Printers Remain Anxious About the Future of Mail -- and Understandably So

Printers who mail and mailers who print have read the boldface truth in headlines over the past nine years: Since 2007, the United States Postal Service (USPS) has lost nearly $50 billion, reported watchdog group Citizens Against Government Waste. While its performance has improved as of late, the USPS still is losing money – lots of it.

"The USPS balance sheet remains deeply -- [by] tens of billions of dollars -- in the red," said Lisbeth Lyons, VP of government affairs for Printing Industries of America (PIA). "Operations are slightly in the black," she added, but the agency is just "one hiccup by the economy or breakthrough in communications/delivery technology [away] from returning to the brink of a taxpayer bailout." Based in Washington, DC, Lyons believes strongly that the printing industry, with some $1.3 trillion in annual sales and approximately 7.5 million private-sector workers, needs a "well-functioning, efficient postal system."

The USPS has tried employing some high-tech tactics to help raise revenues. It announced a 2016 expansion of its “Informed Delivery” service in which it sends daily emails of scanned envelope images to selected P.O. box customers who request the service. It also could use augmented reality to improve mail processing, delivery, and customer experience, the USPS Inspector General has found.

As the printing industry marches toward Q2, there are three primary points of anxiety for print firm owners and managers for the remainder of 2016 where postal issues are concerned, believes Leo Raymond, VP of postal and member relations for the Epicomm association (formerly NAPL, NAQP, and AMSP). Firstly, “the big question is about rates,” Raymond said, “which actually are expected to go down about 4.3 percent or so this spring.” In the short term, that is welcome news for printers looking to keep their postage costs under control. However, he warned, “in the long term this is not a good thing … [as] it casts uncertainty about the agency [USPS].” At PIA, Lyons agreed, saying that "rates must remain stable -- predictable, consistent, and affordable -- to avoid chasing more volume out of the system."

Secondly, concern continues over how the USPS is realigning its services, Raymond continued. The reality is that “there is 27 percent less flat, letter mail in the system than there was a few years ago,” he stated factually. As a result, the USPS began its Network Rationalization Initiative, a multi-phase, multi-year. “right-sizing” effort to balance mail-processing infrastructure costs against current and anticipated mail volumes.

However, in its striving to be more efficient, the USPS “did too much too fast a year ago and had service issues,” Raymond explained. So in mid-2015 it decided to defer most of the plant consolidations that were scheduled to take place last summer. The planned consolidation activities have resumed in 2016, and the jury is still out as to how smoothly operations will be running within the smaller network come summertime. Lyons, his PIA counterpart, contends that "further major downsizing will be counterproductive to services expected by the public and business, and drive both further into electronic alternatives."

Fixing the dysfunction

The third but not least postal cause of anxiety for printers this year: Congress is the real problem facing the Post Office and the one who can fix it, labor unions said in a Washington Post article published last October. Epicomm postal guru Raymond does not disagree, referring to Congressional action as the “third rail” of the electrically charged USPS runaway train.

“Congress seems to interfere and meddle” in postal affairs, he complained, “but it seldom helps. They need to agree on substantive, statuary reform for the Postal Service.”

After 10 years of publicity, most people in our industry are aware of what Raymond refers to as the “excessive mandate” calling for the USPS to put $5.5 billion toward future retiree pensions, which “include employees not yet hired,” he explained. This situation “dates back to 2006 and is still not fixed.”

PIA's Lyons noted, "The focus of legislation must be on financially stabilizing the USPS. Generating more savings and revenues are crucial." She believes legislation elements should include:

• Switching postal retirees to Medicare (drawn from 2014's Senate bill).
• Investing the retiree health benefits fund in conservative market instruments, such as index funds and Treasuries, as approved by Congress for several entities (Amtrak, TVA, PBGC, National Railroad Retirement Investment Trust). "Current Treasury-only investments net around three percent per year, and expenses for retiree healthcare are growing four to five percent per year," Lyons pointed out. "Those numbers do not work."
• Transferring the surplus, if any from the Federal Employees Retirement System (FERS) to USPS.

Lyons warned that broad Postal Service reform remains politically infeasible. But Raymond’s major gripe is that the Senate has yet to confirm governors for the USPS board, which flies under public radar but is critical to the agency’s reform and future success, he noted, despite its “rubber-stamp” reputation. These governors (or directors) are appointed by the President. There only was one nomination in 2013, according to Raymond, and several nominees since have withdrawn their names. “Eight of the nine seats are vacant and the ninth expires this coming December,” he said, adding that there now are five nominations but none have been confirmed. A big part of the problem, he contended, is that “Senator Bernie Sanders doesn’t like the nominees’ political inclinations.”

Direct mail growth

Interestingly, while overall mail volume is down, the amount of direct mail printed and delivered increased slightly in 2015, up 0.3 percent, noted Marco Boer, VP at industry research firm I.T. Strategies. That modest growth likely will continue into the second quarter of this year and beyond, which bodes positively for print service providers (PSPs) who produce direct mail pieces.

