What It Means to Mailers

Posted on by Chief Marketer Staff

The Postal Rate Commission has admirably fulfilled the vision set out in the 1970 Postal Reorganization Act-that of providing checks and balances to discipline the monopoly. In its May 11 recommendation, the PRC reduced the rates proposed by the USPS, and suggested deferred implementation.

If approved by the Board of Governors, the overall increase for Standard A mail-the class used most by direct mailers-will be between 2% and 7%. Small-volume letter mailers should see an increase of about 1.8%; large volume letter mailers about 4.6%. Similarly, small-volume flat (or catalog) mailers should see an increase of about 6.6%; large volume flat mailers about 5.6%.

For Standard A mail at the pound rate (over 3.2985 ounces), the increase will be similar or slightly less than that of the piece-rate flats. All of these increases are about 1.75% less than those proposed by the USPS.

The destination-entry discounts stay as they are currently. High-density and saturation rates once again go down by .05% to 4% for letters (and there’s no change for flats).

First class mailers will have increases of around 3%, with postcard mailers receiving essentially no rate increase.

For Standard A parcels, the other shoe did drop: The 10-cent-per-piece surcharge is recommended. However, significant discounts for destination entry are recommended for the first time.

The day after the PRC’s recommendation, the postal Board of Governors announced the appointment of William Henderson as the new postmaster general. I hope the BOG will show the same wisdom as it considers the implementation date for these new rates.

The BOG is obligated to render an implementation decision at its next meeting the first week in June. Its choices seem to be: immediate, Oct. 1 or January 1999.

Rapid implementation serves the postal service’s projections of imminent and sharp expense increases.

The industry and PRC seek a deferral until January 1999, a time when the USPS is more likely to be losing money.

The compromise date, Oct. 1, also presents problems. Besides being a chronological mid-point and the beginning of the fiscal year, it is a key time for fall mailings.

After two years of poor fall delivery, a mid-fall rate change is a bad idea. A predictable effort by mailers to shift volume in advance of implementation could create staggering delays, and it could take weeks for the system to recover.

Remember the impact from UPS-diverted parcels last year? What if 250 million additional catalogs hit the system in the last week of September? Won’t it delay response? January is the best date.

On a happier note, mailers should welcome our new PMG. Bill Henderson has a long-standing reputation for being businesslike, creative, customer oriented and a straight shooter. I’m optimistic Bill will continue his predecessor’s focus on controlling cost and enhancing productivity. I also hope he will extend the USPS’ accessibility for a less rigid partnering with the industry on all levels. Bill Henderson is a great choice at a time of important change.

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