Integrated Financial Plan
The United States Postal Services released their Integrated Financial Plan (IFP) for the Fiscal Year of 2019 last month. The IFP forecasts a repeat of the 2018 financial challenges for the USPS in 2019, resulting in a net loss of $6.6 billion.
Net Loss in 2018
For 2018, the USPS reports a total net loss of 3.9 billion dollars and ending the year with a total of $13.2 billion of debt. The USPS states that they “anticipate further reducing our debt to $11.0 billion (in 2019). This will allow us to minimize interest expense, while maintaining sufficient liquidity to fund day-to-day operations and continue to make essential capital investments.”
USPS Growth and Price Increases
With the 2019 predicted loss, the USPS is expected to increase revenue in 2019 with a growth of 1.3 billion dollars. This increase in revenue stems primarily from the growth in package volume along with an increase in package prices. With an increase in package prices, the USPS has aslo announced a postal rate increase of 2.5% for 2019 Marketing Mail. Catalogers will have the opportunity in 2019 to help offset this increase by taking advantage of the USPS postal promotions. The promotions offer a 2% upfront savings on postage by using technology with the printed catalog.
Dingley recommends participating in the following two options:
- The Emerging and Advanced Technology Promotion– “This promotion will build upon previous promotions and continue our strategy of encouraging mailers to integrate direct mail with advances in technology.” Augmented Reality is the best approach to participate in this promotion and Dingley has a low cost solution for customers.
- The Mobile Shopping Promotion– “This promotion provides business mailers with an upfront two percent postage discount on USPS Marketing Mail™ letters and flats, as well as Nonprofit USPS Marketing Mail™ letters and flats.” Catalogers using a mobile barcode (QR Code) can participate if it leads to a mobile optimized website where a purchase can be made.
By incorporating this technology, catalogers can save 2% on postage between March 1st and December 31st 2019. Have questions? Ask a Dingley representative to help you navigate these changes and to assist you with the right fit for your catalog.
USPS states that they will continue with efforts to improve the marketing mail as this sustains in value, and ROI. The USPS also plans to strengthen informed delivery.
The USPS states, “We will not have sufficient liquidity to pay down debt, fully fund retirement and RHB obligations, and invest in equipment and technologies to fulfill our statutory mission. We will continue to pursue aggressive management actions, cost reductions, and additional ways to generate revenue in 2019, but will also need legislative and regulatory changes to resolve protracted, structural issues with our pricing and cost structures. Many of the structural reforms needed to ensure long-term viability, such as full integration of RHB with Medicare, can only be achieved with legislative change to our unsustainable business model and a successful outcome from the PRC 10-year pricing system review.”