Businessweek Article Declares “The End of Mail”

Did that headline catch your attention? That was the cover story on the May 26th issue of Bloomberg Businessweek [Link]. Click here to view the video interview. The hardcopy article, written by Devin Leonard, looks at the drivers behind the USPS financial woes, including its cushy relationship with postal workers unions and its flailing efforts to stem its customers' migration to the Internet. At the end, the article asks whether the U.S. will be able to follow in Europe's footsteps and reinvent its postal monopoly to regain relevance and profitability. If it cannot, Leonard concludes, the postal service is at serious risk of collapse. The article caused a prompt reaction from the mailing community. Gene Del Polito of Postcom called the article balderdash and a disappointment [Link]. The anonymous blog author for Dead Tree Edition [Link], who claims to be a magazine manager by day, also blasted the Businessweek author for his use of the term junk mail, which is quoted 12 times in the article. One thing is for certain, the U.S. Postal Service needs to reinvent itself, and really fast.

PRC Asked to Re-Examine Exigent Case

The U.S. Court of Appeals for the D.C. Circuit has sent the Postal Service’s request for a significant rate increase back to the regulators who denied it, ruling that they erred in rejecting revenue losses from the recession as the main factor driving the hike. The Postal Regulatory Commission must take up the case again and decide how much of the agency’s financial losses stem from the bad economy and whether rates should be adjusted to reflect that “extraordinary” circumstance. The court’s decision left some ambiguity over whether a rate increase will be instituted and, if it is, how big it will be. But Sen. Susan Collins (R-Maine), who filed a brief with the court siding with the commission’s decision to deny the rate increase, called the ruling a “win for American postal customers.” “I am pleased the court correctly upheld the [commission’s] decision — and my belief — that the Postal Service needs to prove that the exigent circumstances caused the effects” that made a rate hike beyond the rate inflation necessary. Should mailers be concerned? According to Jerry Cerasale, Direct Marketing Association, “The USPS has said that even if it won, it would not raise postage due to this case.” Jerry also said, “With the recession gone, it is unlikely that there is an extraordinary event lurking to allow USPS to break the cap in a next rate filing.” We also encourage you to check out the commentary by Gene Del Polito of PostCom [Link]. He states, “It is highly unlikely that the Postal Regulatory Commission (PRC) will do anything so callous as to order another round of postal rate increases. Doing so would have to be the dumbest thing any regulator could do given the facts that have been laid before it.”

Source: Washington Post and MultiChannel Merchant

UPS Sees Economy Gaining Steam in 2nd Half

United Parcel Service sees the economy outlook "a little muddier" than expected early this year, but growth should "chug along" at a slightly faster pace in the second half of the year. Fuel prices are a wild card but have yet to reach levels that drain demand for UPS's higher-cost express products, Chief Executive Scott Davis said at a Sanford C. Bernstein & Co Strategic Decisions Conference. "Clearly the first quarter was not as strong a performance in the U.S. as people would have thought going into 2011," Davis told the conference. But the company's outlook is unchanged, with a view that gross domestic product will grow just under 3 percent this year, he added.

Source: Rueters