Culture, direct mail, Government, Marketing, Media, USPS

Somehow, The Mail Still Goes Through

Since we last looked, in August, the USPS has broken through another quarter, and published its latest report on Revenues, Pieces and Weights. For you marketers and mailers, here are some stats, and following that, another look at the USPS’s ironic, weird situation.

The good news: direct mail was up by 337,627,000 pieces, a 1.8% increase over Q4 a year ago.  The surge was due to the mid-term election mail, and if you are counting, in the last three months it delivered one additional piece of mail to every addressable soul living in the country.

The Princess Diamond..lost?

The bad news: full year direct mail was down 1.4%, or missing by 1,066,486,000 pieces.  In fact, the shortfall totaled 115,925 tons of mail.  That’s the equivalent of losing the Princess Cruise Lines’ Diamond, which by the way carries 2,760 passengers.  Imagine if it had gone missing.

The bright spot on the USPS horizon however is the growth of parcel delivery.  Package service mail and parcel delivery revenues are up 12% for the year, a happy indication of the robust growth of online ordering.

“Just leave it in between the doors.”

But just when you are feeling that the USPS has a rosy future in parcel delivery, be warned that companies like Amazon, Walmart and Target, the post office’s largest three customers, are now researching ways to do their own “last mile” deliveries.  Watch out, a robot may drop through your roof sometime soon.

Indeed, the parcel delivery business has its own costs, not the least of which are fuel, trucks, planes and drivers.  Did you know that there is a shortage of truck drivers?  USPS transportation costs in the past year were up 8.6% , or by $623,000,000.

Overall, the USPS reported nearly $71 billion in revenues from operations, placing it just behind Target (#39 on the Fortune 500 with $71.8B) as a business enterprise.  As the media enthusiastically reports, the post office missed its bottom line by nearly $4 billion, half of which is owing to pensions and health benefits accruals.

Which is a major source of consternation at the USPS.  Indeed much of the company’s 10K discusses the burdens of pre-funding according to federal government department rules, much different than the private sector.  As a result, it takes the expense on the books, keeps the cash, and adds it to its liabilities.  To date, the USPS must pre-fund $67 billion to employees’ and retirees’ health and pension benefit funds.

For your information, there are 497,000 career employees and 600,000 retirees to provide for. The USPS is the #3 employer in the United States, right behind Amazon, USPS #1 customer, which had 589,000 on the payroll.  The country’s top employer: Walmart, #2 USPS customer, with 2,300,000.

The bigger irony of the USPS is that it is a business, run by business people, but by government rules.  By law, it cannot make changes in products, pricing or service without federal approval.  Its wages, health and pension obligations are modeled on federal department standards.   And isn’t it rich then, that its Board of Governors is subject to Senate approval, and has been short four governors since 2014, the last time the Senate voted to approve them.  It cannot raise a quorum.

In return for federal oversight, it is granted monopoly rights to make door-to-door delivery of mail.  Only recently has its parcel service entered the competitive arena, where it is growing nicely.

Remarkably, despite the USPS financial shortfall of $4 billion, it receives no tax dollars.  Compare that to 18 Federal departments which are entirely tax-funded.  In terms of tax-funded budget, the USPS’s closest federal cousin would be the EPA with a budget of $5.7 billion….nowhere near the Departments of Education $68B, Energy $28B, Homeland Security $44B or Health & Human Services $65B.

Compared to these budgeted costs, it is distressing to see the public criticism the post office endures.    Fortunately, the White House has taken initiative to turn the situation around.

Still, the business continues to grow and manage.  Last year it added 1.2 million new addresses to its rounds, and processed 37 million address changes. It delivered, and picked up 148 billion pieces of mail, six days a week. All in, it drives and walks by 157 million addresses every day.

At a supposed cost of $4 billion, that’s not bad!

 

 

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Runny Numbers

DCIM100MEDIAI think we were all a bit startled by the recent alarm over the Velveeta shortage.   The fundamentals of human existence are oxygen, water, sunlight and Velveeta.   So the breathless announcement made at the peak of the football season provokes even the modest cheese nibbler to wonder: who got paid to leak that tidbit?   Line-ups at the Piggly Wiggly are around the corner.

crowds

Kraft executives estimate there are 40 million U.S. households which buy a Velveeta product every year.   They point proudly to this market as the Velveeta Nation.   Yet somehow, some way, they misjudged demand after owning Velveeta since 1927?

Fortunately, I have a solution in hand for the empty pantry, dear reader.   Government scientists can now fill the Velveeta gap without squeezing any additional cows.

algae-biofuel-pnlRecall, just last week, I alerted you to the stunning news that crude oil could be made quickly from sea algae.   How difficult can it be to divert some of the ersatz crude, rich in vitamins mind you, to be fracked into Velveeta?   Yes!  Science rules!

Quesa Supremo.   The Super Bowl can go on.

Putting out press releases like the Velveeta scare feeds consumer skepticism.   But the whopper of all time is being laid on us right now under the guise of an identity theft alert.    As you know, the nation’s retailer, Target, regretfully announced just before Christmas that their credit and debit card transactions had been hacked.  40,000,000 customers were vulnerable.

credit cards

I.T. is on the carpet.   The accountants are rifling through reports.   But up in the marketing department however, the story is being celebrated in the hallways.   “Forty million customers!   Hah!  Take that Costco!   How ’bout them apples, Walmart!!   Eat your heart out K-Mart!  See ya in the funny papers Kohls!”   It is a marketer’s dream to be the biggest and best, and Target has staked the claim.

40,000,000 customers is the envy of any retail chain.   But why stop there?calculating_costs

“Oh-oh!  OH-OH!!   Sorry, we got that wrong.   It’s actually 70 million customer accounts.   We have even more customers than we first said.    Call Associated Press!  Advise Congress!   Tell the networks!  Get this on the wire: it was 40 million cards, plus 70 million customer files… that’s 110 million  customers!!”   And sure enough, the media obliges with more breathless announcements and the new number.

You know, the U.S. Census Bureau tells us that there are 317 million residents here in the country.   Deduct 76 million children, and there are 241,000,000 American shoppers available to Target.    The retailer tallied 46% of them as customers.  Wow!   Continental domination achieved. cheese crown

The IRS counts itself lucky to have 69 million paying customers.   I wonder how many like cheese?

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