Direct mail postage rates might increase again in 2021. Yet delivery of catalogs, packages, and even first-class mail has been erratic with frequent delays and missed in-home dates over the past several months.
In the catalog world, our strategy includes planning for specific in-home windows. My delivery reports show that while most catalogs are delivered on time, the % of on-time deliveries has decreased. In fact, many direct mail pieces arrived 1 to 2 weeks late.
Several factors attributed to this include: continued pandemic delays, a high surge in holiday package volume, and winter weather. There are also suspicions that USPS leadership made changes that delayed mail delivery.
Last month Marketing Mail postage rates increased and usually these annual postage rate increases take effect in January. However in 2021 we could see a second, devastating USPS postage increase in summer or fall.
In a few days, top US Postal Service officials will testify before a US congressional panel to discuss plans to overhaul USPS expenses. USPS officials are expected to introduce a 10-year plan.
What happens to direct mail postage rates in the proposed USPS plan?
Postmaster General DeJoy wants to:
- implement density adjustment factor increases
- potentially increase catalog and direct mail postage rates by 7.56% this summer
- double catalog mailers’ postal rates over the next 10 years
- slow down delivery of first class mail
- deliver local first class mail within 3 to 5 days instead of current 2 day service standard
- distribute first class mail nationwide via truck instead of by plane
The slowdown in delivery combined with the proposed rate hikes could hurt the direct mail industry even further.
While only local first class mail delivery standards were specifically addressed, it is clear that nationwide delivery has slowed dramatically too. National delivery of first class mail saw just 38% delivered on time at the end of 2020. This impacts both consumers and direct mail businesses alike.
Time-sensitive direct mail campaigns – such as triggered postcards – will be less effective if delivery takes up to 7 days or longer. Consumers can expect delays when mailing payments, receiving packages, and prescription deliveries.
Ironically, the postage increase could hurt the USPS too. The US Postal service is very dependent on Marketing Mail for its annual budget. The USPS wants to increase revenue from the postage rate hike and lower delivery times even further. Instead it should be prepared to see potential revenue increases offset by a drop in direct mail volume.