by Dave Johannes, Executive Vice President, Strategic Initiatives
A decade after H1N1 and the financial crisis of 2009, we again find ourselves in crisis – this time from COVID-19. In a period of 90 days, we watched as the US economy and the stock market were devasted by travel bans, lockdowns and shutdown orders that brought America to a screeching halt attempting to stem the spread of the disease. The long-term effects of the most recent economic meltdown are yet to be determined but it almost surely will have an impact on the USPS, direct mail, printing, and related industries.
America generally overlooks the value and reliability of the USPS, direct mail, printing, and related service companies. On a daily basis, these entities touch almost every business and home in the country. The USPS and these related businesses employ approximately 1.1 million people in the U.S., generating a combined revenue (USPS, direct mail, printing, and related services) of approximately $153 billion a year. Together they generate and deliver 142.6 billion pieces of mail per year, 75.7 billion pieces of which are “marketing mail” that drive sales revenue and donations for a variety of businesses from retail and financial services to your favorite charities. The Postal Service also handles more than 1.2 billion packages containing prescription drugs per year, a service that seniors and veterans heavily rely on. They also deliver 67.9 million Social Security checks every month. Often the butt of jokes, Americans take for granted the exceptional level of service we receive from the USPS. As the old saying goes… “Mail Moves America”!
While the virus has raged and many Americans have been banned from going to work, the employees of the USPS, direct mail and printing companies show up to work each day to keep mail, communications and commerce flowing. Non-profit mail keeps donations flowing so that charities can do their good work in these tough times. Business mail for insurance, financial services, on-line retailers and many other market segments provides a lifeline helping those businesses to function while supporting the public that depends on them. Of course, none of this would be possible without the employees of the United States Postal Service who still believe… “Neither snow nor rain nor heat nor gloom of night and apparently Coronavirus stays these couriers from the swift completion of their appointed rounds”.
While the impact of this pandemic may take a while to sort out, the impact for the USPS has been almost instantaneous. Despite the fact the Postal Service is so critical to keeping America moving, soon it may become one of the biggest victims of the pandemic. Mail volume in the first 90 days of this crisis has already dropped over 30% and there are predictions that they will be down by more than 50% before the pandemic is over.
Based on the current volume and the funding stipend the Postal Service received in the recent CARES Act the service is forecast to go broke between August and October. While other relief legislation is in the works and the politicians argue its’ fate, the Postal Service continues to deliver 6 days a week to every address in America.
As we all know, the Postal Service has been struggling for the last 14 years to stay solvent. This has been difficult because the service is forced to deliver a service model that flies in the face of common business practice and has no control in pricing its’ services. It is also required to fund retiree health care costs and pensions in advance, rather than the pay-as-you-go system used by the entire federal government and two-thirds of private industry. Thus, much of its funding “crisis” is manufactured.
So, at a time when the Postal Service stands on the frontline to keep the country running, it faces a fight for its future. If this problem isn’t solved, think of the ripple effect it will have across our industry as well as the entire economy. Some in DC might prefer a solution that privatizes the Postal Service. Consider the resulting disruption. The real answer lies in allowing the USPS to behave as a business giving it control of its’ destiny and allowing it to make operational decisions to become profitable. Or it could be acknowledged that there are some societal benefits to providing this essential service that could be borne by taxpayer dollars, including important discounts like the nonprofit postal rate. Either could be done within the framework of its charter and either solution would work best without unnecessary regulations like the pre-funding mandate.
The USPS has been delivering for America for over 240 years. Now it is time for America to deliver for the USPS. Failing to deliver will have a trickle-down effect that will be felt for years. If you’d like to learn more about what the CARES Act did for the USPS and what more can be done, please download our white paper here.