Alex Husted, database and circulation manager at Edmund Optics, is watching with concern as the U.S. Postal Service faces the possibility of insolvency. Husted, who directs the catalog business of the global imaging and photonics company, is worried, like many marketers, about the possibility of dramatically rising postal rates, as the Postal Service faces another record loss.
“We're anticipating double-digit postal rate increases annually for the foreseeable future,” Husted said. “When coupled with increasing paper prices, that becomes difficult to manage.”
Husted said Edmund Optics is committed to remaining in the catalog business but is exploring its options.
“Our catalog business puts us at a great advantage over the competition, and we have a lot of marketing prowess here,” Husted said. “At the same time, as the catalog portion gets more expensive, we're going to have to make difficult decisions. Are we going to mail people less, cut back our large book, supplement it with other pieces?”
In the commercial mail space, which includes direct marketers, catalogers and publishers, Husted is not alone. As consumers continue to abandon first-class mail in favor of electronic forms of communication, the Postal Service is predicting a loss of $9 billion or more for its fiscal year ending Sept. 30 and pending insolvency unless it gains relief from Congress and regulators.
“Our issue is we're losing about $8 billion to $9 billion a year,” Paul Vogel, president-chief marketing/sales officer of the Postal Service told BtoB. “We can either ask for legislative changes that put us on a level playing field with the way a normal business operates or continue to reduce our infrastructure, including plants and post offices, to become more efficient.”
The Postal Service wants to do both, but it faces long odds. While not receiving any public money, it nevertheless is restricted by law—and the vagaries of political decision-making—in how it manages its pensions and employee health plans, the products and services it offers, and how much it can charge customers.