Domtar joined industry allies in the nonprofit groups Envelope Manufacturers Association (EMA) and Keep US Posted in continuing their postal service advocacy in March, with visits to key members of Congress.
While in Washington, our representatives pressed for sensible postal rate regulations, honored postal champions and called attention to a concerning new study regarding the U.S. Postal Service’s finances.
EMA Bolsters Postal Service Advocacy
Tina Howard, Domtar’s vice president of converting sales and a member of the EMA board, joined other women leaders for a Women’s Hill Day.
Recognizing both International Women’s Day and Women’s History Month, the EMA gathered women leaders in our industry to meet with congressional offices about postal rate hikes and service concerns. Howard joined EMA Public Policy and Postal Committee Members Lisa Kline of Double Envelope Company and Laura Pickard of Sylvamo. The group met with 12 congressional offices in the House and Senate, with leaders and staff from Pennsylvania, South Carolina, Wisconsin, Virginia, Maryland, Indiana and Florida.
“We reminded elected leaders of the essential nature of the U.S. Postal Service and the critical role that the mailing industry plays in the national economy,” says Howard. “About a third of the paper we make goes through the mail in some form. It is important for our industry, and our country, for the postal service to remain reliable and affordable so that consumers and businesses can utilize mail with confidence.”
Honoring Postal Champions
Keep US Posted also awarded its second annual Benjamin Franklin Awards for Distinguished Leadership in Postal Policy to Reps. Emanuel Cleaver (D-Missouri) and Jake LaTurner (R-Kansas). The awards are given to members of Congress who have led efforts to preserve and protect USPS for the Americans who rely on it.
The mailing industry accounts for 7.9 million jobs in the United States and $1.9 trillion in sales revenue.
Report Warns of Rate-Hike Consequences
Domtar, part of the Paper Excellence Group, continues to join Keep Us Posted to advocate for reliable, affordable mail service for all U.S. residents. As part of our postal service advocacy this month, leaders drew attention to a recent report on the effects of the postal service’s significant rate hike proposals.
The report, commissioned by the Greeting Card Association and the Association for Postal Commerce (PostCom), was published just weeks before USPS is expected to ask the Postal Regulatory Commission to approve the sixth stamp hike in just two years, likely occurring in July.
According to the report, USPS is basing stamp hikes on a demand model that underestimates the elasticities (or price sensitivity) of its consumers — relying too heavily on historical data, among other issues.
These flaws help explain how USPS posted an operating loss of $6.5 billion in 2023 (the year it was projected to break even according to the Delivering for America plan) and why it is projecting a $6.3 billion loss in 2024 — all after receiving a $120 billion windfall from Congress in 2022. According to the report, volume losses exceeding the USPS model’s predictions cost the USPS $1.8 billion in lost revenue in FY2021-2022 alone.
“While economic modeling is both a science and an art, much is at stake with the USPS model,” according to the report. “The USPS model characteristics and practices, such as the number of variables, frequent changes to equations, high degree of subjectivity and lack of best practices, present challenges when using it for predictive purposes. Ignoring price sensitivity may boost revenue in the short run, but USPS must retain volume to achieve and maintain solvency in the long run. … If rate increases continue to proceed at this frequency and magnitude without critical review, it risks plummeting volume further and exacerbating USPS’s financial challenges.”
The report notes several errors in USPS economic modeling, including its treatment of market-dominant mail. This type of mail is critical to the postal service’s bottom line.
In the previous fiscal year, first-class and marketing mail accounted for 96 percent of the market-dominant volume and 89 percent of revenue. Market-dominant mail accounts for 94 percent of total USPS volume and 56 percent of revenue. The inability to accurately predict the impact of rate increases on market-dominant products threatens the stability of the USPS’s volume and revenue base.
“Rate increases are driving the Postal Service’s economic forecasting, when it should be the other way around,” says Kevin Yoder, executive director of Keep US Posted and a former congressman from Kansas. “It’s time for USPS to get its head out of the sand and stop using flawed projections to justify price increases in the Delivering for America plan. Traditional mail is still the largest revenue-generator for USPS, and each rate hike just destroys demand for it. We are looking at the worst productivity performance in the history of the agency.”
Learn more about our ongoing commitment to postal service advocacy:
- Domtar Joins Keep US Posted, Continues Advocacy for Postal Service
- U.S. Postal Reform: A Win for Domtar, Customers
- Domtar, Industry Groups Advocate for Sensible U.S. Postal Service Reform
