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A week ago, the U.S. Postal Service announced that it had lost $6.5 billion in the fiscal year ending Sept. 30. At the same time, mail volume declined sign i f i c a nt ly, and at a faster rate than in previous years.
This comes two and a half years after Postmaster General Louis DeJoy announced the Delivering For America Plan (DFA), which is supposed to stabilize the Postal Service’s finances while continuing to deliver mail six days a week to every address in the country.
First class mail volume dropped by 6.1 percent. Marketing mail was off 11.4 percent from the previous year. And periodicals mail volume was down 12 percent. Packages were down 2.4 percent, even with the USPS pushing its package shipping aggressively. All categories of mail except packages and first class mail saw declines in revenue from 2022. First class and package revenues were up a fraction of a percent. These figures are from the Postal Service’s own report on the 2023 fiscal year. (about.usps.com/newsroom/ national-releases/2023/1114usps-reports-fiscal-year-2023-results.htm).
With this in mind, the Postal Service has raised mail rates four times since July 2022, and says they will raise rates twice a year for the foreseeable future. Our cost to mail your newspaper has gone up annually by double digit percentages in the past two years – much greater than the rate of inflation. We are scheduled to receive another increase in January 2024.
There are smarter people than me looking at this situation and wondering if the Postal Service is putting itself into a so-called “death spiral,” where ever increasing rates drive out more volume, and the net result is that instead of rate increases generating more revenue, they actually generate less.
DeJoy’s goal of stabilizing the Postal Service’s finances are one I support, though I don’t agree with how he’s going about it. Even with electronic communication – email, texting and such there is still a need for physical delivery of goods and printed communication, like newspapers and prescription drugs. The U.S. Postal Service is the only entity that delivers to every home in the nation, regardless of how far out in the boonies an address may be. We need the Postal Service, especially in rural areas like ours.
Mr. DeJoy has been pretty combative when pressed on the progress of DFA, saying that he has a mandate to put USPS on a sound financial footing. The problem is, in my view, he’s decided that primary way to accomplish this is through rate increases, particularly for classes of mail for which the Postal Service has a monopoly on delivery.
USPS claims that postal rates for many classes of mail do not cover the cost of delivery. Periodicals mail rates, which is the class of mail used to get your newspaper to you, only covers about two-thirds of the cost of delivery, according to USPS. However, the Postal Service doesn’t actually have good cost data on some areas of mail, including the cost of delivery of periodicals that are mailed within a county. The Postal Service stopped doing cost studies of in-county mail in 2006.
So, to set the rates for periodicals, the Postal Services uses cost studies for national magazine and newspaper deliveries, typically in more urban and suburban areas. These studies do not take into account many things we do to minimize delivery cost for the Postal Service, such as trucking your newspaper directly to the local post office that serves you. If you live in Fairfield, we deliver overnight your paper and all papers for Fairfield subscribers, to the Fairfield Post Office. We presort your newspaper down to the carrier route, and then we put all of the papers on that route into the order that the carrier delivers them, so they don’t need to sort in the office.
We get some discounts for direct entry and sorting to the carrier route, but I don’t think it accurately reflects the cost savings to the Postal Service – but then, really, nobody knows because of the lack of data.
Community newspapers are willing to pay our fair share, but we are being subjected to steep rate hikes without much in the way of data from USPS to justify the increase. This is why your subscription rates have gone up over the past couple of years, and why they will have to continue to increase as long as mail costs go up.
We don’t plan to raise the subscription price in January when postage goes up, but I can’t promise we won’t have to next July when the next rate hike is scheduled. Maybe some sense will prevail and the USPS Board of Governors or the Postal Regulatory Commission will slow Mr. DeJoy’s double digit a nnual i ncreases. I ’m not holding my breath.
