Features

June 7, 2024 • Ellen Wagner
GCA Report reveal flawed USPS data practices

NORA WEISER, EXECUTIVE DIRECTOR, GCA

The Greeting Card Association (GCA) recently release a report in partnership with the Association for Postal Commerce that provides critical insight into the severe volume declines in response to the United States Postal Service’s (USPS) excessive rate increase strategy for stamps and other postage. It reveals that the methodology used by the USPS to estimate volume loss in response to rate increases is extremely flawed, and that lost revenue from volume losses above the model prediction totaled $1.8 billion. The report also reveals that the USPS methodology fails to follow best practices for such econometrics and suggests that the manipulations incorporated in the model are potentially intentional to support large increases rather than determine what the market can bear.

These findings have profound implications, given that the report confirms that Market Dominant mail still accounted for 94% of total USPS volume and 56% of revenue in FY2023. First Class and Marketing Mail accounted for 96% of the Market Dominant volume and 89% of revenue — yet volumes are plummeting in response to the twice-a-year large rate increases the USPS continues to ram through. The report suggests that the USPS is gutting its core business in a vain attempt to capture market share for packages in competition with a growing number of private sector companies that are more efficient.
GCA has always taken a data-driven approach toward postal policy. Through objective analytics, we continually test our assumptions to ensure the policies we advocate are rooted in truth and concrete data.

Working with NDP Analytics, we’ve looked carefully at the USPS’ Delivering for America in response to widespread concern from the mailing industry that elements of it would be counterproductive, especially concerning the intentional loss of more than 40% of mail volume and huge twice-a-year rate hikes.

That analysis proved that the USPS’ assumptions in the plan were inaccurate at its inception and have continued to fail to meet predictions of how much traditional mail would be lost, how much package volumes would increase and how much savings would be achieved. The reality is that USPS is hemorrhaging traditional mail volume, failing to gain package business while its costs continue to rise due to large outlays for infrastructure and increases in costly full-time employees. Now we see that the USPS’ methodology for calculating volume impacts is severely flawed.

With the USPS’ losses continuing to mount, Congress and the Postal Regulatory Commission (PRC) must take heed. Hopefully, this new data will convince the PRC to take a more critical approach to USPS rate requests. Regardless, the GCA continues to advocate for regulatory modernization legislation that we hope Congress will embrace and that will spur more rigorous oversight to ensure that the USPS is held accountable for the results of the Delivering for America before it is too late.




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