been removed from the system never were, and the opportunity to generate increased net revenue by paring postal costs was lost.

Remarkable! Why is it when mailers try to tell postal officials what their mailing behaviors are likely to be in response to rate changes or changes in the marketplace, no one seems to listen? I know...I know...they've got dozens of "expert" consultants on hand to tell them what they'd like to hear, rather than what they should hear.

So how will the Postal Service respond to this unfortunate circumstance? Will the Postal Service renege on its promise of no new rate case before the year 2000?

Fortunately, we now have a postmaster general that appreciates fully the need to keep the promises he makes, even if it means causing his own team to suffer some discomfort. PMG William Henderson told The Washington Post that "the organization has to hunker down....We've described this as the Postal Service not going on a diet, but having a life-style change." Good for him! And as far as mailers are concerned, this is the only appropriate response.

It wasn't mailers, after all, that failed to behave as they had predicted. The Postal Service wanted to change its mail mix to gain additional operating efficiencies, and the Postal Service's customers delivered. The Postal Service, however, apparently didn't believe in its own power to bring about such change, and lost a fantastic opportunity to show the benefits of increased mailer worksharing at the very time that paring postal costs should have been a top postal priority.

Okay, okay, the year's not yet over, and the PMG still thinks his team can pull this one out of the fire. Let's hope he's right, but everyone within the Postal Service should be on notice that not one single mailer is willing to see his or her service suffer as the Postal Service's finds ways to pull in its belt a couple of notches.