The United States Postal Service is struggling to find its place in today’s digital world. More than three years into a 10-year turnaround plan called Delivering for America, implementation has been extremely rocky. Not only has it missed its financial targets so far, but fast-rising mailing prices, reduced service and declining on-time deliveries are the norm, even after lengthening some target delivery times for First-Class Mail.
Nonetheless, the USPS is doubling down on its modernization plan to right-size and become consistently profitable. It wants to go national with a further slowdown of First-Class deliveries to certain remote locations, affecting some 11% of First-Class Mail by volume. At the same time, USPS said it could deliver 14% of First-Class Mail faster with proposed changes. On October 7, the Postal Service requested an Advisory Opinion from the Postal Regulatory Commission on this proposal for Regional Transportation Optimization and processing network changes, which USPS says would save at least $3.6 billion annually.
Regardless of whether this latest plan goes into effect, service issues and escalating costs have already negatively affected billers, e-commerce companies and other businesses. They also hurt the millions of consumers who depend on receiving prompt billing statements, prescriptions, refunds and other mail-based communications and disbursements, and who mail payments and other important correspondence.
With efforts to modernize the USPS a work in progress, companies need to reset their communications, billing, and payments strategies for these new Postal Service realities without disrupting consumer experience.
A Troubled Turnaround
In 2021, USPS introduced Delivering for America, a strategic plan spearheaded by Postmaster General Louis DeJoy and laying out the urgent case for change, saying, “business and operating models were unsustainable and out of step with the changing needs of the nation and its customers.”
The Postal Service has proceeded with planned changes, including:
- Shifted focus from air to ground transportation for deliveries.
- Reduced overtime and Post Office hours.
- Instituted twice-yearly increases in First-Class postage, from 55 cents in 2020 to 73 cents in July 2024.
Print and mail providers and their clients report a marked slowdown in delivery times:
- Commingled mail additional 2-4 days
- First-Class Mail additional 1-3 days
- International mail additional 6-10 days
- Holiday mail additional 5 days
Shrinking Operations Network
One of the USPS’ biggest operational changes involves consolidating hundreds of local mail processing centers to 60 new regional hubs and 190 local centers. The consolidation has not gone smoothly.
The USPS reported that on-time performance in the second quarter of fiscal year 2024 fell to 69.9% nationally for three-to-five-day First-Class Mail delivery. Its target is 90.3%. Due to concerns from bipartisan lawmakers in Congress and others, the Postal Service agreed to temporarily pause network consolidation until after the U.S. presidential election and voting by mail is completed.
Working Around USPS Modernization
Given the ongoing operations upheaval, technology upgrades, workforce cuts and other changes, it will take years to end service disruptions.
Meanwhile, the price increases keep coming. While the Postal Service recently announced it won’t increase stamp prices in January 2025, it plans to raise prices in "all Market Dominant classes," which include First-Class and marketing mail, six more times through 2027.
Companies that send paper bills, transactional communications and payments don’t have to simply stay the course. The following actions can buffer the impact of rising postal costs, delays and uneven service:
1.Accelerate digital and mobile adoption.
An omnichannel customer communications management platform can improve customer experience by catering to preferences for email, text messaging and online payment options. Shifting more communications to digital channels also decreases paper, printing and postage costs while avoiding delivery delays. Similarly, electronic bill presentment and payment systems expedite payments and improve cash flow.
2.Rework print communications.
Companies should reduce and consolidate, including duplex printing and design changes, which could save postage and possibly hand fulfillment expenses.
3.Leverage print partners to save on mailing costs.
Large print and mail providers negotiate the best USPS rates and discounts, such as commingled ZIP Code presorting for high-volume First-Class mailings. Some letters and notices can be sent via less-costly standard mail, often used for marketing pieces, versus First-Class Mail.
4.Increase deliverability and minimize return mail.
Take steps to validate addresses before entering the mail stream, including using Pre-mailing National Change of Address (NCOA) and Coding Accuracy Support System (CASS). Validation carries additional postal discounts. Address Change Service (ACS), a premium option, corrects undeliverable addresses for mailings already in the mail stream.
Keeping addresses updated minimizes the cost of processing return mail and subsequent delays in customer delivery. Adding an Intelligent Mail Barcode to sort and track letters and flats allows mailers to participate in multiple Postal Service programs, expands their ability to track pieces and provides greater mail stream visibility.
Time to Overhaul the Overhaul?
In many ways, the Postal Service is a modern marvel. It processes and delivers 44% of the world’s mail volume, averaging 318 million letters, cards, bills, packages, and other pieces daily, to 167 million addresses six days a week.
We all welcomed the promise of revitalization and much-needed change. But that’s proving challenging for the USPS, which appears to be taking the wrong path. A strategic look at a new model may be in order.
We aren’t counting out the USPS. It will remain a vital part of our country and a strategic partner to print and mail providers and their clients. The Postal Service has successfully expanded, evolved, and innovated for over 250 years. This latest transformation should be no exception if we hold them to account.
The USPS Office of Inspector General has noted, “The DFA plan was developed during a time of considerable uncertainty, and conditions have evolved.” It’s time to further reevaluate the plan and adjust to strengthen its chances of success.
We can all agree a strong USPS can help consumers and businesses alike. Let’s advocate for a new path forward but manage today’s risks and realities.
Nicole M. Miller is COO of Nordis Technologies, a leader in cloud-based, omnichannel customer communications management technology, integrated with digital delivery, print and mail services and payment solutions. Nicole draws on her expertise in operations, strategy, technology and product management to ensure the right processes, technology and people are in place to support Nordis’ fast growth, continued excellence in customer experience and operating improvements. She can be reached at 954-323-5500, ext. 182 or nmiller@nordistechnologies.com. Connect with her at https://www.linkedin.com/in/nimimiller/.