In March of 2021, the USPS debuted its Delivering for America (DFA) plan; a bold initiative to transform the United States Postal Service into an integrated mail and package network that would be financially self-sustaining by 2023. To date, it has proven to be far more challenging for the USPS to implement than leaders had anticipated. Will 2025 be the year that the USPS is able to accelerate the plan? Can the organization roll out more of the envisioned 60 Regional Processing Distribution Centers that are essential to the optimized hub and spoke ground delivery network than the four that are currently operating? And what can the mailing industry as a whole do to survive and thrive in what is arguably the largest transformation to the 250-year-old postal network in the United States of America?
Let’s begin first by looking at postage prices in 2025. Postage prices have increased cumulatively by 33% to 105% since January of 2021. This is primarily the result of inflation along with additional pricing “adders” that the Postal Regulatory Commission provided the USPS to cover its universal service obligation of delivering mail to 167 million delivery points six days per week. Certainly, every business has been challenged these past three years with 40-year high inflationary rates, and the USPS is not immune to them either. The Consumer Price Index (CPI), which is tied to inflation, is the foundation of postage pricing and is a primary driver for why postage prices have increased substantially. Recently, the USPS decided to not raise prices in January of 2025, thus ending the cadence of twice annual price changes, but do not let that confuse you into thinking that the USPS will go back to once per year price changes. July of 2025 will likely see postage increases of nearly eight percent as the USPS is simply deferring the 1.53% it could have taken in January. Mailers need to use the break in price changes as a pause of opportunity to further automate their mailing operations and leverage every possible USPS promotion incentive to mitigate future postage increases and make every mail piece count.
That brings up the second major challenge and opportunity in 2025, which are the USPS promotions. The USPS has been encouraging astute mailers to bridge the high touch aspect of direct mail with high-tech messaging to enable a physical-to-digital experience that increases the value of mail. As mail volumes decline, in part due to the postage pricing, mailers need to increase the value per piece of mail if they want to survive and thrive during the DFA rollout. For a mail service provider (MSP), this begins by cataloging all mail pieces you are currently producing and determining which ones would qualify for the various USPS promotions. You may be surprised how easy it is to qualify for a promotion with pieces you are already printing! It is like leaving money on the table if you don’t participate, and the USPS has recently shortened the approval window for promotion qualification to four hours in some cases. Rather than face an eight percent postage increase in July of 2025, why not mitigate that down to a two percent increase instead by leveraging these promotions?
For mail owners, USPS promotions are the best way to utilize the mail volume growth credits that you have been accumulating since the beginning of 2024. You have been earning those credits, right? If you mail over one million pieces of First-Class Mail or Marketing Mail and grow that volume over an established baseline, you can start earning significant credits toward a future mailing. This program is extending into 2025, and if you use these credits toward a USPS promotion, it further maximizes their value and may even allow you to try new multichannel marketing campaigns.
The third major item we will see in 2025 are service standard changes. There are two major initiatives that will begin implementation in early 2025 that could be challenges and opportunities for the mailing industry.
The first is the transition from three-digit to three-digit standards to a more precise five-digit to five-digit standard. This increased level of granularity could be very helpful to the mailing industry to pinpoint in-home delivery times, especially for rural addresses. However, the table matrix to reflect this level of granularity would result in a spreadsheet of over 1.7 billion rows! Industry and USPS will need to work together to devise a way to share this information in a manner that is timely and can be utilized effectively.
The second is the Regional Transportation Optimization that would eliminate afternoon pickup of mail collection and could add one day or more of delivery to addresses that are more than 50 miles from an RPDC. Since there are only four out of sixty RPDCs implemented, the RTO initiative could have a nationwide impact initially.
Mailers need to fully leverage the Informed Visibility data from the USPS in order to track and trace their mail pieces from point of induction to final delivery. With broad network changes like these, every mailing that is dependent upon a specific in-home delivery date will need to have a revised strategy for mail preparation, production, and induction into the USPS.
On October 4 of 2024, the USPS filed an Advisory Opinion request with the Postal Regulatory Commission for the planned network changes in 2025. It’s a lengthy filing, but a necessary one if DFA is going to be successful. Mailers who want their voice to be heard should read this filing and be prepared to share their thoughts with the PRC about the planned DFA changes. It will take the entire mailing community working together to ensure we have a financially stable postal delivery system that can hopefully continue delivering for another 250 years.
Chris Lien is Executive Vice President of Postal Affairs for BCC Software, a BlueCrest company. He has been active in the mailing industry for 30 years and participates in numerous industry associations including the Postmaster General’s Mailers Technical Advisory Committee as a former industry chair. As EVP of Postal Affairs, he is focused on all aspects of the mail supply chain and provides a voice of advocacy on behalf of the thousands of BCC Software and BlueCrest customers. Chris also chairs the Board of Directors of the National Postal Forum.
This article originally appeared in the November/December, 2024 issue of Mailing Systems Technology.
