Moody’s Projects the Future of Transaction and Advertising Mail


In assigning a rating on new debt issued by Harland Clarke to cover the purchase of Valassis, Moody’s made an assessment of a business that is primarily dependent on check printing and mail advertising.   Its comments suggests that Wall Street sees both the transaction and advertising mail businesses as profitable but in a secular decline.  More importantly for holders of bonds due in 2021, Moody’s expects the secular decline in both checks and mail advertising to accelerate towards the end of the decade. Harland Clarke’s B2 Corporate Family Rating reflects Moody’s ongoing concern that the combined business model is subject to secular decline in both its check printing and Valassis’ [...] Read more »

Fastenal Corporation Suspects that USPS Operating Changes Hurt Its Finances

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Last week, Fastenal became the first public corporation to report that changes in service standards for single-piece First Class mail have had a negative impact on its finances.   In reviewing the 2nd quarter’s results, Fastenal’s CFO Daniel Florness explained that the most significant reason for the increase in the corporation’s accounts receivable was changes in how Fastenal receives payment from its mostly small business customers. Now both June of 2012 and June of 2013 ended on a weekend. So the calendar is similar, so my comment about the calendar might sound a little odd. But what we’re — and I don’t know if this is a post office, logistics thing or [...] Read more »

Pitney Bowes Misses Earnings Estimates; Cuts Dividend

Pitney Bowes

Pitney Bowes has announced earnings of 42¢ per share for the 1st quarter of 2013.  Earnings were 2¢ per share below analyst’s estimates.   In a seperate press release Pitney Bowes declared a dividend of 18.75 cents per share for the Company’s common stock. 13.  The dividend declared is half of what Pitney Bowes had paid over the previous five quarters. In a statement included in the earnings announcement resident and Chief Executive Officer, Marc Lautenbach, commented, “We are taking a number of actions in support of the long-term health and growth of our business. While the results for the quarter were mixed, we are seeing progress in key elements [...] Read more »

Understanding Why Service Quality Affects The Future of the Postal Service

NewYorkTimes Mast Head

The New York Times yesterday reported on the problems that mailers are having with service the Postal Service provides to business mailers using First, Standard and Periodical Mail offerings.   The article notes that these problems have existed for some time and mailers are finally realizing that changes in the network that the Postal Service is now implementing will force them to change decisions where they print, prepare, and deposit mail with the Postal Service and more troubling for the future of the Postal Service whether they mail at all. The New York Times story included the following excerpt from the post “Is Poor Service Causing the USPS to lose Standard Mail [...] Read more »

J.P Morgan Indicates that USPS Service Standard Changes Will Reduce Business Working Capital


In a note to clients, J.P Morgan notes that the coming changes in Postal Service Service Standards could have a negative impact on the financial health of American businesses. With the reduction in locations and mail carriers, invoices may take one to two days longer to reach your customers, while, simultaneously, customer payments will also take longer to collect. The result: an increase on Days Sales Outstanding (DSO) — and a potential increase in your company’s working capital. Specifically, the receivables cycle and DSO may increase by two to four days, while the volume of delinquent customer payments may also increase.  Current estimates of the financial impact of these changes [...] Read more »

Senate Appropriations Committee Actions Could Slow USPS Actions


The Washington Post has reported that the Senate Appropriations Committee passed the finance and general government appropriations bill that 1) retained maintained the requirement that the Postal Service provide 6-day delivery and 2) prohibited the Postal Service from close small post offices in FY 2013 and prohibited closure of mail processing facilities before 2014 and not until a study by the USPS Inspector General. The appropriations bill sponsored by Sen. Richard J. Durbin (D-IL) and raised objections from Senator Susan Collins (R-ME) who argued that the Appropriations Committee action effectively picked apart S.1789, a bill that she cosponsored, which the Senate had recently passed. The Associated Press reports the Senate [...] Read more »

Overnight Single-Piece First Class Mail Ends July 1; Could be a Problem for Billers and Consumers


Corrections have been made to this post to reflect the fact that the presort requirement for overnight First Class Mail does not become effective until February 1, 2012. The most noticeable changes on July 1, 2012 will be for mail that originates and destinates at different mail processing facilities.  This mail will either see its delivery standard increase from 1 to 2 or 3 days, remain at 2 days, or increase from 2 to 3 days.   While mailers should be able to identify service changes by origin destination pairs, households and small businesses are unlikely to understand what is changing until it affects the timeliness of the mail they send.  Also [...] Read more »

Separation Incentives for Postmasters and Other Postal Employees

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This week the Postal Service announced an early retirement incentives for Postmasters as part of its restructuring of rural retail service. This announcement will likely be the first of a set of early retirement incentive announcements that the Postal Service that the Postal Service makes in the next few weeks as it follows through with its plans to restructure First Class mail service standards and plant operating plans. Expected Announcements of Operating Changes and Facility Closures The Postal Service will announce on Thursday, May 17th, its plans for operating plan changes and facility closures that will occur this summer. The Federal Times has reported that in a press conference held [...] Read more »

S.1789 Is Unlikely To Save Overnight First Class Mail As We Know It

USPS logo-Feat. Image

Section 201 of S.1789, The 21st Century Postal Reform Act, purports to save overnight delivery.  However, a closer look at the language of this section of the bill shows that an overnight delivery commitment will truly be available to fewer customers than most members of the Senate think.  In particular, First Class single-piece mailers will see little benefit from the delivery standard provisions in S.1789 that were designed to ensure overnight service as they are unlikely to tender their mail to the Postal Service before the critical entry time required to ensure delivery overnight. The Geographic Reach of Overnight Service is Now Significantly Less The current S.1789 limits next day service to [...] Read more »

eBay Reminds Sellers USPS First Class Parcels is Not an Expedited Service


Today, eBay reminded its sellers that beginning the first of May it will reclassify USPS First Class Mail delivery as a standard service in all listings that state that First Class mail is the delivery method. eBay first announced this move in February and described the change as a way to set “the right buyer expectation regarding USPS First-Class service.” The timing eBay’s move corresponds with the Postal Service’s expected implementation of new slower service standards for First Class Parcels. Why eBay Says it’s Making the Change Ebay identified two reasons for making this change 1) In general, buyers do not perceive USPS First-Class as an expedited service. Packages don’t [...] Read more »