News

July 12, 2021
GCA and EMA urge delay of August stamp price increase

The EMA and the Greeting Card Association (GCA), whose members depend on the USPS to deliver more than half of greeting cards purchased by Americans to their final recipient, urges that the price increase for the Forever Stamp and other Market Dominant postage rates be delayed until January 2022.

Data from a new report by NDP Analytics released today underscores that USPS’s financial performance and other projections in its “Delivering for America” plan are much improved from its original forecast. All participants in the mailing industry, including citizen mailers, continue to recover from the pandemic, and the proposed large and unexpected increases in postage, which few in the industry anticipated or budgeted for, place an unnecessary burden on the USPS’ monopoly customers, further depressing mail volume.

“Simply put, the USPS does not need the revenue from the proposed increase now,” said George White, president for GCA. “While there can be a debate over how much rate authority in the future is appropriate for the USPS but it is clear it has the ability to raise rates as proposed. It is also clear, however, that the USPS can afford to wait until the normal January timeframe for rate increases which would allow the industry time to stabilize their business coming off the pandemic and prepare for the higher rates.”

The new report, Review of USPS 10-Year Plan: Achieving Financial Stability Without Excessive Rate Increases by NDP Analytics, demonstrates that USPS financial performance since the release of its “Delivering for America” plan is well ahead of projections. In addition, the economy has recovered to a much greater extent than had been planned and mail volumes are higher than projected.

That improved performance, coupled with substantial relief in the form of a $10 billion grant from Congress puts the USPS in a relatively stable financial position. Given ample cash on hand, a delay of 5 months in imposing one of the largest increases in USPS history will make little difference to USPS finances in the short term but will be critical for the mailing industry to prepare and plan for the new rates.

Key takeaways from the report

1. The USPS report, “Delivering for America”, outlines a 10-year plan to reach financial stability and improve operational performance. Most of the Plan’s strategic initiatives align with its vision and mission however, the initiative to raise rates above CPI does not.

2. For the long run financial stability, USPS must retain its customer base and protect mail volume. It can achieve this by implementing predictable and low rate increases, which many mailers indicate is the single most important action the Postal Service can take to preserve business. In contrast, above-CPI rate increases will result in steep volume declines, as seen in the case of greeting cards.

3. The USPS 10-year plan is based on outdated assumptions about economic and USPS performance and needs to be revised. To date, the U.S. economy and market-dominant volume and revenue have far exceeded USPS projections. We expect FY2021 market-dominant revenue to outpace USPS projections by nearly $3B.

4. Under more realistic market-dominant volume assumptions and 1.5% annual rate increases, USPS can achieve financial stability by implementing all of its strategic initiatives except above CPI rate increases (and without implementing proposed August 2021 rate increases).

5. In our most conservative scenario, we expect that USPS can generate $1.8B over 10 years. This scenario generates $1.5B more than the USPS projection with above-CPI rate increases and much steeper volume declines.

“There is much in the USPS’s “Delivering for America” plan that GCA supports,” said White. “Our only area of major disagreement is the application of rate increases at a level that unnecessarily drives away customers. The NDP plan shows that USPS can achieve its goal of break-even financial stability while preserving a much greater portion of its customers. A 42% reduction in mail volume at the end of 10 years is not the best outcome for the USPS, its workforce, or the mailing industry, and greeting cards can be a driver of increased mail volume as Millennials enter their prime card-sending life stage. The three consecutive years of mailed greeting card volume growth, which was snapped in 2020 after the last huge rate hike, well demonstrates this opportunity.”

The GCA continues to advocate for the enactment of the legislative provisions in the “Delivering for America” plan and is working with USPS management to identify opportunities to grow the volume of greeting cards in the mail. It remains committed to ensuring that the USPS continues to fulfill its historic mission of binding the nation together through the provision of affordable, reliable universal service for mail and packages at least 6-days per week.

The GCA represents nearly 200 publishers and suppliers to the greeting card industry throughout the country. Its mission includes efforts to ensure a financially stable USPS that can provide affordable, reliable 6-day universal service to the nation, facilitating the delivery by the USPS of our highly valued greeting cards.

The EMA represents 90% of the companies that make envelopes in North America. EMA strives to ensure there remains a level playing field between electronic and paper-based communications and works closely with state, national, and global legislative and regulatory authorities. EMA’s goal is to protect the industry and maintain its ability to compete in an open marketplace.

Report

Report – Review of USPS 10 Year Plan Final July 2021

Executive Summary

Exec Summary – Review of USPS 10 Year Plan Final July 2021


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