Welcome back to the “Deets with Doug” blog!
Its been an exciting couple of weeks in the postal space, and much to everyone’s chagrin, “exciting” in the postal world often translates to “alarming.”. Anyone in the DM industry that tunes into the nightly news is more than likely a bit on edge due to the USPS sneaking into some of the headlines. While some of those stories have a leg to stand on, you’ll find a lot of the stories were posted a bit prematurely for shock value by the speculative media to get everyone talking, and we will address those in this Deets blog.
It’s unseasonably warm in D.C. this March. Add to the temps the looming April rate filing for a July postage increase and the industry’s Mailers Technical Advisory Committee was a bit hot under the collar and eager for newsworthy details. Our 2-day agenda had a big name missing, PMG DeJoy, and we all wondered how that’d be possible since he’s been making headlines…and of course MTAC is the PMG’s industry committee and not addressing us would only add to the mystery.
What’s on every mailer’s mind?
- Potential for tariffs on raw materials and recession fears
- USPS Structural changes
- The elimination of DNDC discounts
- The July postage increase
- Government taking over the USPS
- The PMG abruptly trading his suit for a Hawaiian shirt
Let’s not yet get into the potential “zone based pricing model” the USPS is proposing for January 2026 as that’s still just a proposal, and could be very tricky from a preparation perspective.
Let’s tackle these listed points one by one…
Tariffs?
Potential Tariffs affecting the paper industry? This very well could happen. Much like the consolidations that have taken place over the years in the print industry, the paper industry has followed suit. A 25% tax on Canada could certainly increase paper prices depending on where your print provider sources their paper. I don’t believe this will be anything like paper-mageddon from 2021/2022, but this certainly won’t help our industry when coupled with the July 2025 postage increase. If you’re not direct buying your paper as a mail owner, this is a good opportunity to trigger a conversation with your MSP to get a better feel for their current sourcing agreements.
2026 Structural Changes: No More DNDC Discounts?
First Class
Introduce SCF pallet discounts. The USPS hopes this incentive will encourage mailers to prep to the SCF pallet level for the discount and perhaps avoid physical tray sorting to reduce USPS labor. This could be offered for cards, letters, & flats.
Eliminate Flat bundles in tubs. Currently mailers can submit loose flats in tubs or bundled in tubs. Mailers can claim discounts based on bundle prep. The option to bundle will be eliminated to keep it consistent, and minimums will be set to 50 pieces.
Marketing Mail
The promos will continue with the addition of double digit discounted catalog promo. Before anyone gets excited about that one, remember the USPS will recoup that money via added cap space in their next price hike.
Why would the USPS eliminate the DNDC drop ship discounts for marketing mail & periodicals? “Unwinding” the 21 NDC’s has been a USPS streamlining initiative in the 10-year plan. According to the USPS these NDCs (Network Distribution Centers) are part of USPS’s plan to simplify operations by eliminating origin processing of marketing mail, eliminate NDC-to-NDC crossdocking, and ultimately merge marketing mail, periodicals, and package services into the first class mail stream. Some of these NDC’s might become S&DC’s, some could become RPDC’s…the Postal service owns all 21 properties and can do what they please with them. What’s important here is knowing that your options could soon become to local entry your SCF mail, or SCF destination entry drop ship your SCF pallets (which hopefully you’re already doing). In my opinion, this could be great news for comminglers seeking piece-level volume and ultimately ship directly to the SCF post-processing. Bad news for mailers enjoying their potentially lower handling costs of drop shipping that NDC mail, but at the same time let’s agree that the desire to hit an in-home window for an offer means nobody will be anxious to take that NDC mail local entry and potentially watch the snails go to work.
The July Proposed Price Increase
Despite what we all believed would be a single digit increase for marketing mail this July, the price cap methodology is being applied with the successes of the promotions in consideration. Typical lag by the USPS in retrieving and calculating the usage data as they need to wait for promos to complete. The 2024 Mail Growth Incentive program was customers earning 0.6% or $153mm for first class and 2.2% or $381mm for marketing mail…a total of $534mm in price reduction as postage credits. Many of us were confused when realizing that this money needs to be made up in other way by the USPS…it wasn’t simply a discount and a “thanks for your added volume and partnership.” What this effectively did for marketing mail was increase the claimed cap space to 4.3% (The January 2025 numbers were banked and deferred to this July’s filing). I predict the MGI program may fall flat on its face next year due to the size of the postage increase and the penalties in added cap space that are created by the increases in industry volume. Or, this’ll force everyone to participate and increase volumes in order to not get penalized with cap increases with no postage credits to utilize to offset the increase.
What does it look like after this?
Please note that this July 2025 filing is the last opportunity for the USPS to utilize the Retirement additive.
Government Intervention & PMG DeJoy
Much to MTAC’s delight, PMG Louis DeJoy decided to make a last minute appearance on day 2. This was by no means a farewell speech. The media certainly blew this out of proportion when they reported he’s stepping down. What the PMG has done is ask the Board of Governors to begin the search for a qualified replacement, and that’s a pretty good trick. PMG DeJoy noted that his original plan was to be in this role for 3 years, fix the USPS, and move on with his life. However, due to rules, regulations, pushback, and screaming from every corner of government, this has dragged his timeline out by an additional 2 years.
Will the government take over the USPS and fire the Board of Governors? Unlikely. That’s a lawsuit in the making.
Will the government’s Commerce Department absorb the USPS in some way shape or form? Perhaps. It’d be tough for the current administration to resist an attempt to flex and implement a short-sighted quick fix. DOGE is now involved and it appears roughly 10k USPS employees could receive their walking papers. More to come on this.
UPDATE: Postmaster General DeJoy Resigns
In a significant development for the postal industry, Postmaster General Louis DeJoy resigned after nearly five years at the helm of the U.S. Postal Service (USPS). His tenure was marked by ambitious restructuring efforts and financial challenges, including a projected net loss of $9.5 billion for the fiscal year ending September 30, 2024. Deputy Postmaster General Doug Tulino will serve as interim leader while the USPS Board of Governors searches for a permanent replacement. This leadership change introduces new uncertainties for the USPS, particularly amid ongoing discussions about potential privatization and operational overhauls.
USPS Promotions
As of right now, the 2026 promotions are slated to be the same as the 2025, with some tweaks to possibly occur to the newest 2025 promos. (I’m looking at you, Continuous Contact….you’re a yarn-ball of confusion).
Until Next Time...
The next MTAC meeting occurs mid July of ’25. American Litho will be in attendance on your behalf.
If the looming July increase is causing you to explore melatonin supplements to help you sleep, or if you’re wondering what you could be doing better as a mail owner to ensure that you’re as close to the pricing floor as humanly possible, it’d be to your benefit to reach out to the experts at American Litho and together we can work to meet and exceed your marketing goals in 2025.
We’ll keep bringing you the real story in future *Deets with Doug* posts—no fluff, just facts (and a little flair).
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