“The relative quiet of the old mailbox has become coveted real estate again:” So stated a Neenah Paper blog posted last month. In other words, “less ‘junk’ in the box [leaves] more room to stand out. Data shows that conceptual, well designed, and well printed direct mail can jump out of the mailbox into the memories and imagination of the recipient,” the blogger continued. “One reason is this: The frequency of direct mail is down, so direct mail that is well made is met with relief and favor.” Neenah added that “direct mail is viewed as trustworthy by 56 percent of consumers, and the more those customers interact with your mailing, the more likely they are to respond.”

The effective use of variable-data printing and variable-imaging capabilities available on digital presses is helping direct mail to go “hyper local.” Another reason for its growth can be attributed to postal software advancements for direct mail marketing, such as Enfocus and AccuZIP’s Direct Mail Configurator. The sales and order entry system won “Best of Category” recognition as a Graph Expo 2015 Must See ’Em this past fall. It permits direct mail and fulfillment services to integrate a complete, end-to-end postal automation workflow with 100 percent visibility of all pieces in the mailstream. Because the Configurator can be placed within an existing web-to-print workflow, it significantly reduces labor costs associated with the manual preparation of mailing lists.

EFI offers Digital StoreFront Direct Mail Automation, which is a new module in its Digital StoreFront web-to-print/eCommerce platform. It allows users to automatically clean lists, price postage, and perform bulk-mail processing. Digital StoreFront Direct Mail Automation performs full CASS certification, NCOA (change of address registry), and address duplication clean up to ensure that buyers only create (and pay for) valid records. The module also includes a streamlined integration with AccuZIP software.

It adds direct-mail functionality to Digital StoreFront without compromising its intuitive, user-friendly design. With the module, print buyers can use Digital StoreFront to complete configuration and ordering of direct mail campaigns, including:

• Variable-content design.
• Mailing list purchase.
• List certification for optimized postage rates.
• Final print material prep.

For printing companies, the module provides hands-off automation for direct mail work that would otherwise require manual file management, mail list integration, and USPS bulk processing. Service providers can process direct-mail jobs with little to no direct intervention during the creation process, which reduces labor and, as a result, increases profitability.

Enhancing mail production

On the hardware side, Pitney Bowes showed its new AcceleJet Printing and Finishing System at Graph Expo 15: The roll-to-cutsheet printing solution provides a simple, cost-effective path to high-quality color inkjet at a cost comparable to many monochrome options, PB said. Combined with the firm’s customer-engagement software, services, and mail finishing equipment, AcceleJet is poised to be the centerpiece of an end-to-end White Paper Factory Solution for print and mail service providers who generate 4 million to 10 million transactional or direct-mail printing impressions per month.

“A number of mid-volume mailers with cut-sheet workflows are looking for a cost-effective way to transition to inkjet. Given our familiarity with these clients and our experience with production print in the complex transactional mail segment, we believe this is a space where we can add value,” said Jason Dies, president of Pitney Bowes Document Messaging Technologies. “Some of the world’s largest mailers rely on Pitney Bowes’ IntelliJet printing systems to produce billions of high-impact color bills and statements every year. Our AcceleJet offering leverages everything we have learned from servicing these high-volume mailers and makes it available to a broader market segment, which includes many businesses that already rely on our industry-leading inserting equipment.”

PB’s Epic Inserting System also made its North American debut at Graph Expo with increased functionality to further simplify changeover processes for high-volume mailers. This new high-speed, multi-format solution cost effectively combines high-performance physical mailing capabilities with precise advanced digital intelligence. The system processes complex transactional mail applications with demonstrated integrity and high yield to simplify capacity planning, increase operational productivity, lower total cost of ownership, and improve return on investment.

Epic features Pitney Bowes Productivity Tool Suite, which was awarded a 2015 Graph Expo Must See ’Em. This digital user interface is compatible with mobile devices and makes it easy for operators to view progress and identify risks. Real-time reporting and alerts help operators quickly adapt to changing conditions to facilitate a seamless flow of work from one stage to the next.

Not-Every-Door Direct Mail …

The aforementioned AccuZIP Direct Mail Configurator software also can generate lists, on the fly, for the USPS’s hyper-local Every Door Direct Mail (EDDM) program. This means that workflows can seamlessly provide saturation lists for any ZIP code or area in the country, within the same workflow. EFI, too, and its Digital StoreFront Direct Mail Automation module supports targeted EDDM from AccuZIP.

What’s nice about EDDM is that is allows for specific geographies to be selected for mailings without purchasing lists. But yet another Postal Service criticism, in the agency’s quest to increase revenues, is that it keeps raising prices on its EDDM service. The number of users – from local restaurants and realtors to retailers and other printing customers -- is on the decline: down more than 10 percent from a high of 948.6 million EDDM pieces delivered in the 4th quarter of 2013, according to the USPS’s own tally.

Even increasing prices by a penny per piece can prove too costly for tight marketing budgets that already are split among print and other, alternative media.