We hope you are well and weathering this storm. I’d like to provide an update on what we are hearing and working on:
Catalog Industry Status During COVID-19 Lockdown
Our merchant membership basically segments into two groups: a) those who are cutting mail circulation because sales are up, but they can’t keep up with demand and b) those whose sales have been decimated by the crisis and cannot justify the postage spend until dollars per book and response rates recover.
To best serve you, we need to find out further specifics about what is happening with your business. With that in mind, please watch for our survey arriving in your inbox later today and complete it ASAP so we can gather granular details on the status of each member company. We’d like to validate some ideas we are working on with the (b) group above to see if these might be helpful. Ideally, we figure out ways to increase the universe of mailable names for a real post-crisis relaunch but prospecting remains the holy grail.
Postal Service Update
You’ve probably heard numerous stories of the USPS running out of cash as early as June. The situation is dire. Mail volumes have been falling every day. But there have also been erroneous reports. ACMA staff participate with industry leaders on thrice-weekly update calls from postal officials. Yesterday’s call was led by Postmaster General Megan Brennan and general counsel Tom Marshall. Here’s what we learned:
- Last week, overall mail volumes dropped 32.2% following a drop of 24% the week before (compared to SPLY).
- The USPS forecasts its volume to bottom out at 74%, down from the pre-COVID-19 period.
- Of that lost amount, USPS expects 26% to be lost forever (by comparison, 20% of the pre-Great Recession volume never came back).
- For USPS’s fiscal year 2021 ending Sept. 30, mail volume is projected to be 70% of the pre-crisis volumes.
- Given this, PMG Brennan said the USPS expects to run out of cash in September 2020.
She and her executive team recently met virtually with the House Oversight Committee and requested $75 billion, which includes $25B for funding the two-year COVID-19 losses, $25B to modernize postal infrastructure (vehicles, facilities, etc., many of which are “shovel-ready” or create long-term employment and can stimulate to the economy) and a consolidated debt facility of $25B (the existing $15B facility plus the $10B debt contained in rescue package III). The ACMA and other prominent industry groups are working behind the scenes to ensure that your interests are protected as negotiations for a Phase IV rescue package continue in Washington.
The Postal Service officials also acknowledged that these are mere projections and that the above does not solve the USPS’s long-term business model challenges or its need for regulatory and legislative relief that postal leadership has long been calling for. The president’s recent press conference where he indicated the Postal Service would be fine if it simply raises package prices “a lot” has complicated our situation. It is obviously a politically charged environment impacting any COVID-19 related relief the USPS gets. We do not need to flame these fires, but this is a good time to write your Members of Congress asking for attention to an industry bigger than the airlines that does $1.5 trillion and employs 7.3 million. We ask for a reasonable bipartisan solution as in the best interests of America.
Postal officials note that leadership from the House and Senate in combination with the Administration will determine what is done ultimately, but that the entire bipartisan USPS board of governors unanimously adopted this set of requests.
Does this mean the mail will stop? We don’t believe so – here’s why: If we approach such a doomsday scenario in September in which the USPS announces a forthcoming temporary stoppage of mail processing and delivery, Congress knows it can’t let that happen. What’s more, the American post office is one of the few federal services specifically mentioned in the Constitution.
Did we mention that now is a good time to bolster your relations with elected officials? Below are links to specific letter templates, all relevant to the current situation. Please click on the letter most appropriate to you, add your business information as you see fit, then email it to your congressmen and senators right away. Click this link to help you find contact information for House members in your company’s district(s).
- This template is aimed for a knowledgeable CEO or other executive without a close relationship to Congress. It is also applicable for rural and small business interests. The targeted Member of Congress should be Democratic leaning but bipartisan in general appeal.
- Use this template to send a short and concise letter to either a House or Senate Member of Congress. While this also focuses on COVID-19 and getting funding for the Postal Service, it can apply to a broader array of Congressional Members.
- Use this template for a more detailed letter that can go to either a House or Senate Member of Congress.
- Click here to view a recently-written list of talking points outlining needs from a stimulus package for the Postal Service.
We’re Here to Help You
While everyone is managing cash flow and some of you are busy managing supply chains, ACMA is focused on helping you get accurate information amongst all the confusion as well as out-of-the-box thinking about how we can help suffering companies restart their cash flows now and post-crisis. If your sales are down right now and you want to engage with us in discussing some of the alternatives we are exploring, we would love to hear from you. If you are a supplier member who has clients and has possible solutions to help, we would like to talk to you too.
ACMA National Forum
We hope you noticed that we have moved our 13th Annual National Forum to September 8-10 from the previously announced June dates. Given what is happening, it is certain to be a vibrant and action-packed meeting and we hope you will plan to join us in Washington.
Thank you for your continuing support and involvement and please watch for our survey.
President & Executive Director
American Catalog Mailers Association