Today, the cost of every resource seems to be increasing in the newspaper industry. Now, more than ever, it is essential for the industry to come together to form unique solutions.
One of those increasing costs comes from the United States Postal Service (USPS), which, on Aug. 29, 2021, raised its rates for periodicals to 9%. While newspapers have evolved over the years to offer e-subscriptions, that is not always an option, especially for consumers who do not have access to the internet or computers. The USPS is an essential service to the newspaper industry and its customers.
According to a statement released by USPS in September, an increase on market-dominant products, including periodicals, will occur again in July 2022. The report also said that beginning in January 2023, price adjustments will occur twice a year — once in January and again in July.
"Rate hikes are not applied evenly across all pricing factors for a given class of mail. Often, they are used to discourage certain mail preparation that is more costly to USPS. For example, most newspapers enter mail close to or at the post office that delivers to the subscriber and in walk-sequenced bundles separated by the postal carrier. This is optimal for USPS and usually takes a smaller hit when rates go up," says Brad Hill, CEO at Interlink, a widely used newspaper circulation system.
Although rate increases from USPS typically earn a collective eye roll, they are a necessary evil. For many years, USPS has been operating under an extreme deficit. In many ways, USPS faces issues familiar to the newspaper industry. With the ever-increasing popularity of online resources, the need for newspapers, as well as mail, decreases. Therefore, both industries must adapt to survive.
"The rate change request is part of a balanced approach under ‘Delivering for America,’ the Postal Service’s 10-year plan for achieving financial sustainability and service excellence. With full implementation, the plan reverses a projected $160 billion in losses over the next ten years. The proposed rate changes are expected to generate $44 billion over the next ten years," USPS explained on its website regarding the 2021 price changes.
USPS claims that even with the rate changes, it will still remain "among the world’s most affordable” carriers. USPS continues to adapt to the nation's changing needs, so the question now becomes, how can the newspaper industry do the same?
"DDU is postal jargon for Destination Delivery Unit, which amounts to entering mail at the post office that directly serves the subscriber’s address. DDU entry is key for same-day delivery and saves between two and four cents per copy on a quarter-pound newspaper. DDU-entered papers also don't need to (shouldn't) be left at the post office in bags or tubs, which means those fees are also eliminated on outside-county mail. Every bag we skip saves another $1.50 in postage,” according to Hill. “It seems like every couple of weeks I hear from a paper that isn’t taking the barcoded automation discount because its local post office said they can’t or don’t use the barcodes anyway. But claiming barcoded rates doesn’t depend on USPS’s use of the barcode, just that the barcode has been correctly printed with the delivery address. Most software and printers can generate the right barcode now, so why leave it off when each one can save 3.5 cents or more? Barcode every piece, every time, and save.”
While other carriers are alternatives to the post office, they come with their own set of issues. Hill explained the benefits newspapers receive by using USPS over other mail carriers:
"Carrier rates vary quite a lot these days, but I rarely see carriers paid less than 20 cents per copy and almost never below 15 cents. Most papers can pay the post office around 12 cents to deliver each local with the right setup and entry — sometimes even less. Saving 10 cents per copy or more when switching to the mail is common and amounts to huge savings. Let's do that math: Saving a dime each on 4,000 copies delivered six times per week totals $125,000 in savings each year. That's before we factor in management and overhead costs,” Hill said.
Newspapers that feel strongly about the rate increases can offer assistance to organizations like the News Media Alliance. News Media Alliance lobbies for the protection and rights of the newspaper industry, including fighting against rate increases.
"News Media Alliance, the NNA (National Newspaper Association) and others are fighting postage rate increases that allow USPS to raise rates as mail volumes fall and service declines. The more mail that leaves the system because of service failures, the higher the cost of handling each mail piece. The Postal Regulatory Commission (PRC) now allows USPS to charge extra for the shrinkage. Counsel Ayesha Khan of Potomac Law Group argued for the mailers' coalitions that the PRC had violated the Postal Accountability and Enhancement Act by allowing the postage price cap that was in effect from 2007 to 2021 to be superseded. The cap is just one part of the calculation of postage rates now, allowing USPS to begin by charging for inflation and then adding on charges for other cost drivers. USPS also sued the PRC, arguing that it should have been allowed to do a one-time rate 'reset' to collect for money lost during the price cap. The Court is expected to rule this fall,” said Tonda Rush, NAA general counsel, in an article regarding rate increases entitled “USPS rewarded for poor service as rates rise, mail volumes fall and service declines.”
Despite the negative attention, the partnership between newspapers and the post office goes back many years. Recent statistics from USPS show that 84.3% of periodicals were delivered on time between Oct. 1 and Oct. 15 of this year. Hill says building relationships are essential in receiving reliable service. Typically, USPS can provide the most consistent service over other mail carriers.
"The Postal Service regards periodical mail as ‘underwater,’ meaning it loses money on that delivery, so I don't see a lot of room for additional discounts at a grand scale. But, at the same time, it has also called periodicals the ‘anchor of the mailbox,’ so clearly, there is an appreciation for value beyond direct revenue. I see this best played out when newspapers entering the mail as a primary delivery mechanism work with local and even district postal staff during the transition. A good relationship goes a long way to ensure consistent, reliable delivery," Hill said.
Overall, both USPS and the newspaper industry face challenges from the rise in online services, which has only worsened during the pandemic. Both industries must work to find unique solutions, and time will tell how future increases will affect their partnership.
Kirsten Staples is a contributing writer for Editor & Publisher. She can be reached at firstname.lastname@example.org.
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"Recent statistics from USPS show that 84.3% of periodicals were delivered on time between Oct. 1 and Oct. 15 of this year". I would be interested in knowing the definition of "on time" and the statistics for a bigger window than two weeks in the fall. Thanks!
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