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USPS, Shiny Objects, Recovery, and Recession

The USPS exigent price increase has expired, and USPS says they “will lose approximately $2 billion in annual revenue resulting from a price reduction” which they knew was going to expire. The increase was to help “recover for the massive volume and revenue losses resulting from the Great Recession.” Yet, Dr. Joe shows that the declines in USPS volume kept declining after the economic recovery began in mid-2009. Then Dr. Joe talks about recession in light of recent economic data. Yeah, they’ll be calling him Dr. Doom again.

By Dr. Joe Webb
Published: April 11, 2016

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Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink.com's Economics and Research Center.

What do you think? Please send feedback to Dr. Joe by emailing him at drjoe@whattheythink.com.

Visit the WhatTheyThink Economics and Research Center

 

Discussion

By Henry Freedman on Apr 11, 2016

Very thought provoking Joe.

Have a comment that significantly impacts the USPS’s operational efficiency limitations.
The following shows why USPS is where they are today as far as economic condition.

Here in Washington during the late 70s had the opportunity to work internally with the USPS and RCA to build a 4 color liquid toned digital web press to print Business to Household mail and was to be installed inside the USPS regional facilities. This eliminated enormous transportations costs as well as huge carbon emissions from associated with motor powered vehicles and aircraft. USPS could bring mail to home in 2 days at a lower cost than current operations. Empty back haul of trucks would bring roll paper to printing facility on return trips if needed.
Once electronically submitted to USPS mail could be delivered in 2 days. Was approved by all postal unions. APWU members were to be press operators and service the press. If a jam occurred the USPS employees were sworn to secrecy of opened content. The press delivered the output in the walk sequence of the letter carrier eliminating 80% of sorting which was USPS’s largest labor cost for mail distribution prep.

Remember the govt. could have had this system over 40 years ago! The congress stopped this sine it would compete then with FedEx GraphNet who wanted to do the same. In the end FedEx and GraphNet killed their projects and the USPS was barred from adopting and applying the technology. The point I make here is that the USPS is prohibited from applying appropriate technologies to automate on top of the govt stealing their money. This inability to apply appropriate technology doomed USPS and now people make fun of antiquated USPS and costs and loss of service.

If you do not allow appropriate technology your costs go up.

 

By Phil Brown on Apr 12, 2016

Joe: your analysis is refreshing. And to your point, direct mailers operate by a set of rules that goes to the economics of response in the mail.

When postal rates rise, packages get smaller and response shrinks, raising the cost to raise a dollar. It is a death spiral.

Fortunately, direct mail is a sustainable business, and continues to survive, even with marginal increases in cost.

The sad fact is that it is the printer, and the data processor, and the list owner which have to reduce their prices because the USPS won't, or can't.

Here is my analysis of the mailer's economic situation: http://wp.me/p41ooi-CC

 

By Joe Webb on Apr 12, 2016

Read your piece and I hope USPS critics read it too -- and train the execs with it. The idea that businesses use mail for an economic return is confusing to a business that still believes their services must be used at any cost. In this column http://whattheythink.com/articles/78327-erc-eddm-does-not-mean-elastic-demand-direct-mail/ I detailed their selective use of data and techniques to "prove" that postal demand was inelastic, ignoring all of the costs and investments that users make to cope with USPS pricing activities.

 

By Phil Brown on Apr 13, 2016

The USPS report may also suffer from the "observer effect". The act of measurement actually changes results. Your article covers it well!

 

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